Commercial Real Estate

TL;DR

At a flexible workspace event in London this week, I was expecting conversations about AI and growth. Instead, the topic that surfaced repeatedly among operators was business rates.

From affordable workspace obligations to rate mitigation and council relationships, it’s clear coworking operators are now navigating property economics and policy, not just community and occupancy.

A big thanks to connector and organiser Bernie J Mitchell for hosting Unreasonable Connection in London this week. It was a thoughtful workspace event with genuinely useful conversations and workshops.

I arrived expecting the usual discussions around AI, occupancy, community and growth. While those conversations happened, the topic that surfaced repeatedly, particularly for more established workspace businesses, was business rates.

One operator told me the rates on a Bath location were approaching 80% of the rent itself.

Another shared recent challenges navigating affordable workspace agreements, Section 106 obligations and backdated rates bills with a London borough.

A third explained how workspace layouts, leases and private office structures are increasingly being designed around rate strategy and local authority approval.

What became obvious very quickly is that many coworking operators are no longer simply managing workspace communities. They’re navigating property economics, planning policy, council relationships and long-term operational viability all at once.

Interesting conversations about social impact

Two workshops focused on impact measurement and community value, led by Sophia Awan and Roshni Sharma from AKOU.
What surprised me was how closely social impact and financial sustainability are becoming connected in parts of the coworking industry.

Several operators discussed how affordable workspace schemes, community initiatives and local impact programmes are increasingly tied to:

• Council partnerships
• Regeneration projects
• Affordable workspace requirements
• Business rates mitigation

This feels far more operational than the traditional idea of “social impact” as a branding exercise. And for some operators I met, community value is embedded into the structure of the business itself.

At the same time, there was recognition that councils are becoming more cautious. One operator described how some boroughs have tightened tender processes after developers were gaming systems to dodge rates perceived to be using affordable workspace schemes primarily to reduce costs rather than create genuine local value.

That tension feels important because it raises a bigger question: How do workspace operators balance commercial sustainability with meaningful community value?

Shared workspace is under structural pressure

I’ve since read more in the impact of business rates for coworking and flexible workspace operators.

A paper submitted to Parliament by Enterprise Nation and a group of flexible workspace experts argued that coworking and open workspace providers are structurally disadvantaged under the current business rates system. Why? Because shared workspaces are often treated as a single entity, preventing many smaller occupiers from benefiting from Small Business Rates Relief.

The paper also noted that rate increases have disproportionately affected open workspaces in London, with knock-on effects on affordability, inclusion and long-term viability.

Reporting from Startups.co.uk highlighted concerns that recent rate changes could significantly increase costs across the coworking sector again, potentially pushing smaller businesses out of shared spaces altogether.

The more operators I spoke to yesterday, the more it felt like business rates sit underneath many of the wider pressures facing coworking right now. Not just because rates are expensive, but because the current system appears to favour certain workspace models over others.

Several conversations made the point that open, community-led and affordable workspace models can be harder to sustain financially when shared spaces are treated differently from private offices or more traditional leased setups. As well as a growing conversation about whether current property and rates frameworks genuinely support the kind of flexible and accessible workspaces cities say they want.

Coworking operators are also property operators

One thing became very clear from the event: the coworking industry is maturing. Operators are no longer just thinking about desks, amenities and member experience.

Many are now dealing with:

• Lease structures
• Rates exposure
• Affordable workspace obligations
• Planning policy
• Operational efficiency
• Financial resilience

And honestly, I think the industry needs to talk about this side of coworking more openly. The future of flexible workspace may depend not just on experience and community within the space, but on whether operators can build commercially sustainable models within increasingly complex property and policy environments.

For some operators, exploring local authority partnerships, community value and affordable workspace initiatives are becoming part of how spaces remain commercially viable while still giving something meaningful back to local communities.