How Profitable is a Coworking Business? 2023 Stats

The coworking business sector in the U.S. has been experiencing a surge with revenues reaching $25.2 billion in 2022. But how do individual coworking spaces within this booming market fare?

Hiow much revenue can they anticipate, and what are the costs associated with starting and operating a coworking space?

In this article, we delve deep into the coworking industry, providing insights into market segments, average revenues, and startup costs. Through a comprehensive analysis, we aim to offer a clear understanding of the economic dynamics that shape the coworking sector in 2023. Let’s dive in!

Coworking market overview

As per IBIS, the coworking market in the U.S. represented revenue of $25.2 billion in 2022 and is expected to grow to $43.7 billion by 2028.

There are various types of shared office spaces offered in this market, such as shared desks, small office spaces, mid-sized office spaces, large office spaces, and others. Yet, with over 6,100 coworking service providers across the country, the competition is also fierce.

How much revenue does a coworking space provider make?

Using the data from more than 82 franchised space providers, a coworking space provider earns $742,000 in gross revenue per year on average. This number is the average gross revenue per clinic from 82 space providers of the largest 3 coworking franchises in the U.S.

Coworking space providers usually charge clients on a monthly basis. With an average cost of $400 per shared desk per month, that’s ~1,800 shared desk clients per month.

Yet, not all coworking businesses have the same yearly revenue. Logically, some will earn more than others because of many factors like location, amenities, etc.

How much does it cost to start a coworking space business?

On average, it costs between $577,000 to $2,136,000 to open your own coworking space business.

This includes various costs such as signages, furniture and equipment, hardware and software, real estate improvements, etc.

• Signages (2%): for signage-related expenses, such as branding and wayfinding elements
• Office equipment, hardware, software, supplies, etc. (5%): technology, supplies, and general office necessities
• Lease payments (17%): cover the substantial cost of renting and maintaining the physical space
• Real estate and improvements (36%): representing a substantial investment in acquiring and enhancing physical properties for the coworking space.
• Furniture, fixtures, and equipment (24%): costs associated with outfitting the coworking space with necessary furnishings and equipment.
• Professional fees (2%): covering expenses related to hiring external professionals or consultants for specific services.
• Marketing (2%): budget dedicated to promotional activities aimed at attracting clients and enhancing the visibility of the business.
• Working capital (11%): costs to cover day-to-day operational expenses and ensure smooth business continuity for the first 3-6 months.
• Other costs (1%): miscellaneous expenses like insurance, business licenses and permits, dues and subscriptions, etc.

How profitable is a coworking space business?

A coworking space provider has a ~30% operating profit margin (EBITDA margin) after operating costs (salaries, facilities, admin expenses, etc.) have been incurred.

Indeed, there are various recurring costs involved in running a coworking space business. The major expenses include facility costs followed by salaries:

• COGS (~3% of revenue): costs related to providing specific services or amenities directly tied to the occupancy and use of workspace by clients.
• Salaries (~10-15% of revenue): compensation for staff involved in managing and maintaining the coworking space.
• Facilities expenses (~40-45% of revenue): costs associated with leasing and maintaining the physical workspace, utilities, cleaning, and general upkeep of the facilities provided to clients.
• Marketing (~1-5% of revenue): budget for promoting the coworking space, attracting new members, and maintaining a strong presence in the market.
• Administrative expenses (~5-10% of revenue): various overhead costs such as office supplies, utilities, and salaries for administrative staff involved in the day-to-day operations.

Profit and loss	Amount (US$)	% revenue
Gross Revenue	$742,000	100%
COGS	$(22,260)	3%
Gross Profit	$719,740	98%
Labor expense	$(103,880)	14%
Facilities	$(319,060)	43%
Marketing	$(22,260)	3%
Administrative expenses	$(59,360)	8%
EBITDA	$222,600	30%