This document analyzes the success of coworking spaces located in urban versus suburban areas. It discusses coworking spaces in general, including their history and growth. The author developed an economic model to analyze factors influencing coworking space profits. Due to limited data, the author instead conducted comparative pricing analyses. Results found urban coworking spaces had higher average daily, standard monthly, and premium monthly prices than suburban spaces. Additional non-pricing factors that could influence success were also considered but not fully analyzed due to data limitations.

1. NIU Springboard Internship: Coworking Spaces in the city versus the suburbs;
Where are they most successful and why?
Research Methods in Economics
Scott Marks
April 22, 2016
Introduction
I was tasked by the NIU Springboard Organization with analyzing coworking spaces in
urban and suburban environments with the intent of discerning which of the two locations were
more successful and why. The term coworking, as it is used today, was first established by Brian
Dekoven in 1999 to identify a method that would facilitate collaborative work and business
meetings, coordinated by computers. Moreover, coworking spaces would not become established
until the mid­2000s. Before then, according to Segran (2015), “Shared workspaces first started as
informal arrangements: Freelancers with extra space in their garage invited friends to work with
them and groups of freelancers leased office space together to make it more affordable.” Then on
August 9, 2005, the first official coworking space was opened by Brad Neuberg hosted by Spiral
Muse. By the end of 2005, there were exactly three coworking spaces, as they are defined today,
in the entire world. As of last year, there were 7,800 coworking spaces worldwide with 510,000
coworkers and it is projected that by 2017 there will be 12,700 coworking spaces worldwide with
1,030,000 members. These spaces are becoming more important because, according to Horowitz
(2015), “Freelancers are a growing workforce. There are now almost 54 million Americans
freelancing, an increase of 700,000 over last year. That’s more than a third of the American
workforce.” On a more worldwide scope, “Only taking the workdays into consideration, there
was an average of 4.5 new spaces opening per day, offering workspaces for creative people in
more than 81 different countries” (Foertsch, 2013). However, despite the fact that coworking

2. spaces are clearly becoming more popular, there is still very little research being done in the
field. It is for this reason that I was tasked with delving into the field to find out why a certain
suburban coworking space was not as successful or growing as quickly as some of its
counterparts in the Chicago area. Said company must remain anonymous on account of the
non­disclosure agreement that prevents me from naming them specifically.
Economic Theory
Coworking space owners are in the business of selling a service. Said service involves
providing a workspace environment primarily to freelancers and entrepreneurs whose companies
are too small, or who cannot afford, to own their own office space. To achieve this end, investors
must first invest capital into purchasing business assets such as desks, chairs, tables and, most
importantly, office space. As of 2012, the process of starting a coworking space in the U.S. cost
an average of $83,900. It is for this reason that some space founders will pre­sell desk space
before the space opens as an attempt to finance their investment without taking on the entirety of
the cost burden. In addition to just providing the space and basic supplies, most coworking
spaces will offer additional services such as Wi­Fi, rentable conference rooms, workshop areas,
hosting events and dining areas. Some of these services, such as Wi­Fi, are provided as a “free”
service, which means that the coworking space either offers that service at a loss or accounts for
it in their pricing. Most other services require the rentee to pay an additional fee to utilize them.
Coworking spaces tend to charge a rental fee for the use of their facilities based on the
requirements of their clients. For clients who only require short­term use of the spaces, they offer
hourly or daily rates, and for those who require longer­term use, they offer monthly rates. There
are two more factors that can directly influence a coworking space’s profitability. The first is the

