Coworking space marketing post COVID-19 has achieved a greater significance because to make the space profitable, coworking space providers need to drive awareness about their offerings. But they can’t stop just at that. When marketing their coworking spaces, these providers also need to emphasise what steps they’re taking to abide by the health and safety regulations as mandated by the central and state governments.

From sanitization of equipment and frequent cleaning of high-traffic areas to revised spatial guidelines to ensure the seating layouts have adequate social distancing, marketing coworking spaces post COVID-19 needs a well-planned strategy in place to succeed. But how profitable are Indian coworking spaces? Let’s take stock of things.

The present scenario

WeWork India's CEO Karan Virwani said in April that they were poised for sustainable long-term growth and were gunning for profitability in 2021. In fact, this coworking space provider reported its best quarter to date in terms of sales after it leased 10,000 desks across 7,00,000 square feet in the first quarter of 2021.

According to a 2020 report by JLL, the market penetration of flexible workspaces in total office space stood at 3%. This percentage was anticipated to rise up to 4.2% by 2023.

The report went on to mention that despite some short-term challenges and disruptions, the coworking space market will grow to 50+ million square feet by 2023 driven by the rising demand from large enterprises. For flexible spaces segment, the good news was an average anticipated growth of almost 15-20% per annum over the next 3 to 4 years, though it was cautioned that this growth might not follow a linear trajectory.

Some leading players have also taken the innovation-and-reinvention route to offer products that would address the needs of changing times. One such provider is Awfis, whose WFH product Awfis@Home launched just two months after the pandemic struck, sold like hot cakes.

All these indicate it’s a good time to enter the coworking spaces market. But still, a question remains. Before you jump in and invest heavily in furnishing and marketing coworking space post COVID-19, you’ll need to know how profitable this niche is. Let’s consider some crude economics.

Profitability of a coworking space in India

Let’s do a fundamental unit economics calculation for a coworking space in Mumbai, where all computation is done with respect to the carpet area.

1) Rentals

The rent for commercial spaces in Mumbai’s A-grade buildings in areas like Lower Parel, Andheri, Worli, Kalina, BKC, etc. could cost as low as ₹80-100 to as high as ₹250-300 per square foot. But you can negotiate a better rate with a long-term commitment of 7-10+ years. When starting up, this could seem overwhelming. However, with steep investment costs associated with furnishings, IT infrastructure set-up, and marketing along with long gestation periods, you’ll need to plan in the long-term to make a profit. 

Let’s assume for a 10-year commitment, your rental is ₹150 per square foot.

Let’s allot an average of 60 square feet per person.

Thus, rental cost for an individual = Rental per square foot X Average area allotted per person

With the above assumptions of rate and space, this comes to

150 X 60 = ₹9,000 per person per month

2) Furnishing expenses

This could be anywhere from ₹1200 to ₹2400 per square foot. Over a period of 120 months (10 years), depreciation per month would be ₹10 to ₹20 per square foot.

Thus, monthly depreciation per person: (₹10 or ₹20) X 60 square feet = ₹600 or ₹1200

3) Other expenses

Coworking space marketing post COVID-19 would include costs for digital marketing, social media marketing, PR events, content marketing, etc.

Another major element to factor in would be the operational costs, which would include the salaries of employees and payment for utilities, maintenance, pantry, housekeeping, etc. along with accounting and compliance costs, among others. 

Thus, overall fixed costs per person = Rental costs + Depreciation (on furnishing) + other expenses (marketing and operational) = ₹9,600 + other expenses

So, a calculated guess for the overall fixed desk cost (monthly) per person could be ₹11,000+

Let’s now take a look at the revenues.

4) Rental revenue from fixed seats

The monthly quoted price per seat per person price could be anywhere between ₹11,000 and ₹18,000.

But if you have a large coworking space, you’ll be typically focusing on getting enterprise clients, who can take up 25+ seats and negotiate this rate.

5) Rental revenue from flexi seats and/or meeting spaces

The per person monthly price for flexi seats could range from ₹8,000 to ₹12,000.

Since only 60% to 70% of these flexi-seats would be occupied at any given point, you can oversell them to boost your revenue.  

The quoted price for meeting/conference rooms would depend on their size. However, you should make the pricing competitive and the amenities top-notch because you’ll be competing with hotels that offer spaces for meetings, seminars, workshops, conferences, etc.

6) Rental revenue from virtual offices

Entrepreneurs and companies looking to have a registered office for correspondence or business meetings can be tapped to boost your revenue by offering them a virtual office. Apart from handling their calls and emails/snail mails, these members could be allowed limited access to meeting rooms.

7) Some other ways to boost your revenue

When you invest in marketing coworking spaces post COVID-19, having value-added services among your offerings would help attract the right clientele and even boost your revenue.

For instance, you can lease or rent out a small space to a third-party vendor for running a coffee shop, cafeteria, or canteen. This would prevent members from going out to grab a bite or a cup of coffee as they can have it within the premises.  

You may even have a revenue-sharing arrangement with professionals like business consultants, lawyers, or those with CA/CS certifications to improve your profitability.

Third-party tie-ups with brands and other service providers like those offering computers and electronic gadgets, educational resources, wellness services and products such as yoga studios, gyms, etc. could also help boost your revenue. By offering deals or discounted products to your members from these providers, you can claim a share of the profit the latter make.

You should keep the above pointers in mind when planning coworking space marketing post COVID-19 to ensure you have a profitable business.

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