Yes, income from co-working spaces is considered rent in the United States and most places in the world. Income considered to be rent is any income received from allowing another person to make use of a property, vehicle, or other assets in exchange for money or other benefits of monetary value.
It can also include other forms of payments you receive from a tenant – such as payment for water bill or parking space rent. However, security deposits are not considered rental income unless used to settle or cover unpaid rents.
In addition, any income from subletting may also be considered as rental income. Subletting simply means an arrangement where you as a tenant, legally allow another person to make use of your rental property and charge them rent or something similar in return. The co-working space imitates this subletting concept.
Have it in mind that most co-working spaces generate a very good portion of their revenue by renting out desks. According to industry reports, one in ten spaces in the United States makes all of their money from desk rentals. An average space, according to reports, will earn ten percent of its revenue from renting out meeting rooms and event spaces.
Food and beverages just make up a mere 5 percent, and the sale of tickets to workshops and events earns another 5 percent. Unlike business centers, co-working spaces get very small revenue from virtual office services (3 percent).
Owing to the vast ways people collaborate or need a location to carry out short-term or long-term tasks, both in single or various locations, co-working spaces tend to offer numerous income streams that can be converted into a source of profit for the space.
Basic Ways Co-working Spaces Make Rental Income
Here are basic ways co-working spaces generate rental income;
The easiest and most common way co-working spaces generate revenue is by providing organizations or teams a good platform to work collaboratively in a shared office space.
However, some co-working spaces don’t have a main lessee; instead, they are established to see to the needs of various workers who, for varying reasons, may not want to bear all the costs of running the office. With this model, all costs that a client could need in a shared office would potentially become rental income for the co-working space provider.
This income source includes private offices, shared desks, or dedicated desk memberships. Have it in mind that membership fees can be calculated at precise portions of time—daily, monthly, quarterly or annual fees—and this gives members the right to use basic or more advanced amenities of the co-working space.
As a co-working space provider, you can decide to make available discounts for longer memberships to reward loyalty or provide group discounts to make profits from serving bigger teams.
This income stream can vary from one space to another and is also an area where any given coworking space can get creative. Note that a good number of shared offices also choose to tailor packages that suit the needs of various average visitors, which more or less include several co-working resources. Have it in mind that the more the member uses, the more cost-effective the package becomes.
Most often, co-working spaces are advised to have a software where members can select one or more of the available package options, then create a personalized package by automatically calculating the costs for each selection from a list. Membership packages can include benefits and discounts with food spots, bars and clubs, gyms, outdoor activities, transportation services, and medical facilities.
Renting Amenities and Equipment
Although amenities provided in a co-working space could be free, however, a good number of co-working spaces choose to charge for them, especially premium ones like private audio or video call booths and individual lockers. Equipment rentals can be from anything such as telephone lines, video, and audio equipment for the conference room.
In some co-working spaces, this can also include printers, computers, and even cloud storage for members that need larger data resources. They also make rental income from renting conference rooms for typical business purposes such as holding meetings, training staff, video presentations, and social events. When possible, co-working providers are designed to serve more than one purpose.
Just like it was noted above, income from co-working spaces is genuinely considered rent. Have it in mind that a co-working space is built for the benefit of its members who pay for the services and products they get.
Note that by working in such a collaborative workspace, members expand their professional networks, and keep their skills and knowledge up to date. As a co-working space provider, consider including imaginative revenue resources, such as referral commissions, merchandise, virtual office rentals, dedicated mailboxes, and member staff support.