What GCUC New York taught me about fractional offices

I was at GCUC New York recently (one of the most energetic editions yet), attending a panel about fractional offices.

A fractional office refers to a shared, flexible workspace used by different companies at different times to reduce costs and maximize a space’s occupancy.

The panel covered offices, part-time desks, sprint spaces, short-term team rooms, that kind of thing. The speakers were Mark Goldfinger, Hannah Mojica, Michael Everts, and Kane Willmott, and they brought data and real operator experience from the UK, US, Canada, and Japan.

I work with coworking operators every day, helping them get more out of Nexudus. These conferences are an opportunity for me to put my ‘ear to the ground’ and see how the world of coworking is growing and what kinds of trends are out there.

Here are my key takeaways:

Fractional offices are real, but not the main event

The panel was pretty much in agreement that fractional offices are not going to replace private offices. Right now, they typically make up around 10-20% of revenue for most spaces. As most of you know, the core business and revenue-driver is always private offices.

However, the reason people are paying attention to them is the margins. When you have a steady income stream from your core tenants, monetizing a vacant day office or an empty team room is almost pure upside. Fractional offices are about making the most of what you have available and converting unused or underutilized space as supplementary income.

‘Sprint space’ is the post-Covid product nobody named until now

One of the more interesting moments in the panel was when someone described “sprint space”, companies taking a space for a week for a team offsite, a project push, or a departmental gathering.

It has a name now, but operators have probably been selling it without really packaging that before now. Since Covid, plenty of companies have ditched permanent office space but still need to get their teams together periodically for an “on-site”.

A week in a flexible space is often exactly what they need. Operators who frame this as a product, not just an ad hoc booking, are leading the way.

Tuesday to Thursday is the real office week

If you operate a coworking space, you’re already aware of the ‘Monday and Friday’ problem, where most spaces encounter lower occupancy and footfall on these days. Tuesdays and Thursdays are busier, with Wednesdays being the peak occupancy day typically. For the Tuesday to Thursday crowd, there’s a rude but funny industry term, I’ll let you google that. It got a laugh in the room.

The reality is that operators are starting to think about pricing the way airlines and hotels do, dynamic pricing that adjusts rates based on the demand.

The industry is a bit divided on how to handle the midweek peak. I’ve had some spaces tell me “we’re not Ryanair” the second the conversation turns to dynamic pricing, while others have completely embraced it, baking it into every bookable resource.

Strategies for those quiet “bookends” of the week vary just as much.

One space told me they actually block tour bookings on Mondays and Fridays because they don’t want would-be members seeing the space looking so sparse. On the flip side, you have spaces being creative in incentivizing attendance, think special events or the “Donut Monday” to try and lure people back in. At the end of the day, if the goal is to actually increase revenue on those quieter days, leaning into dynamic pricing and offering fractional offices are the two most practical ways to get started.

A day pass user is a sales lead

I’ve heard this many times before and the panel reaffirmed it. They referenced data showing roughly 20% of short-term users eventually become a full-time member. That’s not insignificant.

It changes how you look at the person booking a day office. They aren’t just filling a gap in the calendar; they’re potentially your future members!

The operators on the panel were clear that hospitality is what actually gets people to stay, not just a promo price. When a front of house team makes a visitor feel like they belong by making introductions or checking in, they’re doing the real work of growing the business.

This is also about staying on top of your data, however. You have to know if your long term members started out with a single day pass and later converted. If you can track that journey, you can figure out exactly what made them decide to join for good and make sure that happens more often.

London is leading the path for coworking and flexspace

The panel described the UK, and London especially, as much further ahead in the flex market than North America. Over there, customers expect a blend of workspace, wellness, and convenience. It is just a normal part of the lifestyle in a way that hasn’t fully hit elsewhere yet.

One speaker mentioned that while North America can learn from London, we shouldn’t just copy their landlord deals directly. Still, the trend is obvious. The operators who look beyond just providing a desk and focus on the whole experience of being in the space are the ones who will actually meet the new demand.

Brokers: it depends on who your members actually are

The panel was split on brokers. One operator said they only account for about 5% of their business, while another put it closer to 30% or more depending on the market. It really comes down to what you’re selling and who you’re selling it to.

One speaker realized that 82% of their desks were filled by enterprise companies, which changed their entire approach to finding members. They moved away from ads and leaned into broker relationships. If you’re mostly dealing with small businesses or individuals, going direct makes sense, but if you’re after the bigger corporate deals, brokers are usually the ones making those connections.

What I took back to my work

My key takeaways:
Operators need to track fractional revenue on its own instead of lumping it in with everything else. You have to understand those specific margins and know for sure if those short-term users are actually turning into long-term members or not.

It’s also time to build pricing that reflects the reality of the Tuesday to Thursday rush. More importantly, front-of-house teams need to see that giving a day user a great experience is a real investment in the future of the business, not just being polite.

It was great catching up with everyone in New York. Major kudos to the GCUC team for producing an event that captures the heart of coworking: community.