3. size of the working space. As stated by Foertsch (2011), “Coworking spaces earn the majority of
their revenue, unsurprisingly, by renting out desks (61%). One in ten spaces earn all of their
money from desk rental”; ergo in order to maximize their profitability, the owners need to
maximize the size of their space and the number of desks available at any given time. The second
factor is the age of the coworking space. Again, according to Foertsch (2011), “The second
Global Coworking Survey shows that 72% of all coworking spaces become profitable after more
than two years in operation. For privately​ run coworking spaces (those which are not non​profit
groups or government​ run), the profitability rate after more than two years is even higher, at
87%.”
By utilizing all of these factors, I was able to derive a multiple linear regression model
for the profitability of a coworking space in a given year:
, whererofit perday standard premium private costs agep = β0 + β1 + β2 + β3 + β4 + β5 + β6 + u
perday, standard, premium and private all respectively stand for the number of clients who rented
space by the day, rented space by the month, purchased the premium package of space rental,
and rented a private office space rather than just a desk. The costs variable represents the total
costs a coworking space incurred in a given year, which would be much higher during the
coworking space’s first year in operation and the age variable would be a binary variable that
would be equal to one if the space was older than two years and zero if it was not. It seems likely
that the signs of β​1​, β​2​, β​3​, β​4​ and β​6​ would all be positive, whereas β​5​ would likely be negative.
There are other factors that can influence a space’s profits, such as additional services,
conference room rentals and dining area revenue. However, not all coworking spaces offer
additional services which is why they are not directly included in the model.

4. Beyond simply looking at the mathematics involved in coworking spaces, I recognized
that I would also have to consider other factors to determine what made a coworking space
successful. For example, I had to consider what, if any, positive or negative externalities arose
from coworking spaces. If externalities do arise, it would be conceivable that individuals who
utilized coworking spaces could gain enough utility from these externalities to overcome any
negative effects caused by things like high prices or poor location. Additionally, I would have to
determine if any of these, or other, externalities could influence coworking space owners to
convince them to stay with a location that may be underperforming at the moment until it
becomes successful.
Data
Since coworking spaces are still so relatively new, there is not a great deal of research
data concerning them. Due to this, the majority of my data was taken from the Deskmag website
and the websites of individual coworking spaces in the Chicago area. From the Chicago
coworking websites, I was able to ascertain the different price points of all the services offered
by the different coworking spaces and was able to categorize them into four major
classifications: the price per day, the standard price per month, the premium price per month and
the price of a private office. I gave consideration to using a multiple linear regression model, but
dismissed it after quickly realizing that an accurate model would be impossible to determine
without knowledge of the population totals of each individual coworking spaces or how they
were distributed. This information proved to be impossible to find since the spaces in question,
as well as the small businesses that utilize them, are almost all private companies and do not
make this type of information publically available. Additionally, while I was able to find the

5. average cost for starting a coworking space, I was unable to find average operating costs. Since I
was unable to perform linear regression analysis, I decided instead to perform comparative
analysis in regards to the different pricing options in urban versus suburban environments.
Due to the limited numerical data regarding coworking spaces, I decided to look into
additional factors that might lead to their success or decline. Deskmag proved to have an
abundance of this type of information in their yearly surveys regarding coworking. I also made
use of other sources such as Forbes and PBS to ascertain what details about coworking spaces
that drew people to them.
Results: Price Point Analysis
In my analysis of the price points of different coworking spaces in the Chicago area, I
made a few basic assumptions. First, the price per day refers to a standard eight­hour work day
because some of the businesses charged by the hour instead of the full day. Second, the standard
price refers to the price for 24/7 access to the space without a permanent desk and the premium
price refers to the price for 24/7 access to the space with a permanent desk. Lastly, I did not
include any additional costs, whether explicit or implicit, such as an additional cost to use the
machine workshop or costs for extra services.
In regards to the price per day, I found that suburban space had a mean price of $24.88
with a standard deviation of $5.82 while urban spaces had a mean price of $33.83 and a standard
deviation of $28.03. The mean standard price per month for suburban coworking spaces was
$204.25 with a standard deviation of $70.64 and urban spaces had a mean price of $284.77 and a
standard deviation of $90.71. The premium price per month, for suburban coworking spaces, had
a mean price of $340.71 with a standard deviation of $64.90, whereas urban spaces had a mean

