Why Coworking Spaces Struggle with Revenue Generation

Dimitar Inchevby Dimitar Inchev
8-10 min read
Why Coworking Spaces Struggle with Revenue Generation

By TwoFifty | February 20, 2025

At TwoFifty, we’ve spent years diving into the coworking world, helping operators turn flexible workspaces into thriving businesses. The coworking industry is buzzing—valued at $14.91 billion in 2023 and projected to grow at a 15.7% CAGR through 2030, according to Grand View Research—but beneath the hype, many spaces are grappling with a stubborn challenge: revenue generation. High costs, unstable income, and cutthroat competition are tripping up even the most promising ventures. So, what’s going wrong? And more importantly, how can operators flip the script? Let’s unpack the numbers and trends—and share a few insights from our playbook.

The Revenue Riddle: Why Profit Slips Through the Cracks

Coworking spaces promise flexibility and community, but that promise comes with a catch. Fixed costs—like rent in pricey urban hubs, utilities, and staff salaries—eat into profits fast. Take a typical setup: 100 members paying $100 a month brings in $10,000. Sounds solid, right? But factor in rent (say, a few thousand) and staff (eight people at $1,500 each, totaling $12,000), and you’re already in the red before utilities even hit. The result? A razor-thin 10% profit margin, as levels.io points out. We’ve seen this firsthand—operators surprised that shared spaces don’t automatically mean lower overhead.

Then there’s the flexibility trap. Monthly memberships and pay-as-you-go plans draw in freelancers and startups, but they also make revenue a moving target. One slow month can tank your cash flow, a reality Forbes nails when it calls out the instability of short-term commitments. It’s a paradox: the very thing that attracts members can leave operators scrambling.

And don’t get us started on competition. With new spaces popping up daily, the market’s a battlefield. Generic offerings—think basic desks and Wi-Fi—don’t cut it when rivals roll out podcast studios or wellness rooms. A Deskmag survey found nearly half of coworking spaces struggle to turn a profit, with a quarter stuck in the red. Without a standout edge, you’re just another desk in the crowd.

The Data Deep Dive: Where the Numbers Tell the Story

Let’s break it down. Only 40% of coworking spaces are profitable right now, though 70% get there within two years, per ONES Blog. That lag time is brutal—startup costs and low initial occupancy hit hard. Operational expenses don’t help: high rent in prime locations, staff overhead, and fixed utilities keep margins tight, as BookingNinjas notes.

Post-pandemic shifts add another layer. Older spaces (over 10 years) are losing their edge, while hybrid work boosts demand for meeting rooms over sprawling workstations, per Venture X Franchise. Economic wobbles hit corporate clients too, making flexible memberships a double-edged sword, as OfficeRnD observes.

Marketing’s another weak spot. Too many operators lean on word-of-mouth instead of sharp digital strategies, leaving occupancy—and revenue—lagging, according to Optix. It’s a missed opportunity in a world where visibility is everything.

TwoFifty’s Take: Turning Challenges into Wins

We get it—running a coworking space, to put it lightly, feels like juggling flaming torches. But at TwoFifty, we’ve helped operators tame the chaos. Besides the typical ways of generating revenue in coworking, there are more ways to diversify the business. Here’s how:

  • Cost Smarts: Trim the fat without losing value. Negotiate leases, optimize staff schedules, and track utilization rates to keep expenses in check. We’ve seen spaces boost margins by 5-10% with these moves alone.

  • Revenue Remix: Don’t rely on memberships alone. Rent out meeting rooms, host events, or partner with corporates—WeWork’s $250 million from corporate clients (25% of its revenue) shows the potential, per CoworkingResources.

  • Niche Power: Stand out by targeting a specific crowd—e-commerce pros, creatives, you name it. Unique amenities (think recording booths or yoga spaces) seal the deal.

  • Community Glue: Build a vibe members can’t quit. Events, perks, and personal touches drive retention, as Forbes suggests.

  • Unique Positioning: While the strategies above offer a solid foundation, the most impactful revenue boosts often come from tailored solutions unique to each coworking space. Through close collaboration, we uncover hidden assets, untapped market segments, and innovative service offerings that set our clients apart. This bespoke approach ensures that your space isn't just another option, but a destination of choice for a specific community, driving both occupancy and revenue.

The Bottom Line

The coworking boom is real, but so are the hurdles. High costs, shaky revenue streams, and fierce competition aren’t going away—but they’re not unbeatable either. At TwoFifty, we’ve seen operators transform struggling spaces into profit machines by rethinking the basics and playing to their strengths. Want to dig deeper? Check out our coworking consulting services and let’s chat about making your space a standout success.

TwoFifty is a boutique coworking consultancy obsessed with helping operators build better businesses. Ready to rethink your revenue game? Reach out today.