As telecommuting and freelancing become more common, coworking is turning into a viable alternative to working from home or a traditional office. Even in today’s digital age, having a physical place to work still matters. Beyond that, coworking spaces are as much about being around other people as they are about having that aforementioned place to work.
Cities like Riverside provide a thriving coworking culture as people crave social interaction, access to conference rooms and the ability to establish a better work-home balance. As a booming college town that is home to numerous start-up and e-commerce companies, Riverside residents realize that work in the new economy is meaningful, innovative, collaborative and fun. Those operating successful coworking spaces are already beginning to differentiate themselves into segmented market niches to meet the specific needs of a diverse range of workers.
Do you have a vacant retail space? Only operate a storefront a few days per week? Monetize this unused space and create new lines of revenue when business is slow or during your closed hours. Offering amenities such as private offices, meeting rooms, open lounges and cafes, allows users to work efficiently. It is a great alternative over working from home, with the benefit of community and connections that help your business progress.
If you are considering utilizing part or all of your commercial building to start a coworking space, the expert team at Stance CRE would like to guide you through the details and highlight things to consider. Our passion is in commercial real estate and our dedication is focused on creating a flourishing culture within our quaint, beautiful city so that Riverside, California becomes a hub for small businesses and entrepreneurs across the Inland Empire.
What Is a Coworking Space?
Coworking is an office-sharing arrangement between individuals and (sometimes) small businesses. In some cases, the arrangement is very informal whereas a business owner who owns or leases an office space that is too large for their needs then sublets desks and offices to others. Coworking spaces also operate as formal businesses, renting out desk and office space to freelancers, telecommuters and even business travelers.
These workspaces provide flexible memberships to remote workers and businesses. Due to this increased flexibility and new opportunities to network, coworking spaces appeal to a large demographic of users. Operation models vary, with some coworking businesses charging daily, weekly, or monthly rent, while others sell memberships that allow the member to make use of the workspace and its amenities. Coworking spaces usually do not utilize long-term membership contracts or leases.
In addition to offering office space and shared use of amenities, some coworking space owners actively encourage collaboration between members by sponsoring networking events or “getting to know you” websites that allow members to introduce themselves to one another.
The Rise of Coworking In Retail
As a retail owner, learning how you can further monetize your underutilized space can turn your vacant retail space into a super-profitable, vibrant coworking community. By offering professionals a new way they can work and interact, you can become the solution many in our community are searching for.
Companies like Walmart and Amazon have completely disrupted the retail industry by offering consumers new ways of purchasing goods. As a result, many local retail businesses have had to close their doors or have scaled back the need to lease storefronts in highly trafficked areas. Paying high mortgages on office or retail space in the modern era just does not seem to make much sense for many small business owners. Due to the impact of large e-commerce brands and increasing retail vacancy rates, there needs to be a “new use” for these retail locations. The trend toward coworking spaces seems to be on the rise for this very reason.
The Benefits of Turning Your Storefront Into A Coworking Space
If you already own or have invested in retail, by creating a coworking model that is complementary to your target audience’s needs means that you can turn your slow hours or closed hours into a source of revenue.
- You already operate a space to sell your products/services. By leveraging your current investment, you can maximize your opportunities by making money from workspace memberships and customer experiences.
- Creating a popup workspace during your closed or preferred hours, will allow you to build a loyal community by creating unique experiences around your space.
- Coworking can increase foot traffic to a building or retail space. Coworking presents a viable solution for vacant retail space by decreasing vacancy and driving additional foot traffic with a guaranteed daytime population. Coworking brands that also offer a coffee shop within their space, means that more passersby are likely to stop and enter your building.
Coworking Model
Not all coworking spaces offer the same membership. Below, we break down the three most popular space layouts below:
Open Space Coworking
As the name implies, this model mainly offers open desks, lounges and sometimes a conference room for members who need to have privacy. Memberships are offered for specific access to the shared areas, with the option to purchase a dedicated desk to store your belongings if you so need.
Coworking & Office Space
Not all members can work in open space. If the need for privacy is crucial, these users cannot utilize the open coworking model. The coworking and office model allows these customers access to their own dedicated, lockable space.
