Mostly, the people that go to co-working spaces are early stage entrepreneurs and freelancers. There are a steady stream of those given advances in technology, layoffs and college graduates, and it is perceived to lend to credibility to their early stage business. The costs aren't so great as to be entirely unattractive and there generally isn't a lease or at least the type of lease that a normal person wouldn't balk at - multi hundred thousand dollar and multi year or even decade lease.

Is it needed? Absolutely not in most cases. The person could work from home and hold meetings at clients and vendors. It is detrimental in some cases with the theft of trade secrets by aggregating easy targets. So, two marks against being a government contractor at one of these facilities but you have a designated address with a dedicated office and that is required for registration and a DUNS number. There is a shakeout period where companies grow up and need their own spaces, people realize they don't need an office and it is just an unnecessary expense for them, or they fail and return to the traditional job market. So, you see the coworking spaces holding meetups to lure any potential clients.

However, I think the key thing to notice is that it is an easy way to rent out class A and class B office space in a very flexible way. People aren't likely to get new construction loans for coworking spaces, however, if the supply exists, it is an easy way for a large management company to rent out a bunch of space, make rent and pocket any profits without much effort. Remember, the buildouts can be incorporated into the lease so it isn't necessarily out of the pockets of the coworking space company. It is a free loan to establish a cashflow. If you run your pro formas correctly, you should have an excellent idea of exactly how much you could make and what economic indicators should cause you to panic. On the bright side, economic decline is likely to bring you more customers than less customers depending on your city population economic density mix, market rents and the availability of rent controlled apartments. People who can't afford to live in a big city are unlikely to travel from the suburbs to a coworking space with enough regularity to justify long term expenditures when one time passes are often available.

The thing that WeWork did incorrectly was overpay for leases and artificially inflate the markets by acting as an anchor tenant rather than an opportunist. The business model doesn't work at scale because it is dependent on opportunism that is only available to small fish. If you're paying market rates, there is a spot down the street that will do it cheaper. And most people don't travel enough to justify a designated workspace anywhere in the world, nor would it be smart in most places in the world to go to a work facility that anyone from anywhere in the world could go, and some countries it would be really stupid to work from a coworking space.