In recent years, Europe has seen substantial growth in coworking spaces, particularly driven by flexible work demands from startups, freelancers, and large corporations. Major cities such as London and Paris have experienced a boom in coworking leases. For example, in 2018 alone, London saw flexible office space leases increase by 13%. So does that mean that you need to expand your real estate? There are plenty of coworking owners who simply expand their spaces because they feel like it’s what they should do. However, there’s no fixed formula for what a coworking space’s growth should look like.
We like to define four metrics that will tell you if you should expand your coworking space.
What are your metrics like?
1. Your occupancy rates
Plentry of metrics can indicate the time is right to expand your offering. Perhaps the most telling would be
your occupancy rates. Are you consistently at capacity? If you notice your members want to book spaces but often have to resort to using a waiting list, it might be time to address the issue, lest they go looking for an alternative place.
Tip:
A coworking software can help you in calculating and analysing your occupancy rates.
2. The number of inquiries you're getting
Another telling sign is the number of inquiries you’re getting. Perhaps you’ve found the sweet spot for
the number of desks versus active members at your coworking space. That’s great! But what feels less great is when you have to decline interested parties that would otherwise make a great match with the space you’re operating. If you’re getting a significant amount of inquiries that you simply can’t respond to on a consistent basis, perhaps it’s time to sit down and think about where you want to take your business.
3. Churn rate
Contrary to what the last point might make you believe getting a high number of inquiries does not automatically mean you need to expand your real estate portfolio.
The great equaliser here is
your churn rate. How long do your members stay at your space(s) before moving on? Based on data from
Deskmag, the average monthly churn rate for coworking spaces sits at around 5%.
Scrutinise this metric before deciding what’s next for your business. At first glance, you could simplify the way you evaluate this metric to “if inquiries > churn rate = expand business”. However it’s not quite so simple. You’ll want to make sure of two things:
- You’re getting inquiries from qualitative prospects that match well with your space(es).
- The number of inquiries you get and the churn rate you’re experiencing are prone to changing month to month.
4. Profitability
Lastly, you’ll want to consider your
profitability. You might be tempted to look at a new space in a bustling section of town as the perfect opportunity to increase your revenue. But don’t forget that while more space can mean more overhead and other potential headaches. Ensure that you have fully optimised your current space(s) so they’re entirely in line with your business goals and are making a healthy profit.
Want to dive in a little deeper into whether you should expand your coworking space or not?
Download the full ebook.
Ready to streamline your coworking locations?
So, is there a magic wand to streamline your coworking locations? Not literally, but there is a tool that comes really close to it. At zapfloor, we strive to offer more than a typical coworking software. We don’t believe in a one-size-fits-all. Instead, we believe that every business is unique. Together with our customers, we build software packages that meet the requirements to smoothly run their coworking spaces, regardless of the number and the variety of their locations.
Are you curious to see how we back up our claim of improving the way you manage multiple office locations?
Book a free introduction call with one of our product specialists. They’ll gladly give you a quick tour of the platform.