6. price of $402.63 and a standard deviation of $84.15. Lastly, the mean price for a private office in
a suburban coworking space was $978.33 with a standard deviation of $287.34, while urban
spaces had a mean price of $905.09 and a standard deviation of $644.21.
This shows that, in regards to the price per day, as well as the standard and premium
prices per month, suburban locations had a lower average price to rent space. However, urban
locations had a higher standard deviation which was the result of a few outliers raising the
average price of urban locations. This implies that while the urban locations may have a higher
average price, the majority of the locations may have a comparable price to suburban locations
with a few more expensive urban locations raising the average. In contrast, urban locations had a
lower average price, in regards to private offices, than suburban locations. Additionally urban
locations had a much higher standard deviation than suburban locations. This is also caused by
having a few locations with drastically higher price points than the others. These results would
imply that while there are definitely differences in price points between urban and suburban
environments, they are not likely great enough to influence one or the other to be more
successful.
Results: Global Survey Analysis
The next step I took was to compare and contrast the results of Deskmag’s Third Global
Coworking Survey and the 2015 Global Coworking Unconference Conference (GCUC) survey,
Coworking by the Numbers. Both surveys offered a plethora of different statistics regarding
coworking, but only one aspect of both stood out as relevant to this topic:
Networking/Community. According to the GCUC survey (2015), 87% of those surveyed
reported that they met with other members for purely social reasons rather than work related

7. reasons and 82% of those surveyed said that coworking has expanded their professional
networks. This idea is corroborated by Deskmag’s (2012) Third Global Coworking Survey, in
which the top three reasons responders chose to work at their coworking space were: a social or
enjoyable atmosphere (66%), a community (62%), and interaction with others (57%).
Additionally, the number one response given when asked, “Why did you decide to work at your
coworking space?”, was a community. ​This seems to support the idea that the most important
aspect of a coworking space is that it needs to have a good community, which coincides with the
GCUC 2015 survey’s final statement, “People value human space far above office space.”
Results: Popular Media
Since there is very little in the way of academic information regarding coworking spaces,
my next step was to explore less conventional avenues. I found that ​the idea that community was
the strongest factor in determining a coworking space’s success was further verified by multiple
sources including an episode of the PBS weekly series, ​Making Sense​, entitled “Selling Office
Space and Happy Hour to a Rising Economy of Freelancers”, as well as articles from ​The
Atlantic​, ​Time​, and ​The Harvard Business Review​. During the episode of ​Making Sense​, host
Paul Solman, PBS’ economics correspondent, asks, “​Am I being too negative to think that what
you’re doing is providing community for people who would otherwise be lonely, as opposed to
inspiring people and giving them meaning, whereas they couldn’t come up with meaning on their
own?” To which Miguel McKelvey, Co­Founder of WeWork, replied, “Well, certainly, there’s
components of both of those things, but as an entrepreneur who had spent time working at home,
I could have all the ideas in my head, and they could all be incredibly genius, amazing things that
inspired me all day. But without someone to share that with, where does it go?”

8. McKelvey seemed to present a very valid response, but because he is the co­founder of
WeWork, I could not take his word alone. The next step in verifying the accuracy of his
statement was found in an article on ​The Atlantic’s​ website. According to Segran (2015), “The
space, he [Robert Crauderueff] says, has also brought him many other intangible benefits. ‘I’ve
found a community of individuals who each have some sort of unique take on how to contribute
to the world that does not fit into the traditional corporate structure’”. In addition, I found an
article entitled “Why Coworking is Hot” in the​ Time’s​ Money section. In the article, Bacevice
(2014) states “In his recent book, ​The Purpose Economy​, social entrepreneur Aaron Hurst writes
how coworking spaces are a powerful tool for cultivating community among a new class of
workers who are driven to organize their professional lives around continuous personal growth,
meaningful relationships, and the service of something greater than themselves.” Lastly, I
discovered an article in the ​Harvard Business Review​ entitled “Why People Thrive in Coworking
Spaces”. During the article, Spreitzer, Bacevice, and Garrett (2015) state, “They feel part of a
community. Connections with others are a big reason why people pay to work in a communal
space, as opposed to working from home for free or renting a nondescript office. Each
coworking space has its own vibe, and the managers of each space go to great lengths to cultivate
a unique experience that meets the needs of their respective members.”
While these sources all agree on what seems to be the most prominent feature of
coworking, it could be argued that these could all be hearsay and do not represent actual facts.
However, given the reliability and respectability of the sources involved, it may also be prudent
to consider what is commonly known as the placebo effect. Whether a strong community is
indeed a factor of a coworking space’s success or not, the fact that multiple trusted sources are

