How is Coworking Affecting Commercial Real Estate?

Ephraim Vashovsky
Jun 17 · 2 min read

Coworking is a relatively new concept, but it’s one that’s catching on quickly. It involves professionals sharing office space on a rotating basis, so operational costs can be minimized. The professionals may be freelancers, or they may be employed by different companies who are willing to share the costs of renting the office space. While there are clear benefits to employers and freelancers, this also opens up lucrative opportunities for commercial real estate investors.

Meeting Facilities Management Costs

Since you’ll be leasing the same space to two tenants, you’ll be able to charge facility management fees to each party. This ensures the costs of running the facility are met by the tenants, keeping the property owner from having to deal with unexpected losses. Even though you can charge a lower management fee to each tenant, you’ll be taking in more revenue overall.

Less Need for Brokers

Coworking environments usually operate on a very short-term basis. In some cases, office space may be rented by the hour, which means there’s no need for long-term leases or brokers. However, this is good news for the commercial property owner, since this also means earning more revenue than might be possible with a single tenant. There will likely be an increased demand for this type of leasing option, because it means businesses can keep their overhead low and maximize growth.

Be Prepared to Offer Premium Amenities

As the commercial property owner, it will be up to you to ensure you have a worthwhile office space to offer. This means supplying new and comfortable office furnishings, fully stocked break rooms, and more amenities. Already, many coworking spaces also offer gyms, daycare centers, and recreational areas. As coworking becomes more popular, the competition among commercial real estate developers will result in office spaces that have even more to offer. Ideally, this will benefit those using coworking spaces as much as it will benefit the commercial property owners leasing these spaces.

As the interest in coworking continues to grow, so will the opportunities for real estate investors. Even though the digital revolution has limited the need for large commercial real estate, the coworking trend has offered innovative new uses for those properties. As the property owner, you can now lease the same space to two tenants, increasing your revenue and reducing the risks of late rent payments.

Ephraim Vashovsky

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Ephraim Vashovsky is President of Vasco Ventures, one of New York City's leading real estate investment firms | http://www.EphraimVashovsky.org