Hi "Orchestrator" --
I suspect you'll hear from a variety of folks and will see a wide
variety of coworking realities, so here's mine...
I own a small commercial building in a small suburb outside of
Boston. I've wanted to establish a coworking type of space for some
time, but never felt there was a sufficient critical mass of users in
the community to support it. I believe suburban / rural locations can
be challenging to this concept for a variety of reasons.
About 1,000 s.f. of space opened up in my building last March. I had
a couple of prospective tenants fall through, so decided to forge
ahead with creating a coworking space despite my reservations. Here
is how this endeavor is working so far ::
1. The legal entity that owns the building is leasing space to the
entity that operates the coworking facility. The rent being paid is
slightly less than my desired "market rate," but within the range of
what I would have accepted from a well-qualified independent tenant --
and who could be more well-qualified than me ;-). Obviously, there's
a little more flexibility involved because the ultimate owner of each
entity is one in the same, but I'm a stickler for having my businesses
stand on their own... So from the perspective of wearing my "landlord
hat," I have a commercial space that is generating revenue for me, and
I'm happy.
2. The entity that owns / manages the coworking space is essentially
my primary business (which happens to provide services to start-ups
and small business owners). My primary business does not pay rent,
but manages the space in exchange for use of the space. The
equivalent cost is approximately $500 / month. If I had to hire a
person to perform management functions for the coworking space, it
would probably be a part-time role for which I'd expect to pay about
$1,000 / month (it's a relatively small space). So while the rent
for management exchange favors the coworking space from a market value
standpoint, it's not a huge discrepancy.
3. Since starting in September, I have been able to secure about 4
regular coworking members (some full-time, some part-time). I did a
fair amount of outreach to folks I thought would be interested prior
to opening. Excluding the rent-for-management relationship, the space
is about $650 / month shy of being at a break-even. Not too shabby
for a horrendous market and very limited marketing.
4. I have chosen to bootstrap this endeavor, so I've "recycled" some
furnishings from prior business operations and have kept my initial
investments for additional equipment and furnishings, fairly minimal
(IKEA is my friend) -- about $2,500 so far (again, it's a small
space). If I had to purchase everything from scratch, I still could
have kept the total investment below $5,000. I expect to add to the
furnishings as we add members. All this said, the space and
furnishings are still pretty high-end.
5. It will take just 1 additional full-time tenant plus 1 additional
part-time tenant for the space to break-even. Should the space ever
attain operating capacity, it would show a profit of between $1,500 -
$2,000 per month. From my perspective, this would constitute a
profitable endeavor.
Though the community I am creating could be "profitable" as defined
above, it has already been (and will remain) "profitable" in so many
other ways that aren't measured by the numbers above.
Could you create a space that could be profitable on a stand-alone
basis? Probably, but I believe the greatest value will always lie
within communities driven by the unique benefits that come from
nurturing the relationships within their 4 walls.
Just my 2 cents...
Good luck with your adventure.
Cheers,
----------------------------------------------
Jack Speranza
Principal, Main Street Ventures
15 Main Street, 2nd Floor
Hopkinton, MA 01748
T: 508.848.5440 x101
866.472.1035 x101
F: 508.858.5441
http://mainstreetventures.com
http://zenbungalow.com
----------------------------------------------
On Jan 13, 12:56 am, Orchestrator <[email protected]> wrote:
> Hi all,
>
> As I'm reading through all the coworking discussions, I have a few
> questions:
>
> 1) Are you operating your coworking facility/office space solely as a
> "for profit business" or are you just gathering a bunch of like-minded
> people to help share in the cost of the rent?
>
> 1a) and did you receive a great deal from the landlord that you know
> very well (friend or family) because vacancy rates are probably at all
> time high?
>
> While I've heard some people with a coworking office/business say, "We
> are profitable"...
>
> 2) If so, are you doing this 100% as a for profit business and paying
> yourself and other employees (not including spouse, children or other
> family members who will work for peanuts) from this coworking
> business?
>
> 3) Or, are you having to run another business within the coworking
> office space (say a marketing consulting services company), thus
> combining both incomes to satisfy the "take home pay" range in order
> to support you and your family?
>
> I'd be curious to hear from those who are Coworking as "True Coops"
> and those who are in it as a "For Profit" business.
>
> Right now, I'm on the fence.
>
> Thanks!
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