Do co-working spaces make a good return?
As suspected, after visiting a few, unless they own the property, chances of the operator making money are quite minimal.
We looked at some of these spaces - @3-5K a desk (and more if you wanted a secure room), no matter how we did the math, it was cheaper for us to lease an industrial/office unit.
Also could not understand how some of these companies, with presumably significant amount of confidential / IP at stake, would do presentations in open conference rooms, work in glass walled offices where anyone could take a peek and see the whiteboards.
“Co-working operators are not making money,” said Neil Anderson, director and head of office space at Hongkong Land, which owns 4.84 million sq ft of office space in buildings such as Alexandra House, Chater House and Jardine House in Central, the most expensive place to rent office space in the world.Hongkong Land, the biggest landlord in Central, does not want to lease space to co-working operators | South China Morning PostHowever, the profitability of co-working operators is not particularly impressive, which is in the single digits, according to a source.
“When operators first open their new locations, they have to offer discounts to ramp up occupancy, which affects their margins,” said Philip Pang, associate director at Colliers International, adding that some like Urban Serviced Offices have had to close their business. “The larger operators are targeting large companies and multinationals [for long-term leases] rather than only start-ups to sustain their growth.”