The way we work has changed. Pandora’s box was opened when we were forced to work from home for months on end in 2020 and the world of business didn’t collapse in on itself. It’s now hard to look back on how we did things before and think of returning there as progress.
The truth is that hybrid working models (splitting time between home working and a central workspace) offer too many benefits to both employer and employee to ignore – it’s the future that just arrived a little earlier than expected.
One of the more notable side-effects of the change in our working habits is that coworking spaces (and flexible workspaces, more broadly) have now been thrust into the spotlight. These spaces, which revolve around the concept of flexibility and scalability, now appear tailor-made for the hybrid model that so many businesses are adopting.
They are the perfect solution when you want to stay agile, generally operating on flexible leases and featuring spaces that can shrink and grow with your team. And they also improve on many elements of the traditional office, usually cultivating an environment that’s more modern, feature-packed, and invigorating. That might be why the number of coworking spaces is set to double in the next three years.
A lot of money is pouring into the coworking sector right now, mainly because there’s a lot of money to be made by capturing the growing demand. But if you’re considering setting up a coworking space of your own, it’s first important to be aware of the costs of doing so. We’re here to break down roughly how much it costs to start a coworking space in the UK, before talking about how becoming a Venture X franchise owner is an alternative that offers a lot of benefits.
Finding the right space
First of all, and perhaps most importantly, you need to find the right property to house your coworking space. The capital costs involved with securing a suitable commercial property will generally be the largest expense in the entire process, so it’s important that this step is taken seriously.
There are a number of considerations to make when choosing the right property for a coworking space, including:
- A location that suits your target demographic
- Transport links nearby to enable easy commuting
- A large enough space to ensure your margins aren’t razor-thin
- Natural lighting that facilitates a comfortable working day
- An area that isn’t too over-crowded with competition
- A good energy efficiency rating to reduce ongoing bills
Finding a single property available on the market that fulfils all of these criteria is difficult enough, but it becomes especially challenging when you start to look in the most popular urban areas, where properties such as these are in high demand. And that high demand results in a premium price tag, reflected in the difference between the monthly rental cost per square foot of prime office space in London (£65) versus less competitive urban areas like Leeds (£34).
That should make it clear enough that choosing the right area to set up your coworking space is a critical element of your overall business plan – it will be a key determining factor in the success and profitability of your venture for years to come. It also makes it difficult to say, even roughly, how much it will cost you to rent your chosen commercial space for a year, given the variance in cost in different areas.
However, using Manchester as a middle-ground urban example, you would expect to pay around £375,000 per year to rent 10,000 square feet of prime office space in the city centre.
Fit-out and decoration
Finding the right space is only the first step – next you have to fit it out, buy all of the equipment you’ll need to provide an excellent working experience to your members, and decorate to create an impression. This is another significant cost that can snowball if it’s not managed efficiently, especially if you’re planning on launching an ambitious coworking space full of the most up-to-date tech and designer furniture.
Continuing with the 10,000 square feet example, we can start to get a rough idea of just what kind of cost the fit-out and decoration stage will incur. The general rule of thumb is that 100 square feet per person is ideal, so let’s assume that you’re aiming to create a workspace that accommodates up to 100 people. That means you’ll need roughly:
- 100 desks and chairs
- Furniture and equipment for 3+ meeting rooms
- Lighting for all 10,000 square feet
- A lobby space with plush furniture
- Kitchen facilities and appliances
- 5+ toilets
That’s without considering all of the additional extras you might want to build into your space, such as meeting pods, security equipment, access control technology, and any other office equipment such as printers. It also doesn’t take into account the cost of the labour required to fit out the space, or the time you’ll have to put into overseeing it.
Again, there’s such a huge variance in the quality and extent of fit-outs in coworking spaces that there’s no easy cost range to land on here. However some estimates put the fit-out cost of a mid-range office space in London at around £105 per square foot, meaning we’ll say you should expect to pay around £1,060,000 in total to get your coworking space in shape.
It’s all well and good having a workspace that’s beautiful and functional, but if no-one knows about it, you’re not going to be very successful. It’s also typically advised that you secure occupiers and customers in advance of opening, smoothing the transition into operation and ensuring that you’re earning revenue from day one. That makes pre-launch marketing an important consideration, and another major expense to add to the list.
Before you get started with any marketing, though, you’ll need a website to act as a destination for digital leads. For a simple website with limited interactive functionality, you should expect to pay £1000-2000 for the build, and an additional ~£200 annually for domain renewal and hosting.
With a website built, you can start to consider how to get people to visit it – focusing on building a sales funnel that points towards a conversion action. There are a wide range of marketing channels to consider leveraging, but the most important ones include:
- SEO – Search engine optimisation to rank organically for target keywords such as ‘coworking london’
- PPC – Pay per click advertising on search engines to target similar keywords to SEO, with a greater impact in the short term
- PR – To secure coverage in relevant local and industry publications, getting your name in front of the right crowd and securing backlinks to your website
- Social media – Organic advertising and direct lead discovery on social media sites like Facebook and LinkedIn
The cost of marketing will depend on how aggressively you want to capture leads. If you’re keen to drive revenue as quickly as possible, your spend in effective short-term channels like PPC will likely be fairly high, whereas if you’re content with taking a longer-term organic approach, you will pay a more reasonable amount. Generally, though, you should budget at least £2000 per month for marketing a moderately-sized coworking space, or £24,000 per year.
Finally, there are the ongoing costs that are associated with regular operation of your coworking space. These include, but are not limited to:
- Staff wages
- Utility bills
- Internet and phone lines
- Cleaning costs
- Office supplies
There are certain costs that you certainly don’t want to skimp on, such as finding the right staff to make sure your coworking vision is achieved and choosing internet that’s more than enough to provide a fast and stable connection across the whole space. Others, like software and refreshments, can be minimised by just focusing on the essentials and avoiding nice-to-haves.
Operating costs for a coworking space are far too variable to predict accurately, but you can expect them to be well in excess of £5000 per month, or £60,000 per year.
Venture X Franchise as an alternative
So it’s clear that, in total, it costs a lot of money to open and operate a coworking space. Although the market is growing and it’s arguably a better time than ever to enter it as a new coworking operator, it’s still a sizeable investment that carries risk.
That’s why franchise arrangements like the one offered at Venture X make sense for coworking. As a Venture X franchise owner, you get to achieve your dream of opening a coworking space but mitigate a lot of the challenges of doing so. And since Venture X is already an established brand that’s been recognised as one of the fastest growing coworking brands in the world, there’s far less risk involved.
Ours is a tried and tested franchise model, with 45 workspaces already open across 30 countries. We offer all of our franchise partners full and comprehensive training, and they receive ongoing support from the Venture X team in areas like selecting the right location, fitting-out the space, and running the marketing campaign. You also get to reap the benefits of joining a popular brand with a well-defined position in the market.