Shared Office
Unlike the traditional open space coworking model, the shared office model consists of 90% dedicated lockable offices with one smaller open common area. This model is more like a typical office that caters to smaller companies who want a suite.
What Are the Costs Involved in Opening a Coworking Space Business?
The startup costs associated with opening a coworking space business are manageable. The primary costs include leasing a commercial space and purchasing:
- Furniture
- Networking Equipment
- Decorations
- Miscellaneous Office Supplies (e.g. trash bags and toilet paper)
- Insurance
Who Is the Target Market?
The target market for a coworking space business is business owners and professionals with a focus on serving entrepreneurs, solopreneurs and small business owners in the local community. In a destination city like Riverside, your coworking space could cater to large corporations with traveling employees. Riverside is also home to 4 major universities, meaning you could expand to cater to graduate students, remote workers and freelancers.
Other industries and professionals that could be well-served by a coworking space include Software Developers, IT Services, Financial and Legal Services, Marketing and Advertising Services, and more. Developing a coworking marketing plan that communicates your services to the types of users it serves is best because it helps you identify avenues for future growth.
How Does a Coworking Space Make Money?
A coworking space business’ primary source of revenue is subscription fees, which clients pay in exchange for being able to use the space. Many coworking space businesses rent meeting rooms, offer classes and hold events for additional sources of revenue. Since the whole point of a coworking space is to provide flexible office solutions, most coworking space owners have multiple subscription options. Clients could pay by the day, week or month, with an extra charge for a dedicated desk, an office or a locker. Some spaces charge extra for use of a meeting room, while others including meeting room use in their standard fee.
With coworking locations expected to double worldwide by 2024, this is the perfect time to invest in a growing trend. Coworking spaces are continuing to trend and will soon become relatively mainstream. Coworking has become a global industry that can be as viable to big chains as it is to single, self-run locations.
Popular Revenue Streams
People collaborate in diverse ways and many need a location to perform a myriad of short-term and long-term tasks. There is a multitude of models to run a coworking space, but most include at least several options to monetize the space, the equipment and the human resources.
Membership Fees
Depending on how much privacy and liberty the coworker needs over the rented space, membership packages can include private offices, shared desks or dedicated desk options. Membership fees can be calculated at daily, monthly, quarterly or annual fees and can allow the member to use basic or more advanced amenities of the coworking space.
Membership Packages
This is an area where you can get creative. This option can vary based on the needs of the client. The more the member uses, the more cost-effective the package gets. A membership package can include benefits and discounts with restaurant, gyms, outdoor activities and even transportation services. These all meet the needs of the members and can be easily negotiated and incorporated into different packages.
Renting Amenities and Equipment
While your amenities could be free, you can also choose to charge for them. Premium conveniences like private audio or video call booths, individual lockers, social spaces, telephone lines, video and audio equipment, printers, computers, and even cloud storage for startups that need larger data resources.
Start a coworking space business by following these 10 steps:
- Plan your Coworking Space Business
- Form your Coworking Space Business into a Legal Entity
- Register your Coworking Space Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Coworking Space Business
- Get the Necessary Permits & Licenses for your Coworking Space Business
- Get Coworking Space Business Insurance
- Define your Coworking Space Business Brand
- Create your Coworking Space Business Website
- Set up your Business Phone System
How Stance CRE Can Help You
Typically, when we ask people what they do for a living, we ask where they work. We think about work and the workplace as synonymous. Lawyers work in a law firm and journalists work in newsrooms. Increasingly over the past decade, coworking spaces have begun popping up in areas around the country. Riverside is a city prime for such spaces.
Stance CRE can be a great resource regardless of which type of business owner you are. We have been adding value to business owners’ decisions right here in Riverside for years. We are not just market experts, we are your neighbors! We are a local business with local interests.
At Stance Commercial Real Estate, we live and breathe Riverside culture. We are not only working in the community, we live here… we love it and we want to help you succeed in it!
Call us today at (909) 772-1212 and let us help you decide which type of role is best for you!