When the “sharing economy” first took shape, it sparked heated debates. As a business format that uses technology to facilitate the exchange of goods or services between provider and customer (e.g., Uber, Airbnb), it inspired entrepreneurs to think outside the box with regards to acquiring and optimizing resources. It turned out that there were ways to reduce overhead costs while simultaneously expanding market reach. Technology didn’t even have to be present; all that was needed was a shared platform whose primary purpose would be to bring customer traffic to all parties involved.
As the sharing economy gained traction around the world, so did people’s interest in an old business practice: the sharing of business spaces.
There are many reasons for sharing a commercial space with another business, but the primary goal is often to cut operational costs. This is especially true in central business districts where the rates for prime offices, retail spaces, and kiosks are sky-high.
Which businesses are drawn together in a shared space concept? They are often ventures whose products or services complement each other’s, such as a coffee shop and an artisanal pastry shop, a bookstore and a creamery, and a bar and a restaurant. These businesses don’t compete for customers. Rather, their target markets are also potential customers for their partner businesses.
The sharing format depends on the types of businesses involved.
Startups and self-employed professionals are prime examples of how cost-effective shared business spaces can be. Signing a bi-annual or annual lease for expensive office space isn’t possible for those who start small, so they look for co-working establishments instead.
Telecommuters subscribe to co-working communities where they can access office facilities like conference rooms, reliable and fast Internet connection, free coffee, and personal work cubicles. Many companies that have downsized but are burdened with a spacious property can also turn co-working into a new revenue stream. It has become so popular and potentially lucrative that many enterprising individuals are tapping the market by organizing co-working communities through franchises or from the ground up.
Why is there a huge potential for growth and profit with co-working spaces? There’s currently a massive movement in employment in the United States wherein professionals are leaving corporations in favor of self-employment. Co-working communities meet their needs that work-from-home setups often cannot.
Businesses with a customer-facing process (the most crucial part of their operation is convincing their target market to buy their products and services) are suitable for commercial space sharing.
Those in the foodservice industry are a prime example. They can sublease or share spaces with commercial kitchens large enough to accommodate all their cooking needs. Retailers whose items complement each other (e.g., clothing and shoes, luxury bags and jewelry, beauty and skincare, sports equipment and nutritional food supplement for bodybuilders) also thrive in a co-retailing arrangement. It’s a common sight in malls: small-scale retailers come together to form a bazaar where they can set up their own kiosks. There’s usually a theme, too, like food, women’s clothing, gadgets and accessories, toys, etc.
Shared business spaces have plenty to offer businesses. Foremost would be the cost savings. Opening shop in a high-traffic area would be of little use if the bulk of a business’s earnings would go to rent. Co-working and co-retailing eliminate this problem. Moreover, partnering businesses can generate more revenue from their complementing products and services.