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How to Choose Between Coworking and Renting Office Space

April 6, 2020 | by Melissa Landon
Reviewed by real estate expert Michael Colacino

Updated November 2021

“Working in an office” isn’t a simple, overarching concept anymore. Today, renting office space can mean many things. You can work from an executive suite, sublease office space, rent space in a business center downtown, or rent part of a coworking space in your neighborhood, and that’s not even a full list of the many options for workspaces.

Those at this early stage of business development are often searching for something smaller, cheaper, in a particular location, and more flexible than the types of offices their more established counterparts want. Usually, that means a choice between coworking or finding an inexpensive renting situation like subleasing. Let’s look at each of the options in detail to help determine what’s best for your business.

The Advantages of Coworking

A coworking space is basically any location where unconnected individuals or groups of individuals work in communal proximity, sharing common spaces and services but very little more. Today, coworking spaces come in all shapes and sizes, making them a particularly attractive deal for companies seeking flexibility. They may be found in the city or the suburbs and offer freelancers, entrepreneurs, creative types, and sometimes small businesses the chance to escape the isolation and monotony of working at home or in a coffee shop. A coworking space could look like an office, a lounge, a network of connected rooms, or just one giant room.

Amenities typically include:

  • access to WiFi
  • kitchen areas with an assortment of snacks available
  • unlimited coffee and tea
  • conference rooms
  • private offices that can be reserved for a period of time
  • furniture such as desks (floating or dedicated), tables, and couches

Often, these workspaces also provide seminars with guest speakers, happy hours and other community events, a shared office management and reception team, a professional voice to answer your company phone, and standard office equipment like printers. Let’s dive into some of the other specific advantages of renting coworking space.

Flexibility

We are far from the era when businesses – whether a large corporation with multiple city offices, or a small family-owned outfit with its own floor in a local suburban office park – seemed to stay static for decades. Remember when people literally spent their entire careers working for one company? Nowadays businesses often grow rapidly, sometimes slowly, and sadly they may downsize as well (but there is always hope for growth!). They also frequently re-locate or shift employees around to different locations based on company reorganization.

With so much uncertainty (and possibly a limited amount of capital), especially for newer companies and startups, a coworking office space is a very enticing option. Most coworking spaces offer daily, weekly, or monthly leasing (and payment) options and costs tailored to the length of contract and type of space. Coworking offers the flexibility to scale staff up or down as needed without worrying about having the appropriate-sized office. It also makes it possible to have employees move to different locations if needed and to even allow employees to have a workspace closer to their own homes. This latter option is especially useful for companies that are remote but that still want to provide employees with an option to go to a workspace.

Networking Opportunities

Possibly the most valuable perk of coworking is the sense of camaraderie among the coworking community members and the opportunity to network. Many coworking stations are symbiotic ecosystems, where businesses can connect with freelancers, lawyers, clients, potential partners, and more.

On a personal level, coworking offices allow small companies to have a day-to-day social outlet beyond their team, and to see other businesses experience similar growth and operational challenges. Whether they’re chatting about their respective companies over coffee in the shared kitchen space, or mixing it up at after-work networking events hosted at the space, coworking office members enjoy numerous opportunities to network in their location.

Additionally, a growing number of shared-space operators are helping small businesses overcome start-up challenges together by, for example, facilitating the exchange of services, clients, and even investor contacts.

Reduced Costs

Renting an office can be very pricey. Renters have to furnish the rooms, purchase office equipment, pay for utilities, and potentially cover renovation and build-out costs. Coworking spaces like those offered by WeWork are turnkey, with access to shared amenities ranging from office equipment to large reservable spaces for events, so you can focus on your business. They usually include an office starter pack of sorts—desks, tables, couches, printers, kitchen spaces, and WiFi. Many also come with shared office management and reception teams to help coordinate maintenance, cleaning, deliveries, and visitors. Coworking tenants don’t have to worry about renovations, decorations, janitorial services, or utility bills.

Additionally, most landlords want tenants to sign a lease for at least three years, which can be too risky for some companies, especially startups — and extremely costly if the need to break the lease arises.

Tenants who travel and don’t always need the space may prefer the daily, weekly, or monthly payment options most coworking offices offer for their workspaces. Costs for coworking spaces vary greatly based on factors such as length of contract and type of space. For example, a freelancer could rent a flexible desk (available 24/7), a dedicated desk (available during business hours), or a shared desk (a desk shared with one or more other coworkers).

