Covid-19 Forces Co-Working Firms to Recast Their Business Model

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The pandemic is compelling a number of co-working firms to discard original business models, or accelerate the adoption of a new one, with the broader office market under threat

Now, some analysts suggest the pandemic is accelerating the end of the industry’s lease-and-sublet model. “The business model was similar to picking up pennies in front of a steamroller, which history has shown isn’t a sustainable strategy,” said Daniel Ismail, a senior analyst at commercial real-estate analytics firm Green Street.

Instead, he expects revenue-sharing agreements to become more common. They are similar to the relationship between hotel owners and operators, where operators get fees and a share of profits but don’t have to pay rent. Revenue-sharing deals are considered less risky because they leave operators with lower fixed costs.

 

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