With the mass exodus from cities and the boom in work from home, is now the time to invest in suburban co-working spaces? If you think it is, you'll probably want to know how to get started.
If WeWork can do it
Probably the most famous, or shall we say infamous, co-working space is WeWork. In case you didn't know, there was some turbulence over there in 2019, leading to the ouster of founder Adam Neumann. And then came the coronavirus, another blow to a company based on people coming together during a time of stay-at-home orders. But the company survived that too. If WeWork is still in business after those huge challenges, this points to a viable market.
Flexible office space/flexible jobs
The coronavirus has taught us a new way to adapt to societal changes, including the workplace, and that way is to be flexible. Millions of employees who started working from home might never return to a downtown or main office. Those millions would be a potential market for co-working spaces.
Flexibility would probably be a good way for a new co-working space to brand itself. Co-working spaces typically focus on short-term leases and move-in-ready office space. This suits businesspeople whose companies, still in the midst of the coronavirus, haven't made long-range plans.
When the pandemic is under control, companies, perhaps gun-shy from being burned again (let's hope not another pandemic), like the idea of being able to quickly get out of a lease. Many would be willing to pay a premium for a short-term lease as a better alternative than being stuck in a traditional long-term one.
Co-working in the suburbs
Why set up in the suburbs? People are moving from working in big cities to working in the suburbs where they live. Workers want to be more spread out and not so centralized anymore after the pandemic, which is what smaller co-working offices provide. The name for this business model is "hub-and-spoke" -- where a company has a headquarters in a big city and several satellite offices in the suburbs.
Things to know before starting a co-working business
Co-working spaces tend to be most effective when a community is built so that people can collaborate. A big draw, besides having a decent workspace, is the sense of community people get from co-working. This community aspect also serves as a lead generation tool, as new members might invite friends or peers to the co-working space. Here are some more things to know and do.
Conduct market research
There's a market for folks who'd be interested in using a co-working space. The latest news, however, as of February 2021, is not great for co-working: WeWork has cut prices, and rival Knotel filed for bankruptcy. So how does that translate into filling up your co-working space? It requires some market research.
Study the competition
- Perform an online search by looking for "co-working near me." You also might want to search for "flexible office" or "shared office."
- Read your competitors' websites to determine how they market their businesses.
- Differentiate your business. Once you have an understanding of your competition, determine how you can fit into the space. Figure out something you can offer that your competitors don't, your unique selling point (USP). Maybe your space can also serve as an incubator or an event venue (when things start opening up again).
Advertise your business
- Put out feelers. Create a group on social media and see how much interest you get from remote workers and freelancers.
- Visit local coffee shops. If you see people working there, consider putting up a flier about your co-working space.
- Market to large companies that don't have satellite offices. They might want to offer flexible space to staff.
Determine what to charge
- As you study the competition, look at their pricing models. Only charge more if you position yourself as top-of-line with amenities that warrant the higher price. Otherwise, after determining your costs, you might want to charge less than your competition if that's possible to do and still make money.
- Determine how to charge. You might offer discounted memberships and higher drop-in rates, for example. You might also rent larger spaces for a higher price and set them up as conference rooms.
The Millionacres bottom line
People are using co-working spaces, but it remains to be seen what the future holds for the industry. Many workers want or need a so-called "third office space": a place to work that's not at company headquarters and not at home.
A third space is a small office facility close to home that's as safe as working from home but where people can be as productive as they are in the main office. Whether to invest in or open one will take some research on your part and an assessment of your risk-tolerance level.