In the dynamic realm of coworking, it’s not uncommon for newcomers to view it as a simple “build it and they will come” property venture akin to self-storage or apartment complexes. Many embark on this exciting journey, touring coworking spaces, jotting down checklists, and naively believing they’ve cracked the code to success. Property developers often dive in, collaborating with architects and furniture suppliers, sketching out blueprints, all while rarely consulting experienced coworking operators. Why? Perhaps it’s the fear of rejection, the hesitation to ask seemingly trivial questions, or perhaps just a touch of hubris. After all, coworking is merely about offering office space for rent, right?
However, here’s the kicker: mistakes in coworking can be costly. Newcomers often grasp the magnitude of their errors only when they’re buried under towering debts or left with an empty, uninspiring space far from their financial goals. Drawing from our extensive experience, DenSwap has identified a series of common, expensive, yet easily avoidable mistakes made by property owners looking to launch a coworking space or transfer it to an existing operator via a management contract.
Mistake #1: The Wrong Furniture Size
Coworking newcomers often fall into the trap of mirroring their oversized home office setups or large private offices. They order desks that are a colossal 36 inches deep and 60 or 72 inches wide. These imposing desks may seem impressive, but they tend to deter potential tenants and create the illusion of cramped spaces. A large desk can transform a 140-square-foot four-person office into what appears to be a much smaller two-person space. Consequently, the rental price plunges, resulting in the office generating approximately $5,400 less in revenue per year. Ouch!
What’s more, larger desks limit a room’s adaptability to cater to a diverse group of members throughout the year. Ideally, most coworking desks should measure 24 inches by 48 inches, with a potential recommendation of 30 inches by 48 inches in specific markets. Crucially, desk storage should never be fixed to the desktop but should comprise movable storage pedestals with cushions on top, providing temporary seating. This flexibility is vital as coworking spaces require frequent furniture rearrangements, and commercial furniture can be exceptionally weighty. Fixed desk storage can become an obstacle to maneuvering in and out of narrow doorways, introducing inefficiencies and potential obstacles for members.
Furthermore, many members today favor paperless environments and prioritize spacious legroom over storage. If desk storage is attached to the desktop, it renders the entire desk unusable, necessitating the removal of the desk and the potential loss of a sale. Desks themselves can be quite pricey, ranging from $450 for a desk with pedestal storage to $1,300 for most commercial-grade furniture. In a 7,000-square-foot space, workspace furniture, including chairs, could set you back anywhere from $90,000 to $130,000.
The combination of furniture replacement costs and lost revenue can serve as a painful lesson for first-time coworking entrepreneurs. Regrettably, we’ve seen coworking spaces falter due to this seemingly simple mistake.
Mistake #2: Incorrect Office Size Allocation
Private offices are not only costly to construct but are also challenging to modify once a space is operational. Too often, individuals make educated guesses about the number of single-person offices, four-person offices, and conference rooms based solely on intuition. Rather than relying on data-driven insights gleaned from market research, they attempt to replicate what they’ve seen elsewhere or make their pro-forma financials fit.
Private offices in coworking are a meticulous game of inches. A 6-foot by 11-foot office, for instance, can be marketed as a two-person office, renting for $800, but a 9-foot by 11-foot office becomes a three-person office, with a rental rate of $1,100 to $1,200. It’s not just about square footage; dimensions and desk layouts are equally significant. If you’re already committed to the wrong furniture sizes, as previously discussed, your formula will be inherently inefficient.
Achieving the perfect office size allocation might be challenging, but too often, spaces end up with an abundance of offices that aren’t the right size, leading to discounted rates and missed opportunities worth tens of thousands of dollars each year.
Coworking is a complex hospitality business, and decisions regarding furniture and office sizes represent just a fraction of the intricate choices faced by first-time coworking entrepreneurs. As coworking consultants, we’re dedicated to collaborating with property owners, utilizing cutting-edge software-as-a-service (SaaS) solutions to perform feasibility studies and connect them with operators possessing the right market positioning, branding, and operational processes to foster thriving communities within their spaces via management contracts. If you’re a property owner interested in transforming your vacant space into a coworking hub, we invite you to explore our SaaS platform and schedule a consultation with us. Your journey toward coworking success begins here.