How Much Does It Cost To Start A Coworking Space? [2024]

The coworking space market could be worth $34.99 billion by 2027. Despite this estimate, the recent bankruptcy of coworking giants like WeWork raises a question: Why are some coworking spaces thriving while others struggle to survive?

The answer is simple. Coworking companies making a profit understand how to balance the costs of running a coworking space with maximizing their revenue stream.

So, how much does it cost to start a coworking space and set it up for success? In this article, we’ll take a look at all the important details.

Quick Answer

On average, it costs $100,000+ to start up a coworking space. This includes expenses such as rent, renovations, amenities, and coworking management software.

Why Start a Coworking Space?

According to a 2022 study, 74% of employees want to work outside the office at least three days a week.

As a result, not only are workers seeking collaborative spaces, but companies are, too. This indicates the growing appeal of taking work outside the traditional office setting and bringing flexibility to the corporate world.

The Biggest Benefits of Opening a Coworking Space in 2024

• High demand and growth: With over 1 million people using coworking spaces in the US, more employees, remote workers, contractors, and entrepreneurs are starting to treat coworking spaces as “musts.” The coworking space sector is booming and is projected to grow significantly in 2024 and beyond. See this on-demand webinar for more insights on that.
• Considerable profit margins: Maximizing space, reducing overhead costs, and offering different membership pricing tiers give companies substantial profit margins.
• Real estate investment: Coworking spaces are an investment in real estate. As such, companies that use them could see potential returns if they sell the business later on.

Given coworking spaces’ high demand and stable profit growth potential, opening one in 2024 can be an incredibly lucrative investment.

How Much Initial Capital is Needed to Start a Coworking Space?

Commercial buildings are currently traded at approximately $124–$132 per square foot. This means you’ll likely need at least $500,000 as your initial investment to get started in the coworking space game if you’re looking to purchase a property.

However, the initial capital needed to start a coworking space also depends on the following factors:

• The property’s location
• The property’s size
• Market conditions

Sorting out your coworking space’s finances before getting started helps you develop a clear coworking space business plan to achieve maximum profitability within your first two years of operation.

What are the Different Costs Associated with Starting a Coworking Space?

The exact cost of starting a coworking space can vary depending on your space’s setup and any specific requirements.

For example, some managers of coworking spaces choose to allocate 65% of the space to dedicated desks, while others reserve 54% for private offices to rent. Your structural and design choices will significantly impact the initial cost of your space setup.

Here’s a list of specific costs you’ll need to consider when starting a coworking space:

Rent

Average cost: $2,163–$7,000 per month

Rent is the most significant expense when starting a coworking space. The cost of it isn’t just a flat rate but typically includes the following fees:

• The base rent
• Utilities (electricity, water, and gas)
• Initial bond
• Maintenance or strata fees

Take The Quantum Terminal, an Australian coworking space business in the heart of Haymarket in Sydney, Australia. A 140-square-meter office space in Haymarket is currently advertised for about $1,621 per week.

This means that The Quantum Terminal could be spending $7,046 per week on base rent alone, plus an additional $7,046 as a bond, bringing their total to $14,092.

Sure enough, funding the entire business venture could also be a substantial cost to factor in. Check out this article for more information on funding.

Structural Renovations

Average cost: $465-$518 per square foot in the US.

Substantial renovations may eventually be necessary for you to elevate your property’s value.

These may include:

• Wall restructuring
• Foundation repairs
• Space extensions

But the expenses don’t stop there. If you want professional help planning and executing amendments, you could pay up to $15,000 for a structural engineer, in addition to an hourly fee of $100–$250 and a 5–10% construction fee.

Design and Office Furniture

Average cost: $1,000–$1,500 per square meter

The overall cost of a coworking space’s design and office furniture depends on how much you want to transform the space.

For example, the package in a comprehensive “fit out” may include changes like:

• New desks and floors
• Updated desk chairs and couches
• Modern lamps and other lighting

Your best option in this scenario is to seek out a professional interior designer.

For example, the NeueHouse, a coworking space in Los Angeles, collaborated with interior architect Sarah A. Abdallah to give her space an elegant touch.

Technology and Infrastructure

Average cost: $2–$4 per square foot + equipment costs

You’ll need a robust networking system in your coworking space to ensure seamless connectivity. This investment encompasses not only the networking system’s cost but also installation and contractor call-out fees.

Plus, it’ll require:

• Desktop computers and monitors
• Printers and scanners
• Video conferencing technology

Although investing in more advanced technology may be a significant initial outlay, it can lead to great returns and enhance the value of your coworking space.

Insurance Coverage

Average costs: $340.75 per month for basic coverage

It’s essential to have comprehensive coverage for your coworking business to protect the property itself and guard against work-related accidents, theft, or loss of income. This can encompass various types of coverage, such as the following:

• Data security and privacy
• Fire and physical safety
• General liability and asset insurance
• Property insurance

Ensuring users’ safety and security in the space should also be a priority. This means investing in access control for entry points and installing high-quality security cameras.

Legal and Administrative Setup Fees

Average cost: $200–$1,000 per hour for lawyer fees

When setting up your startup coworking space, you’ll need to consult with legal experts to ensure you’re legally compliant and protected.

Legal requirements include the following:

• Registering the business structure
• Getting the proper zoning permits
• Crafting the lease agreements
• Ensuring you’re compliant with taxation policies

Discussing your plans and concerns with an experienced lawyer is crucial to ensuring your operations will be protected from potential liabilities.

