Are Coworking Spaces Profitable?

Coworking space profitability has been a subject of conversation since the industry first began nearly two decades ago. 

In this Coworking Quick Tip, we’ll break down the percentage of coworking spaces that are profitable, the average profit margin of coworking spaces, and which coworking spaces are most (and least) likely to be profitable.

For more information on generating revenue in your coworking spaces, we recommend checking out our guide to the cost of starting a coworking space.

Are coworking spaces profitable?

According to data from 2023, roughly 46% of coworking spaces are profitable. That means just under half of every coworking space that opens will reach profitability. Considering around 65% of small businesses across all industries are profitable, profitability is considerably more rare in the coworking sector.

It is important to note however that the number of profitable coworking spaces has been trending upwards over the last 10 years. As the industry matures and operators gain knowledge of best practices and standard operating procedures for how to run a successful coworking space, we expect profitability to become more and more within reach for operators.

What is the average profit margin of coworking spaces?

The average profit margin of a coworking space is 19.7%. In 2019, the average profit margin of a coworking space was 17.4%. This represents a 13.2% increase post-pandemic.

Which coworking spaces are most likely to be profitable?

According to research by DeskMag, the coworking spaces that are most likely to be profitable are those between 4 and 6 years old, 100 – 249 members, and 10,000 – 20,000 sq ft.

This is likely for a few reasons:

1. Coworking attracts a lot of first-time entrepreneurs. It can take these individuals a few years to figure out how to generate revenue consistently
2. The first few years of a coworking space may come with significant start-up costs that take time to recoup
3. Larger coworking spaces have more space for private offices which are the most consistent form of revenue or event space for rental
4. Coworking spaces with more than 100 people are able to generate more predictable revenue through memberships

Which coworking spaces are least likely to be profitable?

Young coworking spaces are the least likely to be profitable, with just 11% of coworking spaces profitable in their first year. Coworking spaces with less than 25 members are also unlikely to be profitable.

This suggests that a large part of profitability is having the knowledge that comes with more established operations, along with enough members to grow the business over time.

Coworking spaces are becoming more profitable

It’s important to note that coworking space profitability is trending in the right direction. As the industry matures, we expect more and more operators and businesses to succeed.

In a few short years, the profitability conversation will fade into the background. Operators will understand what it takes to run a successful business before they even open their doors, adding to the success of the individual spaces and the industry as a whole.