The question that gives London coworking operators sleepless nights:
Does offering those cheap virtual offices actually pinch your valuable physical memberships?
Or, could it be a clever way to draw businesses into your world, a sort of gateway drug to a full-blown desk?
Loads of operators are terrified that a low-cost virtual presence will devalue their main offering, attract the wrong crowd, and suck up resources that should be spent looking after their dedicated desk members.
It’s the classic head-scratcher:
Are virtual offices a smart entry point or a dangerous distraction?
Let’s get to the bottom of it:
“How does offering VOs really stack up, financially and strategically, against just focusing on physical memberships?”
SOME CONTEXT
In London’s cut-throat market, independent coworking spaces live and die by their community, connections, and the quality of their physical gaff.
The core sales pitch often hangs on the experience of actually being in the space.
So, introducing a purely virtual service, often seen as low-value and high-hassle, naturally sets alarm bells ringing.
Operators worry about their brand getting diluted.
Will being known for cheap mail handling tarnish the premium image of their physical space?
They fret about where their team’s time goes.
Will they get bogged down serving fleeting VO clients instead of nurturing their committed members?
And they stress about attracting clients who only care about the postcode, not the people.
These fears are totally valid, especially if VOs are rolled out badly, as we’ve banged on about in previous articles.
CALL OUT THE FANTASY
The really seductive fantasy here is the idea of effortless conversion:
“Offer a cheap VO, and clients will magically upgrade to a desk membership once they see how brilliant we are!”
Spoiler: this rarely happens on its own.
Why would a client happily paying £50 a month for an address suddenly decide to fork out £400+ a month for a desk unless there’s a damn good reason and a clear path to get there?
Just being in the same building isn’t enough.
The truth is, turning VO clients into physical members needs a proper strategy, smart service design, and a real understanding of why someone chooses a VO in the first place.
Treating VOs as a passive lead magnet is just asking for disappointment and reinforces the idea that they’re separate, low-value things.
THE REALITY: UNDERSTANDING THE MESSY RELATIONSHIP & ACTUALLY BUILDING BRIDGES
Figuring out if VOs are rivals or buddies means picking apart their relationship with physical memberships and deliberately building bridges between the two, instead of just letting them bump into each other and cause chaos.
This gets right to the heart of the comparison questions operators wrestle with.
1. GET REAL: DIFFERENT NEEDS, DIFFERENT PRODUCTS
First up, accept that VOs and physical memberships are fundamentally for different primary needs. A VO client mainly needs a professional business front, a registered address to keep the authorities happy, or a mail handling service. A physical member mainly needs a place to actually work, connect with others, and use the facilities.
Yes, there can be overlap (a VO client might need a meeting room now and then), but their core reasons for signing up are different. Some savvy operators, like Paula Madrid, founder of Blue Panda Office Spaces in NYC (and a former trauma psychologist, interestingly), even completely reframe what a VO is. For her, it’s not just about mail; it’s about providing a safe, confidential anchor for a business, handled with genuine care.
Trying to shoehorn VO clients into a physical membership model without addressing their main need (or spotting a new need for physical space) is usually a waste of time.
2. BE HONEST ABOUT POTENTIAL CLASHES & RESOURCE SINKS
Be realistic about the operational hit. As we covered in Article 3, badly managed VOs do suck up resources. Staff time spent on low-margin, high-compliance VO tasks is time not spent engaging your physical members or developing services that actually make decent money.
If your VO processes are a shambles, or if your VO clients are demanding and non-compliant, they will drag down team morale and potentially hit the service quality for everyone. This answers the unspoken question: “What are the real downsides of trying to do VOs alongside proper memberships?”
3. ANALYSE THE CANNIBALIZATION RISK – WHEN IS IT ACTUALLY A THREAT?
The fear that VOs will steal potential desk members is strongest when your pricing is all wrong or your value proposition is muddy. If your basic hot-desking package is only a tiny bit more expensive than your all-singing, all-dancing VO package (which might even chuck in some meeting room access), then yes, you might just tempt businesses that could use a physical space to go for the cheaper virtual option. Cannibalization is less of a worry when:
There’s a clear price difference that reflects the different value and resources involved.
Your physical membership offers obvious, tangible benefits beyond just a desk (a strong community, decent events, specific facilities) that a VO simply can’t match.
Your VO packages are clearly aimed at businesses needing presence, not a place to work.
4. DESIGN THE CONVERSION PATHWAY – DON’T JUST HOPE FOR IT
If you want VOs to feed into physical memberships, you need to build the bloody bridge. Don’t just cross your fingers and hope clients will wander over it. Strategies include:
Tiered VO Packages (The Upsell Ladder): Offer a basic mail-only option, but create higher tiers that bundle in day passes or meeting room credits each month. This gives VO clients a taste of your physical space and its perks at a controlled cost.
