Inflation is a reality faced by economies around the world. It is typically defined as an increase in the overall price of goods and services in an economy over time. This may lead to an upsurge in the cost of living and a decrease in purchasing power for individuals and businesses. However, the impact of inflation may be different when it comes to coworking spaces.
In this post, we’ll look into how inflation could affect the cost of managing or renting workstations in today’s modern economy. We will also uncover potential strategies to help cope with the rising costs associated with running a successful coworking space at times of rapid inflation. After reading this blog post, you’ll have a better grasp of the implications inflation may have on coworking spaces as well as your own short-term and long-term decisions. Let’s dive in.
Potential Impact Of Inflation On Coworking Spaces
Inflation might not necessarily have a direct impact on the shared space industry as a whole, but some individual coworking spaces may definitely see slight changes. Let’s look at what these could be:
Higher Charges
As the cost of resources increases, coworking spaces may need to raise their prices to keep up. An increase in price means the members will have to shell out more money for an annual or monthly membership. For example, if you have a fully stocked pantry in the coworking space, the scaling prices of commodities will reflect in your membership plan. The same goes for more essential services like the internet, printing, etc.
Reduced Amenities and Services
Price increases are not the only way for operators to keep up with inflation. Coworking spaces might cut back on specific amenities and services to make up for the inflation-led hike in expenses and stay afloat. For example, they might decide to reduce the number of housekeeping days or offer fewer refreshments. Or, in some cases, they may even need to remove certain amenities entirely, like unlimited coffee. They might also sacrifice a common kitchen for more office space to open up cash flow. However, it’s important to remember that coworking spaces often offer a wide range of amenities. So even if some are reduced, plenty will still be there for members to enjoy.
Increased Competition
The most obvious impact will be increased market competition between different coworking players. The primary reason for the birth of coworking spaces was to save on traditional office costs by opting for flex spaces instead. However, due to inflation, these savings are going away. This means that coworking spaces need to compete on quality and service to attract more customers.
Will Inflation Impact Coworking Space Growth?
While inflation might spike the costs of working from or managing a coworking space, the industry will likely thrive during inflation. As the cost of living increases, more people may be inclined to seek more affordable working options. That’s one potential benefit of inflation for coworking spaces.
As wages and salaries do not increase at the same rate as inflation, people seek ways to save money. Through coworking spaces, they can opt for an area that suits their needs and will pay accordingly.
Even mid-sized businesses or bigger corporations might opt for coworking spaces to cut costs. Moreover, the demand for coworking spaces has been steadily increasing over the past decade. This could indicate that even if inflation rises, the demand for coworking spaces will likely stay steady, or perhaps even surge.
Coworking owners are also focusing on making their spaces recession-proof, meaning they’re incentivized to keep the cost of operations low for the sake of continuing to make money. Here are some more ways they can achieve that:
Strategies for Coping with Inflation
Though the impact of inflation can be hard to predict, certain strategies can help cushion its effect. Here are some things to consider when trying to cope with inflation while running a successful coworking space:
Increase Efficiency
To keep up with inflation, coworking spaces can look for ways to increase their efficiency. This could mean streamlining processes and reducing manual labor to save money on staff wages. Or even opting for power-efficient equipment that reduces bills. It’s also important to make sure the space is being used optimally. Therefore, ensure that all seats are filled or keep a close watch on the occupancy rate.
Cut Unnecessary Expenses
Coworking spaces should look for areas where they can cut costs without compromising on quality. This could mean reducing amenities or cutting back on resources that aren’t being used as much. It’s important to identify areas where costs are rising and look for ways to cut them back while still providing the same quality of service.
Develop Strategic Partnerships
It can be beneficial for coworking spaces to find strategic partners or suppliers that can provide a competitive edge in terms of pricing or quality. For example, partnering with a local coffee shop for refreshments or teaming up with a technology company to offer discounts on software can help reduce costs while still providing valuable perks for members.
Increase Membership Fees By Reasonable Amounts
By now, it’s obvious that inflation will scale the membership fees to cope with rising costs. However, it’s important to ensure that any fee increase is in line with the rise in costs, or members might think of leaving. Such news must also be communicated to members in advance so they can budget accordingly. Also, it can prove beneficial in the long run for coworking owners to consider lowering their revenue goals in times of inflation.
Conclusion
Overall, due to the increasing demand for coworking spaces, inflation should not affect their growth too significantly. However, it’s essential for coworking spaces to stay on top of the situation by making strategic adjustments in time. By relevant measures like cutting unnecessary expenses, developing strategic partnerships, etc, coworking spaces can continue to thrive even during inflation.
