5 Riskier Things to Keep in Mind When Creating a Coworking Space
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5 Riskier Things to Keep in Mind When Creating a Coworking Space

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Eliza Sadler

Coworking space culture is on the rise and property investors heavily consider switching their existing offices to coworking space. Some consider expanding and tapping into this market, whereas new players want to start off with the coworking space model. Just like any other investment, adequate due diligence is required before jumping the gun and making that decision. 

Probably it is the benefits that drew you to this business model but what are the downsides? However, just like any other business as well, there are risks associated with this business model. Here are the riskier elements to consider when creating a coworking space.

1. Limited Clientele to Your Center

When you are starting a coworking business, there are many pieces that need to be aligned and one of them is marketing. However, marketing coworking space is a bit difficult because you can’t generate quick money on impulse sales. Instead, you need to develop complex sales funnels and then generate leads before making a sale. 

That could result in limited clientele coming to the center you have developed. Also, other potential customers could be old school and believe in renting real office space instead of coworking. 

empty room at a coworking space

According to expert writers for a cheap assignment help site, convincing such customers can be a little bit challenging because you need to help them unlearn inaccurate doctrines about business management that are so deeply founded within them. This is not impossible, though, but it could limit the overall amount of customers you can get. Also, more time and effort are required to acquire tenants for the coworking space arrangement you have going on.

2. Unsatisfactory Service to Clients

With coworking space, there are also a lot of moving pieces when compared with regular office space rental. The reason why this entails the flexibility that comes with the coworking arrangement. 

For example, consider the amenities provided with regular office space rental. Since it is a fixed rental, there are certain benefits available to these customers, such as the use for meeting rooms and so forth. Coworking tenants might have to pay extra and those renting regular office space are given priority when booking such amenities. 

That could lead to unsatisfactory service to coworking clients and they could up and leave for a different facility, which is why it is important to evaluate the services and value-added benefits given to both regular office tenants and coworking tenants. From then, try to see how common ground can be reached to provide helpful services to both parties.

3. Experiencing a Huge Influx of Seasonal Customers

Many coworking individuals are either freelancers or self-employed individuals that are not based in a certain location. Some are seasonal workers that come to work on certain projects and leave until the next season the following year. 

Consider this example — if you are near a convention center with large exhibits each year, some could hire coworking space. They could be journalists covering the event or attendees that need some coworking space during that time. This seasonality brings uncertainty and some unexpected changes to your financial records. 

Therefore, experiencing a huge influx of seasonal customers could bring uncertainty into the business, especially when considering the fact that the business is reliant on that season or big event. 

If circumstances were to change, it would mean losing the customers altogether. To avoid this, you could thoroughly analyze how to make this seasonality extra money by drilling down on the target market you have chosen. Appeal to them and attract them as long-standing customers.

4. Strong Competition

Competition in the real-estate sector is no foreign concept because of all the investments poured into this industry. People recognize that real-estate can be a cash cow they can milk for as long as there are human beings on Earth. The competition gets a bit more rife with coworking space since it is an innovative idea and everyone wants to implement it.

Others that are pressing to implement this working model include large players in the industry. That could make you a grain of sand when compared to the giant-like enterprises. However, this can be mitigated by targeting a different crowd than the competition. Find a unique selling proposition and run with it.

5. Rising Rent Costs

If you do not own the property, the owners could increase the rent at their own discretion, which can be bad for business. Rising rent costs have never been good for business but this is especially true for coworking space providers. The businesses and freelancers working under your roof have budgets for a certain period. Increasing the rent and blowing their budgets could lead to losing the customers to cheaper competitors. 

You can mitigate this risk by ensuring that the lease agreement forbids the landlord to up the rent whenever. Instead, have a set time where rising rent costs are negotiated and if an increase is reasonable, the tenant should have enough time. That time could be used to properly give their tenants a heads up on what is about to happen.

The Bottom Line

The coworking property rental is not without its problems and as long as you work hard to mitigate them, this business model can be incredibly successful. The key is finding the target audience and your unique selling proposition. With those two elements in check, you can have a flourishing coworking space business with a lesser risk of failing.


The article was written by Eliza Sadler. Eliza is a professional journalist with extensive experience of 4 years working and is ranked as one of the best essay writers in her trade. She is a freelance writer and loves doing articles from various topic areas. Her motto is to deliver absolutely great quality and original work every time she is assigned a project. You can contact Eliza via email.

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