The concept of coworking has revolutionised the traditional workspace model by offering a shared workspace where individuals and businesses work in a collaborative environment. In recent years, coworking spaces have experienced a rapid growth rate globally. The success of coworking spaces has been driven by several factors, including the rise of remote work, the adoption of hybrid work culture, the need for flexible workspaces, and the changing attitudes toward work and the workplace.
Coworking spaces are becoming a lucrative business model for landlords and franchisee micro-entrepreneurs. By renting out unused space, landlords can raise the value of their properties, lower vacancy rates, and earn a good income. In addition, micro-franchisee entrepreneurs can launch businesses with low startup expenses using a well-known operator brand and a business model. Moreover, landlords and franchisee micro-entrepreneurs can make informed decisions about the possibility of coworking as a successful business model by being aware of the advantages of the practice.
The coworking industry in India has experienced significant growth in recent years, with flexible space stock reaching almost 47 million square feet in the first half of 2022. It is expected to exceed 80 million square feet by the end of 2025. With a surge of new coworking spaces opening, the critical question is how quickly these spaces can break even.
To launch a coworking franchise in India, an initial investment of Rs 20 lakh to Rs 1 crore is required, with space ranging from 2500 to 10,000 square feet. Hence, various micro-entrepreneurs are entering the space and pouring in the capital to open a franchise; opening a coworking space franchise offers several benefits to the owner.
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Building a well-known, trustworthy brand could be an arduous task at times, requiring a significant amount of effort and money. However, a franchise model offers one to be associated with well-known brands that already have loyal customers, thus reducing the marketing expenditure significantly. Additionally, the owners have access to training and guidance from the industry experts themselves from the parent brand. This further saves time and money in pursuing market research.
Here’s a look at how coworking spaces are turning out to be a profitable business-
Generating Revenue from Underutilized Space
One of the main factors contributing to coworking’s growth as a profitable market for landlords is the ability to monetise unused space. Many landlords face difficulties filling vacant or underutilised spaces in their properties. On the other hand, coworking spaces allow you to use this space, reduce vacancy rates, and increase the property’s value. Due to the flexibility of coworking spaces, landlords can divide larger rooms into more manageable units. Thus, coworking spaces are a great way to supplement your income using communal amenities such as kitchens, conference rooms, and printing services. This means landlords can maximise their investments while earning income from various sources.
Low-Cost Entry Point
Franchisee micro-entrepreneurs seeking to break into the real estate sector find coworking spaces appealing. The franchisor offers a turnkey solution that includes branding, marketing, and business operations, allowing franchisee micro-entrepreneurs to launch their own company with low initial expenses. Thus, coworking franchises are the perfect solution for business owners searching for a low-cost entry point into the real estate industry. Moreover, franchisee microbusiness owners can benefit from an established brand and business approach, which makes it simpler to draw clients and make money.
The Rise of Remote Work
In recent years, remote work has become popular as more companies implement hybrid work models that let workers work from home or in coworking spaces. These coworking spaces present an enticing alternative for remote employees who want to work in a professional setting but want to avoid the expenses, terms and conditions of a standard office lease. In addition, these spaces are a desirable alternative for remote employees since they are adaptable, inexpensive, and offer various services.
Flexibility and Customization
Another essential element promoting the expansion of coworking spaces is flexibility. Customers can tailor their workspace requirements by choosing from various flexible lease choices available at coworking facilities, including daily passes and monthly memberships. Customers can work whenever and wherever they want because of this flexibility, which gives them the autonomy and control that is missing in conventional office settings. Additionally, coworking spaces provide various customization choices so that clients can select the workspace that best meets their requirements. Some coworking spaces offer many workspace alternatives, including private offices, open workspaces, and assigned desks.
Community and Networking Opportunities
The sense of community and networking opportunities offered by coworking spaces are among its most significant advantages. Different people and businesses come together in coworking spaces to foster a supportive and collaborative environment. These networking events and other social gatherings are often held in coworking spaces, allowing customers to meet people and create connections. In addition, these gatherings offer clients a venue for idea exchange, project collaboration, and network building.
Amenities and Services
Coworking spaces provide a variety of perks and services, making them a desirable option for modern professionals. These include: high-speed internet, printing and scanning services, meeting areas, Chill Zone, and cooking facilities. Certain coworking spaces provide additional services, including IT, mail handling, and administrative support. These features and services improve the usability and effectiveness of coworking spaces for consumers, generating value for landlords and franchisee microbusiness owners.
Final Takeaway!
Many coworking spaces operate by leasing office buildings long-term from property owners, which requires significant capital investment to develop the interior, purchase furniture and equipment, and hire staff. This presents a challenging business model as clients occasionally occupy the space throughout the year. As a result, some coworking spaces are turning to franchise models, which can be more profitable due to lower costs and broader distribution.
(By Lavesh Bhandari, Co-Founder & CTO, Qdesq)