Amenities, Maintenance, and Office Supplies

Average cost: Varies depending on the options chosen

The average cost for amenities, office supplies, and mandatory services is more challenging to calculate, as it varies depending on the services you offer.

For example, you’ll need to consider offering the following:

• Complimentary coffee and tea
• Cleaning services
• Vending machines
• Water dispensers
• Parking spaces
• Cleaning services

While these coworking space costs may seem small, they can add up very quickly. For example, a commercial cleaner for a 1,000–2,000-square-foot property can cost $200 per working day or $4,600 monthly.

Marketing and Branding

Average cost: $22,260 (or 5% of your revenue)

Marketing and branding are often overlooked aspects of coworking space development. But if you aren’t actively promoting your coworking space early on, how will potential members find their way through the door when you launch your business?

Marketing and branding expenses you’ll have to consider include the following:

• Search engine optimization
• Social media advertising
• Email marketing
• Writing newsletters

If you’re looking to maximize your marketing, you might also consider partnering with a digital real estate-specific promotion platform, such as AIM Digital or realtor.com. It’s also highly beneficial to learn how to do SEO for coworking spaces to maximize your digital marketing efforts.

Coworking Space Management Software

Average cost: $259 per month

All startup coworking spaces should invest in a robust coworking management platform to automate operations.

Enter OfficeRnD Flex.

OfficeRnD Flex is a next-gen flex space management platform helping coworking owners and operators automate billing, make data-driven decisions, and deliver best-in-class member experiences.

OfficeRnD Flex also offers various pricing tiers, including monthly or yearly subscriptions, to align with your specific requirements.

The best part is that currently new space owners can benefit from the OfficeRnD Flex Startup program and apply for 20% annual discount on the OfficeRnD Flex starter plan.

Can a Coworking Space be Profitable?

Yes. By diversifying your income streams and maximizing space utilization to accommodate as many paying members or one-off users as possible, a coworking space can be a sustainable business that leads to considerable financial success.

You can earn money through your coworking space by charging for the following:

• Day passes and desk hire
• Amenities and equipment rental
• Membership packages
• Meeting room or conference room hire

Like any business, flexible office spaces can be profitable, but only when managed well.

Take, for example, The Commons, a coworking space company that earned $44.6 million in revenue last year. They built an empire by harnessing data-driven decision-making and knowing how to make their space work to generate more revenue.

The biggest lesson from profitable coworking spaces like The Commons is that efficient space utilization and data analytics are key pillars of successful coworking spaces.

OfficeRnD Flex offers an excellent space management solution for new individuals looking to enter the coworking space. It provides on-the-go management tools for you to track and store critical data in one centralized location.

Additionally, here is an example of a coworking rental contract to give you an idea of what you can expect when you embark on this venture.

Not only that, but OfficeRnD Flex also offers premium features, like automated bill collection and late fee reminders, a booking platform, and real-time data reports highlighting the areas of your space that coworking members are using and which sections are being underutilized.

How Much does it Cost to Start a Coworking Space? (the Real Answer)

The answer to “How much does it cost to start a coworking space?” isn’t one-size-fits-all. It depends on the foundational elements of your coworking space, such as the property you’re renting, where the building is located, and how much renovation and design work the space needs. How well you manage your resources, maximize your office space, and create multiple revenue flows are also factors.

Improve Your Coworking Space Business With OfficeRnD Flex

When starting out, choosing the right coworking management software is crucial for success.

With a customizable software platform such as OfficeRnD Flex you can:

• Create experiences that members will love
• Get paid faster with less stress
• Scale operations through integrations
• Boost revenue per square foot and offer Hybrid services
• And more

Book a live demo with one of our workspace experts today to learn more.

FAQ

Why Do Coworking Spaces Fail?

Coworking spaces fail for various reasons. Common ones include poor location choice, inadequate market research, high operating costs, lack of community engagement, ineffective management, and failure to stand out from competitors.

These spaces can also be impacted by external factors, such as economic downturns and unforeseen events like the COVID-19 pandemic.

How Much Does a Coworking Space Cost Per Day?

The daily cost of a coworking space can vary based on its location, facilities, and service. Rates typically range from $30–85 per day, although premium passes may cost more.

How Profitable is a Coworking Space?

The profitability of a coworking space depends on several factors, including location, demand, pricing strategy, and the range of services offered. Successful coworking spaces can achieve high profitability by maximizing space utilization, offering flexible membership plans, and providing value-added services such as networking events, workshops, and access to business tools. Effective management and marketing strategies are crucial to attracting a diverse member base and ensuring steady revenue streams.

What is Needed to Open a Coworking Space?

Opening a coworking space requires a strategic location that appeals to your target market, a well-designed layout that accommodates different work styles, investment in reliable technology and high-speed internet, and comfortable furniture. Additionally, securing necessary permits, creating a strong brand identity, and developing a marketing plan to attract members are essential steps. Offering a mix of private offices, open work areas, and meeting rooms, along with community-building activities, can set your space apart.

How Much Does it Cost to Build a Workspace?

The cost to build a workspace varies widely based on location, size, design complexity, and the level of amenities provided. For a basic office setup, expenses may include rent, furniture, technology infrastructure, and utilities. High-end or specialized workspaces, such as those requiring advanced IT equipment or customized interiors, can significantly increase costs. Initial outlays can range from a few thousand to several hundred thousand dollars, depending on these factors and the desired capacity and functionality.