9. all saying that it is could cause others to believe it to be true and, as a result of that belief, cause
it to become true.
Conclusion
It is difficult to ascertain exactly what it is that makes a coworking space successful, let
alone whether coworking spaces are more successful in urban or suburban environments and
why. From the sample of spaces chosen in the Illinois area, I feel it is safe to say that pricing is
not a very significant variable in how successful a coworking space is since they all appear to
have similar price points. The most prominent point that seems to determine a coworking space’s
popularity, and therefore success, is community. If a coworking space has a strong sense of
community, it will be more popular and, therefore, more successful. To that end, I propose that
the reason there are more urban coworking spaces than suburban spaces is that individuals who
live in a city lack the sense of community that is generated by living in a suburb. Whereas those
in the suburbs can have neighborhood barbeques or community events, city dwellers require a
location to be able to participate in different types of bonding activities. Coworking spaces not
only fulfil this location need but also allow people to meet and connect. In fact, a strong sense of
community could be viewed as an extremely positive externality generated by coworking spaces
in all environments, but especially in urban ones.
I feel that this is a topic that could, and should, definitely be explored further. There is so
little actual research that has been done in regards to coworking spaces that further research
should be done on all aspects of it. To that end, the first thing that could be done to improve my
research would be to reach out and attempt to obtain the financial records of as many coworking
spaces as possible in order to perform detailed statistical analysis on the profitability of different

10. spaces compared to their locations. Of course, care would have to be taken to ensure that none of
this information became public, since it would be dealing with private companies and they
wouldn’t want their financials ending up somewhere public, such as the internet or on the nightly
news, or in a competitor’s possession. It would probably be best to hire third­party analysts with
no connections to any of the coworking spaces or renters involved to ensure confidentiality.
Furthermore, interviews and additional surveys could be performed with coworking space renters
to determine just how strong of an effect community plays on urban settings versus suburban
settings. There are other factors that could also be investigated to determine if they have any
bearing on the success of coworking spaces in an area, such as ease of transportation to and from
the spaces, population areas of spaces, demographics in areas around spaces or the types of
businesses that the spaces host. Given these factors, I would emphatically encourage the
coworking space that this report is intended for to look deeper into this subject matter for their
own benefit or to collaborate with other coworking spaces to explore this and other topics jointly.

11. Table 1: Price Points
Per Day
Standard Price
per month
Premium Price
per month
Private Office
per month
Suburban Spaces
Elgin Technology Center ­
Elgin, IL ­ $100.00 $200.00 ­
CoWorkersLink ­ Glenview,
IL ­ $195.00 $345.00 $495.00
Company X ­ IL 1
$35.00 $265.00 $365.00 ­
Rev3 Innovation Center ­
Naperville, IL ­ $200.00 $350.00 $800.00
Metropolitan Coworking ­
Aurora, IL $30.00 $250.00 $400.00 ­
Regus ­ Naperville, IL $23.00 ­ ­ $1,200.00
Regus ­ Rolling Meadows,
IL $23.00 ­ ­ $1,200.00
Regus ­ Rosemont, IL $23.00 ­ ­ $1,200.00
Intelligent Office ­
Schaumburg, IL ­ ­ ­
Suite Spotte $25.00 $275.00 $375.00 $975.00
coLab ­ Evanston, IL $25.00 $250.00 $350.00 ­
The Nest Coworking ­
Peoria, IL $15.00 $99.00 ­ ­
Mean Values $24.88 $204.25 $340.71 $978.33
Standard Deviation $5.82 $70.64 $64.90 $287.34
Urban Spaces ­ Chicago
Enerspace ­ $300.00 $425.00 $750.00
Design Cloud Coworking $35.00 ­ ­ ­
Free Range Office $20.00 $285.00 $385.00
BeOffice $20.00 $350.00 ­ $500.00
NextSpace $25.00 $275.00 $425.00 $1,750.00
Carr Workplaces ­ $499.00 $540.00 $1,100.00
WeWork ­ Grant Park ­ ­ ­ $750.00
1
Company name removed on account of non­disclosure agreement

