The 2018 Global Coworking Unconference focused on profitability and the importance shared workspace functionality and member enrichment.
We just returned from GCUC - the Global Coworking Unconference - annual USA event. And "global" is a fair description of the event. A record number of attendees, who were greeted by a wall of donuts, came from all over the United States, Central and South America, Europe and Asia to learn and meet fellow operators. (And to soak in the culture of New York City.)
A lot of topics were discussed at GCUC - community, real estate strategies, and the best coworking software. As we reflect on our time in the Big Apple, two clear themes emerged:
While there are many reasons for getting involved in the coworking industry, it is only sustainable if you can earn a profit. It turns out, that is no piece of cake. Carsten Foertsch of Berlin-based Deskmag presented the results of the digital publication's recent coworking industry survey. One statistic jumps out - only 52% of shared workspaces report they are profitable. Which is an improvement! Another recently published study suggested 70% of coworking spaces are unprofitable.
This information came on the heels of WeWork releasing financials as part of a bond sale. Despite raising $7.6 billion in equity, and $700 million in a prior debt sale, the coworking giant is seeking another $500 million in debt. And the credit rating agencies S&P and Fitch both analyzed the raise as junk. The firm lost $933 million in 2017, with per member revenue down 6.2% to $6,928. Meanwhile, sales and marketing costs tripled.
Some of this is driven by the fast expansion of the industry. The study also found it takes 15 months for US-based coworking spaces to become profitable. Further, around 35% do not begin promoting their space until their grand opening - or later! Once they do finally turn the corner, the average American space generates $6,800 monthly profit on $29,000 revenue. Of course, smart use of high-touch technologies will help your space increase the odds of success.
Source: Jerome Chang
Blankspaces founder Jerome Chang presented a revenue mix many spaces can use to improve profits. His presentation reviewed several revenue-generating activities, exploring the size of the per unit revenue opportunity, the number of units that can be sold, and upfront investment to be attractive to your target customers. Mr. Chang emphasized that while building this mix might take, this mix is proven to maximize revenue in almost any square footage scenario. Surely thinking beyond the core member will help many become more viable operations.
More than merely functional, tomorrow's smart office will help employees be physically and mentally healthy. In a discussion titled "health is the new black", interior design gurus Karen Quintana and Mark Strauss shared that our physical and social environment is the biggest determinant of our health. Mr. Strauss introduced the concept of allostatic load, which he defined as increased stress, less sleep and wear and tear on the body that accumulates as individuals are exposed to repeated and chronic stress.
Fortunately, they proceeded to share the key factors in creating an environment that workers love and thrive in - air, water, nourishment, light, fitness, comfort, and the mind. The duo also presented the WELL Certified Building. WELL is an interior design framework for improving the human experience of your workplace.
Not coincidentally, that same day, Bill Jacobson of Workbar announced one of their locations had become WELL Certified. Here are some features of Workbar Back Bay:
There is no doubt that GCUC USA was a success. Many industry leaders - and hundreds of others - were in attendance. As were corporate real estate professionals from "traditional" firms trying to understand how to apply coworking themes to their businesses. From a content standpoint, operators got some clear guidance as to how to improve their economics and the importance of providing a shared workspace that satisfies the mind and body of members.
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