A Fun Environment

Coworking spaces are specifically designed to spark creativity and foster a sense of community amongst members. Some coworking spaces have perks and amenities like:

Want to play ping pong during your breaks? You can probably find a coworking space that offers this. Want to have easy access to cool downtown lunch spots and art galleries? There is probably a convenient coworking space in the area. Want to take a moment to center yourself when the day gets stressful? You may be able to find a coworking space with a meditation room. As New Worker Mag writer Diana McLaren explained coworking: “I work from a place that has Friday drinks and a naptime space. How’s that cubicle looking?”

coworking space

The Advantages of Renting Office Space

Renting private office space offers businesses the opportunity to tailor the space to suit their specific needs. This could mean purchasing and arranging the ideal furniture, doing construction, playing music, or putting up banners and logos. And in most cases, renting a traditional office means having the space all to themselves. In some subleasing situations, businesses will still work alongside other businesses, but subleasing still usually means having full access to several office rooms and private offices instead of just a few desks.

In a coworking situation, you might just have one desk to yourself and have to share conference rooms, tables, printers, and kitchens with others. When you rent office space, the whole space belongs to your company. That means you don’t have to reserve the conference room, worry about someone moving your furniture when you wanted it left a certain way, or put up with another company leaving dirty coffee mugs in the sink.

In a traditional office, you set the rules, atmosphere, and yes, snacks. So as long as it’s okay with the building, you can make it dog-friendly or not, host costume parties, play music, and have kombucha—or pilsner—on tap. Let’s look at some more of the benefits of renting traditional office space.

Privacy

Privacy in all forms—physical, informational, sound—is becoming a growing concern for many businesses. Tenants in traditional offices (where everybody within the space works for the same company) worry a lot less than those in coworking spaces about nosy neighbors, noisy neighbors, or nosy, noisy neighbors. Moreover, if a company deals with sensitive information of any kind, a private office allows for all sorts of privacy enhancements not available in a shared work environment, including extra-secure WiFi networks.

Coworking presents potential struggles with physical privacy, sound privacy, and information privacy, making the idea of having a dedicated office for your business all the more attractive.

Physical privacy

In a coworking space, you don’t ever really know exactly who else is present. Strangers might look into your offices, be within earshot while you’re on the phone with a client, or walk by your conference rooms just often enough to be disruptive. The property managers might also give tours to potential tenants, causing noise and activity in the halls. When your company has its own office, you don’t have to worry about these annoyances.

Noise control

You can control the noise level within your own company to a reasonable degree, but if you have noisy neighbors, you can’t do much about it. Or, maybe your team tends to have a lot of spirited discussions that might earn you complaints from the neighbors.

Information privacy

Especially if you’re dealing with sensitive information—like people’s finances, social security numbers, government documents, personal backgrounds, criminal records, etc.—you may enjoy the freedom to speak in the privacy of your office instead of trying to find a quiet corner in a coworking space and pausing every time someone walks by. Want to interview someone for a new position within your company? No problem! Just invite them to your private office without worrying about fielding questions from other businesses about the newcomer. Sharing a WiFi network could also present security issues.

Stability

Couch-surfing can be fun when you’re starting out in life, but as you mature and accumulate stuff, you usually want a stable, private home to live in. It’s pretty much the same for a business. When startups are growing and finding their identities, the flexibility of coworking can be a big advantage. But as your business becomes more established, the prospect of a stable office space to call your company’s home for the next three, five, or maybe even 10 years (and possibly longer if all goes well) becomes far more desirable. As you settle into your office home, you no longer need to stress about moving costs and arrangements and scouting new locations. What a relief!

Reduced Cost

Wait a minute, you say. I thought renting traditional space costs more than coworking! Well, in most cases that’s true. However, as your company grows to more than a half dozen employees, you may find that it makes more sense financially to rent your own space. Here’s why: If a private office in a coworking space costs around $800 per month and you need 15 desks, you’re now paying $12,000 per month. You could just get a 2,000+ square foot traditional office for a similar amount!

Branding

When you rent your own space, you can put your company logo on the sign above the door, on the window, and in the street outside. When you interview a potential employee or invite a business partner to visit, he or she will enter a space that reflects your company values, culture, and community. The environment won’t be injected with the values and cultures of the coworking company and the other tenants.

Do you want customers entering your office to feel secure and comfortable? You can control the thermostat, noise level, creative decorations, the types of events held there, and music choices — the sky’s the limit. Also, renting your own space means your business can easily be listed on Google Maps, making it easier for customers to find out where you’re located.

Still not sure? Ask a broker.

Hopefully, after reading this article, you have some idea of what coworking spaces and traditional spaces have to offer. Remember each has pros and cons, and every space is different. If you’re on the fence, you should tour a few different options before making up your mind. Even more importantly, you should talk to a professional broker.

Our SquareFoot brokers can help you assess your situation, identify various renting and coworking options (e.g. WeWork, Alley), consider all the advantages and amenities, and act on a decision that is best for you. Our brokers are commercial real estate experts, and their guidance comes completely free to tenants. They’re here to help you find a space that’s perfect for your business, today and as you grow.

You can start by taking our Coworking vs Private Office Space Quiz to see what option is right for your business.

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