7 Tips To Build A Successful Coworking Business In 2025

Building a successful coworking brand is challenging. This business has the physical limitations of real estate, the unpredictability of a high-velocity business, and the complexity of a hospitality company.

It can serve many customers, from individual freelancers to the largest global enterprises. It’s also a complicated community-building exercise that involves creating an environment where all these customers can work together.

In addition to that complexity, 2024 was the fourth year since the perfect storm, which unleashed unprecedented office utilization challenges, high inflation, super-high interest rates, and a completely unpredictable business climate.

Yet, the best coworking brands are thriving! They have done a lot of things right. We studied hundreds of coworking and flex space businesses and found the top 7 traits of the most successful brands—the ones with the highest occupancy rates, the best retention rates, growth, and profitability.

Let’s dive in.

#1 Define a Clear Ideal Customer Profile (ICP)

The best coworking brands have an extremely well-defined Ideal Customer Profile (ICP) down to the smallest detail. Some target VC-funded, seed-stage tech startups with 3-20 employees, while others focus on mid-aged, successful solopreneurs working in creative industries.

The ideal customer profile defines your most valuable potential customers’ firmographic, environmental, and behavioral attributes. It is developed through both qualitative and quantitative analyses. You can read more about it and follow a well-established framework by Gartner here.

The ICP aligns marketing, sales, service, and executive teams with the highest-value customers. It also focuses on scalable and repeatable strategies and tactics to engage and convert top accounts. Finally, it drives target account list creation, segmentation, organizational structure, and other key activities!

Having a very clear ICP in coworking is essential because, as mentioned above, potentially everyone can be your customer – from a freelancer to a multinational corporation.

You don’t want to waste time on the wrong customers instead of chasing more of the right customers. Having more of your best customers (and less of your worst) will help with retention, occupancy rates, growth, profitability, product offering, and everything in between!

You can start building your ICP by:

1. Creating a unified spreadsheet with all the data you can collect for your existing members.
2. Talk to your customers and try to learn as much about them and their decision-making as possible.
3. Analyze the results and build assumptions.
4. Validate and iterate until you feel you nailed it by observing!

Knowing your best customer (ICP) will allow you to polish and perfect your best product further. We discuss creating an ideal customer profile in our extensive guide on SEO for coworking spaces.

#2 Have a Hero Product

The best and most successful coworking space companies we have evaluated have a standout product. They are famous for that one specific product, which helps them sell more of their other products.

For example, some spaces offer the best event spaces in town, which will help them sell more desks and offices. Others offer the best day passes in the city.

As a result, they can more easily sell their offices and meeting spaces. Some have outstanding designs and character for their buildings, and others have an incredible community.

Of course, your killer product can offer all services at the best price.

Your Ideal customer profile (ICP) should be able to easily connect your brand to your hero product or feature of your space! Everything gets so much easier after that.

#3 Win the Local Market

The most successful coworking spaces win their local markets first! They usually saturate their small town or city well before expanding to other cities, states, or countries.

Almost all great brands start by winning their local markets, opening three to five or more locations in a city, and completely dominating it before they move on.

The power law applies very well here – the dominating brands in a local market get the majority of the opportunities.

Researching our customer base shows that having more locations in a city increases the lead flow exponentially.

In difficult times, the best strategy is to focus! Focus on your core market and win it! If you cannot do it alone, you can always hire a coworking consultant to help you out.

And here, you can learn more about the current state of the coworking space industry.

#4 Go Small-town or Suburban

It’s no secret that the Central Business District and the Financial Districts struggle the most in the post-pandemic world. However, the Suburban spaces have been doing very well lately!

These are both very good reasons to expand in small towns. However, the main reason is that you will inevitably have less competition in the early days and will be closer to where people live.

All research out there is pointing out that the main reason for people to work from home is not that they don’t like the office in general. Or that they like working from home so much.

The problem is that people hate the commute. People hate spending hours in their cars.

So, if your coworking space is near your ideal customer profile’s home – you have a win and a much better chance to convert them to customers.

2025 will be the year of small-town and suburban locations. Still, here’s a great guide on what to consider if you’re looking to start an urban coworking space.

#5 Just be Profitable

I know it sounds easier than it is. However, in 2025, you have to be profitable. The best brands out there are profitable. Some of the best-performing coworking space operators are generating a 20% EBITDA margin on an individual location basis.

This is a very healthy margin for a hospitality business. It’s challenging, but it’s doable.

• Increase your topline by nailing your ICP, polishing your hero product, and winning your local market.
• Improve the bottom line by renegotiating your base rent, finding operating efficiencies, utilizing AI in sales and marketing, investing in good tech, etc.

Coworking can be profitable!

#6 Sign Better Deals with Landlords

The physical location remains the most significant cost and crucial element of a coworking space, which will remain true in 2025.

There are many details to consider when signing a new contract with a landlord. Our research shows that the best brands are very good at negotiating great deals with their landlords. They usually align the incentives well and turn their landlord into a strong partner. Some of the critical elements of the contract include:

1. Type of contract – management agreement vs. lease agreement or some form of hybrid.
2. Specific terms for getting out of the contract—this is also a very important term, as some locations don’t work, and in that case, you should be able to shut them down.
3. Fit-out and renovation costs—In many cases, you should be able to negotiate with the landlord how to share the costs of the fit-out and renovation of the flex space.

#7 Secure the Right Funding

2023 and 2024 were the worst years for funding any type of business. Hopefully, next year will be a little better.

There are different funding paths for coworking operating companies.

• VC (Venture capital) – that’s arguably the worst funding for a coworking space. Almost all VC-backed coworking spaces failed, with WeWork and Knotel at the top. The main reason is that VC money is tied to high-growth, high-margin, mostly tech businesses. This is very hard to do in real estate or hospitality, quickly creating a significant misalignment between the company and the investor.
• PE (Private Equity) – PEs can work better for coworking and flex spaces than VCs. There are many flavors of PEs; some can be more patient and support strong coworking operating companies.
• Family Offices – Often, family offices can be a good investor in a coworking business. They can provide patient capital suitable for hospitality and real estate brands like coworking.
• Local Councils – oftentimes, regional councils can provide additional funding to coworking spaces when they are opening locations in the local area. Many councils can recognize the massive splash effect of good coworking spaces on an area. So they are more and more willing to help fund new openings!
• Debt – debt is always a good option to finance a profitable coworking operating business. 2023 and 2024 were hard and 2025 will likely be almost as hard; however, debt is always an option if you have good company!

When securing funding, the most important element is always to have a very good alignment between your business and the investor!

Check out this article to learn how much it costs to start a coworking space in 2025.

In Conclusion

Building a thriving coworking business doesn’t have to be complicated. You need to be well-educated and plan for success.

The good news is that at OfficeRnD, we have the right tools and resources to support you along the way:

• Gain invaluable, practical insights about the coworking business with the “Flex Academy: Coworking Bootcamp” video series we created with the experts from “Everything Coworking”. It’s free.
• Check out OfficeRnD Flex – our coworking and flex space management software that connects members, operators, and owners in over 2,500 locations worldwide. We help flex operators scale revenue collection through native integrations, billing automation, and a modern member experience. We can help you, too. Book a live demo here.

Wishing you a very successful, less stressful, and incredible new year!