12. Table 1: Price Points (Cont.)
Per Day
Standard Price
per month
Premium Price
per month
Private Office
per month
­ ­ ­ ­
WeWork ­ Fulton Market ­ ­ $350.00 $700.00
WeWork ­ River North ­ ­ $455.00 $650.00
MakeOffices ­ $250.00 ­ $550.00
Grind $35.00 $375.00 $425.00 $3,200.00
Platform Coworking ­
Ravenswood $26.00 $215.00 $365.00 $700.00
Platform Coworking ­
Wicker Park ­ ­ ­ $470.00
Creative Coworking ­ $250.00 $300.00 $900.00
Onward Coworking ­ $280.00 $415.00 $850.00
Forum Coworking $20.00 $195.00 $350.00 $750.00
Level Office ­ 73 W Monroe ­ $199.00 ­ $349.00
Level Office ­ 211 W
Wacker ­ $199.00 ­ $349.00
Level Office ­ 318 W
Adams ­ $199.00 ­ $349.00
Blue 1647 Tech Innovation
Center ­ ­ $250.00 $450.00
Space ­ $250.00 $400.00 $1,100.00
Serendipity Labs ­ $399.00 ­ ­
OfficePort Chicago ­ ­ ­ ­
Workshop Chicago $25.00 $225.00 $400.00 ­
Industrious Chicago ­ ­ $420.00 $1,000.00
Catalyze Chicago ­ $225.00 $350.00 ­
The Study $20.00 $450.00 $600.00 ­
The Shift ­ $145.00 $295.00 ­
Coalition Coworking $20.00 $350.00 ­ $850.00
Office Evolution $120.00 ­ ­ $750.00
Servcorp $40.00 ­ ­
The Bureau ­ $350.00 $500.00 $2,000.00
Mean values $33.83 $284.77 $402.63 $905.09
Standard Deviation $28.03 $90.71 $84.15 $644.21

13. References
Bacevice, P. (2014, November 19). Why coworking is hot. ​Time​. Retrieved from
http://time.com/money/3586004/coworking​why​it​works/
Deskmag. (2012). ​The Third Global Coworking Survey​ [Survey results]. Retrieved from
http://www.slideshare.net/deskwanted/global­coworking­survey­2012?ref=http://blog.de
skwanted.com/
Foertsch, C. (2011, November 23). How profitable are coworking spaces? ​DeskMag​.
Retrieved from http://www.deskmag.com/en/how​profitable​are​coworking​spaces​177
Foertsch, C. (2013, March 4). 4.5 new coworking spaces per work day. ​DeskMag​. Retrieved
from http://www.deskmag.com/en/2500­coworking­spaces­4­5­per­day­741
Global Coworking Unconference Conference. (2015). ​Coworking by the Numbers​ [Survey
Results]. Retrieved from
http://officeslicecoworking.com/wp­content/uploads/2015/06/GCUC­2015­Coworking­
by­the­Numbers.compressed­1.pdf
Horowitz, S. (2015, October 2). This is what the state of freelancing in the U.S. means for
the future of work. ​Fast Company​. Retrieved from

14. http://www.fastcompany.com/3051686/the­future­of­work/the­state­of­freelancing­in­the
­us­in­2015
Segran, E. (2015, February 27). As coworking space scale, can they keep their communal vibe?
The Atlantic​. Retrieved from
http://www.theatlantic.com/business/archive/2015/02/ascoworkingspacesscalecantheyk
eeptheircommunalvibe/385653/
Solman, P. (Host). (2015, November 5). Selling office space and happy hour to a rising economy
of freelancers. ​Making Sense​. [Webcast]. Arlington, VA: PBS. Retrieved from
http://www.pbs.org/newshour/bb/selling­office­space­happy­hour­rising­economy­freel
ancers/
Spreitzer, G., Bacevice, P., Garrett, L. (2015, September). Why people thrive in coworking
spaces. ​Harvard Business Review​. Retrieved from
https://hbr.org/2015/05/why­people­thrive­in­coworking­spaces