Safe Investing: Are Coworking Spaces Worth the Risk?

The WeWork debacle has changed the face of coworking — mostly for the better. With the decline of one of the biggest coworking company — one that charges members the least — opportunities are opening up for new coworking brands.

Corporate Demand Is Still There

Corporations couldn’t care less about the pricing of some companies, especially if their workers are happily working at a coworking space. More than 50 percent of U.S. companies are resorting to telecommuting/remote work, and coworking spaces give them a little more control while also allowing their coworking employees to work a little bit closer to home. Coworking spaces are lower company overheads and decrease employee turnover rates. Workers are happier, and this reflects on their work. Coworking employees perform better, and tasks are finished faster. Instead of having expensive satellite offices, major corporations are placing staff in several different states to handle local concerns, information gathering, and marketing projects. Lower taxes and a strong U.S. economy have allowed companies to expand their operations, and coworking spaces enable immediate expansion. Why rent or purchase a building, when you can house your employees in a shared office space?

Projections Are Still Positive

coworking space

Even coworking critics believe the industry will be growing in the following years. As corporations expand, the need for more coworking spaces will only grow. Shared office spaces already account for more than 8 percent of the total office footage in the USA. Estimates point to that number growing to 20 percent within the next few years. Property owners see coworking as a boon, as valuation skyrockets when coworking spaces are involved. Many turn to coworking to make use of non-performing properties by leasing to or partnering with an established coworking brand. The constant demand for coworking spaces is overwhelming, and new office spaces are often contracted by corporations the moment they start operating. After the WeWork debacle, leasing prices have more or less stabilized, making coworking investments more profitable.

A Space of Your Own

Coworking spaces are perfect for non-performing properties. They allow an owner to make use of space or building, which would otherwise be in the red, and transform it into productive and profitable shared office spaces. Even if you opt to rent a space or a building to turn it into a coworking space, the investment can still be valuable. The overhead will be higher, but you can make up for it by accommodating more than 80 coworkers and attracting the big corporations. Larger coworking spaces might require higher startup costs, but they also have the highest return on investments. You’re better off partnering-up with an existing franchise than going at it on your own. Starting a successful coworking space requires connections and expertise — something established brands already have. Coworking franchises often require very little from the owner aside from the initial start-up, giving you time to pursue other matters.

Coworking is still a viable investment. Corporate demand is still strong, and the projected number of new coworking spaces is still insufficient to meet the rising demand.

Spread the love