Opening a Coworking Space – The Complete Guide of How’s & Why’s

Opening a coworking space today is more than just a business venture: It’s a response to a growing demand for flexible work solutions fueled by the rise of remote work. And, as traditional office settings give way to more adaptable environments, coworking spaces have surged in popularity to offer dynamic alternatives for freelancers, startups and even established businesses. The global shift toward remote work has also highlighted the need for spaces that foster productivity, creativity and collaboration — without the rigidity of conventional office leases.

Of course, where there’s demand, supply usually follows. As such, the coworking industry across the U.S. has been on a constant rise in recent years with surges of up to 10% in inventory throughout the course of only one quarter.

In this article, we’ll explore the essential steps to successfully launch a coworking space by tapping into this high-demand market and creating a thriving community hub.

Opening A Coworking Space

At first glance, a coworking space might seem quite similar to a traditional office. But, there are many aspects that determine its unique makeup and distinct appeal.

In the era of remote work and flexibility, coworking spaces are highly sought-after due to their efficiency, design and productivity-inspiring environment, not to mention their tight-knit communities of like-minded professionals. So, when opening a coworking space, it’s crucial to keep all of these aspects in mind and appeal to the real needs of today’s workers.

Determine Your Vision and Your Goal

Behind every business initiative, there’s a vision or a goal that drives the entrepreneurs and business owners to work for it wholeheartedly, while also attracting and inspiring customers. Therefore, before opening your coworking space, you need to identify your vision and goal, as well as how you can leverage that to relate to coworkers.

A well-known mission shared by one of the largest coworking operators, WeWork, is “Create a world where people work to make a life and not a living.” This shows that they work toward enhancing their members’ lives — not only professionally, but also personally. Accordingly, they provide an ecosystem — an environment of sustainability and community networking —while also supporting the proverbial work/life balance.

Conversely, there are some coworking spaces that cater to a different type of goal: They want to eradicate the monotonous office culture and help members interact with like-minded people. There are even a few coworking spaces that have included childcare facilities within their workspace. For instance, Erin Richards of Happy Hubbub was challenged when working as a freelancer and simultaneously looking after her child. So, she solved the problem for herself and numerous other working parents by opening a childcare business with coworking facilities on-site.

Granted, there’s no denying that revenue is a core goal behind every business out there, so it’s important to budget appropriately and keep your head in the game. However, always consider that coworking is a highly personal business, and catering to your clients by building relationships and a sense of community are crucial to gaining and retaining loyal members in the long run.

Considerations Before Opening a Coworking Space

Different businesses have different target audiences, needs and goals. But, one aspect that they all have in common is the need to plan ahead and anticipate customers’ needs through a solid offering, competitive pricing and comfortable environment. Here are some of the most important characteristics to consider when setting up your coworking business, as well as the best options to apply them in a way that works for you and your customers alike:

Location: Searching for a location for a new coworking space is not easy. Because it’s a new business, you probably don’t want to spend too much on rent. So, renting a space in the premium region of the city is not always an option. Instead, target a location that’s easily accessible, even if it’s on the outskirts of town or in the suburbs, which will come at a lower cost. You may also find more affordable locations for rent outside of the central business district, which will still keep you close to relevant areas of interest.

At the same time, keep in mind that almost all commercial properties require a security deposit and two months’ advanced rent. In that case, your initial cost will be three times the monthly rent.

Your choice of location may also change if you’re catering to a niche coworking business model. As an example, a startup-centric coworking space should reside near a university or a popular college. Or, a coworking space for the legal community should operate in an area near the courts. Be thorough and strategic when deciding on the location of your coworking space, which is of the utmost importance.

The neighborhood also matters because your members look for conveniences in the surrounding areas. Apart from public transportation sources, they’ll also need to know whether there’s adequate parking.

Costs: Opening a coworking space involves significant initial costs that vary based on location, size and design preferences. Key expenses include leasing or purchasing property, which can be a substantial financial commitment, especially in prime areas. Likewise, renovation and interior design costs to create an appealing and functional workspace can also add up quickly due to expenditures for high-quality furniture; ergonomic office equipment; and aesthetic elements, like lighting and decor.

Additionally, initial operational costs — such as utilities, internet setup and marketing to attract members — must be factored in. For this reason, a well-planned budget is crucial to successfully launching a coworking space. Be extremely thorough when planning your budget and keep in mind that unexpected expenses can arise along the way, so be sure to be prepared for that, as well.

