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Is It Time To Move On From Coworking?

How do you know when it's time to find your own office?

July 12, 2017 | by
Reviewed by real estate expert Jonathan Wasserstrum

Over the last ten years, coworking has become the dominant trend in office space. And for good reason.

Flexible and affordable office space? Check. The promise of networking? Of course. Free coffee and beer? You got it. All this and more draws early-stage startups, small businesses, and freelancers across all industries through the doors of coworking spaces.

The end of 2017 saw more than 1.7 million global coworking members working in more than 14,000 coworking spaces. By 2022, those numbers will nearly triple.

Innovation in coworking spaces continues to take new forms. Restaurateurs and bar owners rent their dining spaces to digital nomads looking for a more reliable alternative to a table at Starbucks. Demand for niche coworking spaces, catered toward specific professions or groups, is on the rise. Co-living spinoffs have expanded to include year-long travel excursions with companies like Remote Year.

With all the perks and options offered by coworking giants like WeWork and Regus, many see coworking as a “rite of passage” for entrepreneurs. Yet by the nature of its design, renting coworking space is not meant to be a permanent solution. So what are the signs you’re ready to move on from coworking, and where do you go next?

You’ve outgrown your coworking space

Arguably the most common impetus for leaving coworking is simply outgrowing the space. If you’re renting shared space in a coworking facility, some say that two employees is the breaking point for venturing elsewhere. Anything more than that, and the benefits of your own space become that much more alluring.

“When we hired our third person we realized it might be time to find a dedicated space,” says Damon Gochneaur, founder of Aspiro Agency. “With a team of six now, we absolutely made the right decision, bringing on our fifth and sixth employees as soon as we acquired our new space.”

The coworking experience only reinforced our feelings that our own space was critical for truly building a team and a culture that was organic, not contrived.

On top of the physical constraints, a growing team can draw some unwanted attention, too.

“At my first coworking space, we were told we were dominating the shared space too much, and needed to rent our own office,” says Chris Post, CEO and founder of Post Modern Marketing, a Sacramento-based agency. “That presented a space problem once I hired [only] my second employee, so I moved to another nearby coworking office, where we ran into the same issue. Once you hit the point of having a couple employees, coworking spaces simply don’t work anymore.”

photo; coworking desk space

Lack of privacy impedes your workflow

The “co” in coworking is arguably the most significant benefit to early-stage startups prospecting for talent and clients. For some, the appeal of working alongside like-minded people who might provide a valuable connection down the road starts to wear off as noise and distractions become harder to escape. This can be especially problematic for those who rent hotdesks instead of offices — the slew of events and activities provide extra distraction, particularly when working outside the 9 to 5.

A private office can not only improve clarity and focus, but it also offers a key component to many businesses: confidentiality.

For Steve Bouchard, managing director at SEO agency It Works, confidentiality was a major sticking point in an otherwise pleasant coworking experience. “When it came time to hire my first member of staff, I knew it was time to move into my own office,” says Bouchard. The privacy of his own office mitigated the concern of nearby coworkers overhearing a sensitive conversation.

While Bouchard appreciates that having his own office allows him to build the kind of company culture he’s always wanted (“We have the radio on, which certainly wasn’t allowed in the coworking space,” he offers), the freedom to communicate without paranoia is a surprisingly big deal.

“We aren’t worried about who might hear our conversation on the phone because we’re all working for the same business, so everybody knows everything anyway.”

And while many coworking facilities have spaces you can rent or reserve for client meetings, inviting a client to a meeting in your private office just can’t be beat.

Coworking culture can smother your company’s culture

Coworking tends to conjure images of beer on tap and ping pong tables — signifiers of relaxed, free-flowing “startup” culture. Which, frankly, isn’t for everyone.

For Gochneaur, the whole coworking vibe was a bit too caricatured. “The coworking experience only reinforced our feelings that our own space was critical for truly building a team and a culture that was organic, not contrived.”

With his new 400-square-foot office space in Denton, Texas, Gochneaur and his team have settled into their own groove.

“Things felt temporary and too startup-y in the coworking space,” Gochneaur says. “We’ve been in our new space for roughly six weeks, and we’ve already seen a marked increase in communication, productivity, and most importantly employee satisfaction.”

Certain features of the startup atmosphere and like-minded community that coworking provides can be a boon for companies that are still forging their own culture. Open door policies, flexible office space, and collaboration among varied skillsets are beneficial aspects that many companies adopt when they move into their own office space and refine their company culture, without the excessive bells and whistles that saturate the “play-hard” side of coworking culture.

photo; coworking space cafe

Initial savings start to shift

At a certain point, coworking members with growing staffs and growing businesses have to make a more crude calculation about when it’s time to move on: the point at which it stops saving you money.

Let’s do some math. If a dedicated desk in a New York coworking den costs $450 a month, and you need eight desks, that’s $3,600. When you consider that for $5,000, you could get a private office approaching 1,000 square feet to call your own, coworking starts to make less fiscal sense.

Eventually, coworking costs also become more difficult to factor into a company budget. While shared amenities are initially a perk, moving to a private office and spending money on exactly the resources and supplies you and your employees need — and no more — is a much more effective approach to budgeting.

Moving into your own office isn’t a task to take lightly. After all, renting an office is usually a business’s most considerable operating expense second to work wages. And signing a multi-year lease on office space is predicated on the idea that your business will continue growing long enough to justify the investment, an outcome that is far from guaranteed, as any business owner knows.

If one or more of these scenarios are true for you, it may be time to move on from coworking. Take the aspects that suited you as you go to use moving forward, and then reap the benefits of building your company in an office space you can call your own.

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