Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
- Workspace Strategies founder Karen Condi recently joined the Allwork.Space Future of Work Podcast to offer her essential expertise for those considering venturing into the coworking business.
- Coworking spaces generate enhanced revenue for property owners through higher rents per square foot and the ability to rent shared spaces multiple times, eclipsing traditional lease incomes.
- Commercial property owners are leveraging coworking models to meet the demand for flexible, on-demand workspaces from both small entrepreneurs and large enterprises.
This article is based on the Allwork.Space Future of Work Podcast episode featuring Karen Condi, Founder and President of Workspace Strategies. Click here to listen to the full episode.
Embarking on a journey into the coworking sphere is a venture that demands acumen, an intrepid spirit, and above all — a vision that transcends the archetypical business framework.
Workspace Strategies founder Karen Condi recently joined the Allwork.Space Future of Work Podcast to offer her essential expertise for those considering venturing into the coworking business. She’s regarded as an expert in the shared workspace and coworking industry, and her deep knowledge of industry trends and finance makes her an invaluable resource for property owners and companies entering this market.
She says that commercial property owners who are on the fence should consider tapping into the $26 billion coworking boom now.
It’s not just about money — though the numbers make a convincing case on their own. Coworking spaces yield far higher rents per square foot than traditional office set-ups.
“We are seeing so many property companies enter the shared space industry, and I think there’s a variety of reasons why,” Condi said on the podcast.
“We are seeing so many property companies enter the shared space industry, and I think there’s a variety of reasons why,” Condi said on the podcast. “But obviously, I think the number one reason is they make more money. In the coworking and shared space business, it all really comes down to the higher rents per square foot — the higher rental yields. And typically in the coworking business, you’re going to yield a higher rent per square foot than a traditional long-term lease.”
She says her company’s investors and owners are receiving 130% of market rents on the high end, and even up to 170% in some locations.
The fact is, the future of work is flexible, and commercial property owners are waking up to this new reality. By catering to diverse needs — from solo entrepreneurs to enterprise teams — coworking spaces create economies of scale traditional landlords can only dream about.
Here’s why smart property owners are racing to launch their own coworking offshoots or partner with existing players:
Higher Revenue Potential
The profit potential comes comes down to the revenue model; coworking spaces rent out spaces multiple times over to various clients. A single office may see 3-4 members sharing it over a year. This aggregation of demand allows them to charge higher rentals per square foot. For property owners, it represents a vastly more lucrative revenue stream compared to locking in long-term leases with single tenants.
Meeting Evolving Workspace Needs
The other key driver is the nature of demand itself. Even enterprise companies now want flexible, on-demand workspaces. They are moving away from traditional 10-year leases that saddle them with unused real estate. Coworking spaces allow them to right-size for evolving business needs. For property companies, it provides a way to cater to — and monetize — this growing demand.
Operational Considerations When Launching Coworking Spaces
1. Differences from Traditional Commercial Real Estate
Make no mistake; coworking spaces are a different ballgame operationally. The business model resembles running a hotel more closely than traditional property leasing. It’s a hospitality-first business requiring day-to-day management of services, facilities, and community building. In short, it’s a much more hands-on operational approach.
2.Higher Start Up Costs
Generally, getting into the coworking business may have higher upfront costs than a traditional lease deal.
“The space is usually very high tech, so there’s higher technology costs,” Condi explained. “There’s higher upfront costs, but, if they have the temperature to weather that storm of that first one to two years, they’re going to reap the rewards on the back end.”
3. Hospitality-Focused Skillsets Required
Property companies venturing into this space need to equip themselves accordingly. They need staff and systems adept at customer relationship management, marketing outreach and technology infrastructure. Community building and programming to retain members is also crucial. It’s a culture shift as much as a business evolution.
Key Location and Design Factors
1. Conducting Thorough Market Analysis
Not all spaces are created equal when it comes to coworking viability. Comprehensive feasibility studies help assess critical factors like area demographics, income levels, nature of local businesses, infrastructure and amenities in a 5-mile radius around the planned site. These have a direct bearing on potential demand and pricing models.
2. Incorporating Wellness and Community Amenities
Coworking spaces today need to provide much more than desks and wifi. People want spaces that enhance productivity, collaboration and overall wellbeing. So operators are incorporating elements like lounges, cafes, outdoor areas and recreational spaces. Building a sense of community is also key to improving member engagement and retention.
The coworking revolution presents a lucrative opportunity for commercial property owners to maximize yields from existing real estate assets. Yes, the operating model differs vastly from traditional leasing, but the rewards more than outweigh the incremental effort for those who can bridge the cultural and functional gap.