Community: Sure, your coworking space might have world-class amenities and top-notch seating arrangements. But, it all comes down to the type of community you’re working with. That’s because if people needed an environment that was akin to the everyday office, then there would be no reason to open a coworking space. Rather, a coworking space should be an energetic, efficient and collaborative community that attracts like-minded people.

To that end, host professional events and workshops so that people can learn about your space. You also have social media at your disposal, which can save on advertising costs. Also, remember that your members may have previously worked from home or a café, so what you offer them in terms of community and the overall environment will make a big difference.

Coworking Space To-Do’s

As with most businesses, opening a coworking space means you’ll need other people by your side to assist you. Although you might be able to run a “one-man-show” (which will undoubtedly save you money), that can also pose countless challenges and high stress, especially in the beginning.

The best method is to hire experienced people for specific roles. While this option will cost you a bit on a monthly basis, the results will likely be worth it, and having dedicated staff in certain roles will go a long way in helping you run your space as there will be a lot to manage, such as:

• Hosting events
• Managing accounts
• Building the community
• Establishing memberships
• Ensuring that members get access to all amenities
• Addressing member complaints
• Restocking snacks and coffee
• Cleaning the workspace
• Promoting the business
• Keeping records and managing expenses

These are only some of the activities to successfully run a coworking space. As you can see, once you’re set up and people start coming in, you’ll have a lot on your plate if you’re working alone. That’s why it’s beneficial to hire employees to help you run the space. To start, you’ll require a community manager, an operations manager and an administrative manager. Collectively, these three staff members will cost you around $5,000 per month.

Most Important Facilities and Services:

What you provide to the members in your coworking space also resonates with your mission and goal. For instance, a coworking space focused on assisting startups typically provides services and amenities that help them develop further. An example of this would be workshops spanning topics that allow the startups to address their issues.

There’s no end to the services and amenities that can apply to members in a coworking space. And, because it’s not just a workspace, you can also add a number of elements to make your coworking space attractive. That said, it all depends on your budget. On a tight budget, you should focus solely on the essentials and necessary amenities and services, such as:

• Furniture: Before opening a coworking space, determine the types of membership you will provide. There are two types of memberships that every coworking space should have — the dedicated desk and the hot desk. In a 2,000-square-foot area, you can accommodate around 50 members. This means that you’ll need at least 50 ergonomic chairs and a certain number of desks, depending on their usability. For the dedicated desks, you’ll need to provide storage space whereas, for others, you’ll need separate storage racks. If the budget allows, you can also spend some money on interior decorations, which will make the workspace more aesthetically pleasing. It’s only natural that when a person is working in a beautifully built workspace, the work seems more fun. Another option is to include standing desks in your coworking space, which might cost a bit more, but also offers extra benefits and comfort to your members.

• Utilities: The most important amenities are internet access and printing facilities. Without a fast and reliable internet connection, you cannot run your coworking space, let alone allow the members to get work done. Similarly, electrical outlets are also a must at every coworking station.
  Another important service is coffee, which is a perk that most coworking members have come to expect. Lastly, you’ll need to have enough bathrooms and water outlets within the coworking space design. The cumulative expense of building bathrooms and providing electrical outlets comes out to around $10,000. This is after including only the bare minimum of what is necessary for opening a coworking space.

• Temperature Control: The heating and cooling systems are also necessary to control the climate of the coworking space. For a 2,000-square-foot area, the dual HVAC system will cost you around $5,000. This is essential to allow members to work in a comfortable environment.

Services You Can Initially Exclude When Starting a Coworking Space:

Although the ultimate aim should be to provide as much convenience and comfort to the member as you can, in the initial stages of starting a coworking space business, you can set aside some services that will only add to your cost and won’t necessarily attract more customers. These services include a bike rack, shower facility, phone booths, lounge areas and a fully equipped kitchen. All of these (and many more similar services) will surely make a difference, but they will also add to your initial cost. And, when you’re opening a coworking space, you need to tread carefully and take baby steps going forward, just as in any business.

Next Steps

When your coworking space is up and running, it’s time to reach a wider market. There is tremendous scope for scaling up after just a few months of opening a coworking space. The trick is to first assess your progress and then move on to expansion. Then, increase the value of your business plan by adding features and services that will attract more members and accelerate your marketing efforts. These three steps will help you expand and widen your work area.

The coworking business has upended the commercial real estate scenario. In countries where this trend is an emerging concept, opening a coworking space will be fruitful. In others, you may need to differentiate your business as there are already a plethora of coworking spaces available.  Happy coworking!