Clear Upgrade Offers (Make It Tempting): Make it easy and attractive for VO clients to make the leap. Offer introductory discounts on hot-desking or dedicated desks for the first few months.
Targeted Communication (Talk to Them Like They Matter): Segment your comms. Send VO clients specific invites to relevant community events (networking, workshops) or share news about space improvements. Highlight the benefits of physical membership that solve problems they might actually be facing (like loneliness, or nowhere decent to meet clients).
Community Integration (Optional & Controlled – Don’t Overdo It): Let VO clients opt into relevant online community platforms or newsletters. This can help them feel a bit connected without overwhelming your physical members.
The Personal Touch (Actually Be Nice): When a VO client uses a meeting room or a day pass, make sure your team gives them a warm welcome and a positive experience. A quick chat about their business and what they need can uncover chances to suggest an upgrade.
5. SERVICE QUALITY REFLECTS YOUR WHOLE BRAND – IT’S ALL ABOUT TRUST
This is huge. The experience a VO client has – from signing up to their daily mail handling – reflects on your entire brand. This isn’t just about being efficient; it’s about trust. As Paula Madrid stresses, handling someone’s official business mail needs confidentiality and care, almost like the standards in a therapist’s office. A sloppy, unresponsive, or unprofessional VO service doesn’t just annoy the client; it screams that your whole operation might be a bit rubbish, eroding trust across the board.
On the flip side, a highly efficient, compliant, and professional VO service, even if it’s basic, makes your coworking space look like a well-run, trustworthy organisation. It shows you respect the client’s business, no matter what level of membership they have. This directly answers that nagging question: “How does this VO nonsense impact my main brand?” It impacts it massively, through the lens of trust and professionalism.
THE CULTURAL COST – IDENTITY CRISIS & TEAM GRUMBLES
The biggest cultural risk rears its ugly head when your team starts seeing VO clients as second-class citizens or just a necessary evil.
This often happens because of badly designed processes, not enough training, or having to deal with problematic clients lured in by rock-bottom prices.
Does chasing VO revenue blur your core identity as a community-focused workspace?
It damn well can, if you don’t manage it strategically.
Keeping your purpose clear is vital.
Is your main mission to provide physical workspace and community, with VOs as a supplementary, professional service handled with care and respect?
Or are VOs now a core part of what you do?
Be clear with your team and your members.
Make sure your team feels equipped (with tools like Nexudus and proper training) and empowered to manage VO clients effectively and professionally, and to enforce boundaries when needed.
When the VO service is respected internally as a legitimate and well-managed part of the business – seen through that lens of trust and professional responsibility – the cultural friction starts to fade.
THE OPPORTUNITY – BUILDING AN ECOSYSTEM, NOT JUST FLOGGING DESKS
Instead of seeing VOs and physical memberships as rivals fighting over the same scraps, think of them as different stages or parts of a bigger business support ecosystem.
A strategically implemented VO service, handled with professionalism and care, can:
Act as an Outer Ring (Catch Them Early): Grab businesses that aren’t ready for physical space yet but need a professional London presence built on trust. You start building a relationship early on.
Serve Your Existing Members (An Easy Add-On): Provide a valuable, reliable extra service for your physical members who also need a registered office address that’s separate from their home or main workspace.
Generate Qualified Leads (Warm Them Up): Tiered packages with bits of physical access act as effective, low-risk trials for potential desk members, showing off the value of your physical space.
Enhance Your Overall Value Proposition (Look Like a One-Stop Shop): Position your coworking space as a comprehensive hub offering solutions all the way from a virtual presence (handled with integrity) to full-time residency, catering to the entire business lifecycle.
Build a Ladder, Not Just Sell the Bottom Rung (Think Long-Term): See the VO service not as the end of the line, but as the first step on a potential journey with your space. Nurture these clients, understand their changing needs, and be ready to offer them the next step when the time is right, all built on the foundation of trust you established through the VO service.
The key is smart integration, backed up by professionalism and respect.
Price it right.
Design clear pathways.
Use technology effectively.
Maintain high standards of trust and confidentiality.
And make sure the VO service fits with, rather than fights against, your core mission and brand identity.
Do it thoughtfully, and VOs can indeed be a valuable partner to your physical memberships, helping to build a stronger and more resilient coworking ecosystem.
VIRTUAL OFFICE VS. COWORKING MEMBERSHIP: FRIEND OR FOE? (How to Make Them Play nice)
This article is brought to you by the London Coworking Assembly, a grassroots network of coworking operators, community builders, and advocates shaping the future of work in London and beyond. 👉 Join our newsletter for honest conversations, peer support, and tools that actually help: Subscribe here 🎙️ Listen in: Coworking Values Podcast — stories from the frontlines of community-led coworking.
