The economic situation of coworking spaces has continued to improve since last year. Currently, 46% of respondents rate their economic situation as good. In addition, more than half expect to see further improvement over the next six months.
Coworking spaces with smaller locations or in smaller cities view their current situation less favorably than others, but are more optimistic about the coming months. In general, however, it is mainly those that are currently doing well that are positive about the future. For this reason, only a moderate upturn is expected for all coworking spaces overall.
Occupancy rates can affect this situation. On average, they have increased significantly compared to 2023. Currently, nearly two-thirds of the capacity of all coworking spaces is occupied.
Large locations are more highly utilized than small ones
Coworking spaces larger than 500 square meters have an average occupancy rate of about 75%. In contrast, just under half of the capacity in smaller locations is vacant.
High demand for event and meeting spaces
There is currently a strong demand for event space, which was avoided during the coronavirus crisis. Compared to last year, individual offices and hot desks have become slightly more popular, while the demand for team offices has weakened and the demand for meeting rooms has remained high.
The higher overall occupancy rate has not yet translated into a higher probability of profitability. However, in contrast to the current situation and occupancy rate, the question of profitability refers to the last twelve months as a whole.
Less profitable coworking space businesses
Here, the proportion of profitable coworking space companies in Germany has fallen to just one-fifth compared to the previous year. With the unprofitable share remaining stable, there are now more coworking spaces that just cover their costs (42%).
One reason for this is likely the further increasing operating costs that coworking spaces themselves have to pay. High rents and energy prices are particularly problematic. Presumably, they have not been able to pass these on in full to their members. Based on recent months, it seems that small coworking spaces with lower occupancy rates are particularly affected by this, as they don't want to lose members due to price increases.
However, the biggest challenge for coworking spaces is member acquisition. This has been a key concern for many years, but it is also a core business task. Insufficient local demand is often cited as a possible cause, but one in four companies also report the opposite problem: a lack of space for more members.
Why are German coworking spaces less often profitable?
Most coworking spaces in Germany are not unprofitable. But why do they turn a profit less often than the international average? There are three indicators for the market as a whole that can make it much more difficult.
First, more coworking spaces operate as non-profit companies. While this does not preclude them from making a profit, it is clearly not their primary goal.
Second, many coworking spaces in Germany are relatively small. Nearly 70% operate spaces of less than 500 square meters per location. This limits capacity and flexibility, as well as potential cost advantages. The small spaces also include many for-profit companies that sublet their vacant space as coworking space. In these cases, the space is often not the primary source of revenue and is primarily intended to be self-sustaining.
Third, size affects not only capacity, but also the variety of offerings. Even if the rental of individual desks is a central source of income for many coworking spaces, additional offerings increase the profit opportunities. In the past, these were mainly private offices. Now, as described above, meeting and event space is in particular demand. However, smaller coworking spaces are less likely to offer these due to the limited amount of space available.
Fourth, there are relatively more coworking spaces outside of major cities. Their catchment areas are therefore often less densely populated, which influences the other three points.
Word of mouth remains key
For years, word of mouth has been the most successful way to attract members to coworking spaces. According to more than 80% of respondents, this is still the case in 2024. Unfortunately, (authentic good) word of mouth can rarely be ordered directly, but is rather the result of various methods.
SEO for their website and professional use of (social) media are two other promising ways to recruit members, according to nearly half of the respondents. One in three also mentioned "community building" and "events for potential members”.
