In the ever-evolving landscape of the modern workplace, coworking spaces have emerged as a frontrunner. They offer flexibility, foster collaboration, and create a sense of community, making them highly attractive for professionals across the board. But for property developers, the burning question is: what’s the potential return on investment?
Through an analysis of real-world coworking pro formas, we’ll shed some light on the potential of these ventures.
The Essence of a Coworking Pro Forma
A pro forma is essentially a projection of expected revenues and expenses. It gives developers a glimpse into the profitability of a coworking space, aiding in decision-making and risk assessment.
Dissecting the Revenue Streams
Using our sample 20,000 sq ft and 10,000 sq ft coworking spaces as a benchmark, here are the main revenue streams:
-
- Private Office Memberships: Premium pricing due to privacy and exclusivity.
-
- Coworking Areas: Shared spaces catering to a variety of professionals.
-
- Meeting Rooms & Event Rentals: Rented out on demand.
-
- Additional Revenue Streams: These include virtual memberships, day passes, locker rentals, and more.
Understanding Expenditures
Here’s where the money typically goes:
-
- Rent: Often the most significant overhead.
-
- Insurance & Property Taxes: Essential for protecting the investment.
-
- Salaries: Compensation for managerial and operational staff.
-
- Utilities & Maintenance: Keeping the space running smoothly.
-
- Marketing & Advertising: Attracting and retaining members.
Optimal Space Allocation: Why It Matters
The success of a coworking space isn’t just about how many members you can cram in. It’s about crafting spaces that resonate with modern professionals:
-
- Striking the Right Balance: Maximizing revenue per sq ft while ensuring member satisfaction.
-
- Amenities & Communal Areas: Essential for member satisfaction and retention.
Scaling: The Bigger Picture
Comparing our 10,000 sq ft and 20,000 sq ft samples offers some insights:
-
- Economies of Scale: Some costs may not increase proportionally with size.
-
- Adjusting the Offering: Larger spaces can cater to different market segments.