Industry jargon. Commercial real estate is chock-full of it. Whether you have negotiated a commercial lease before or it’s your first time, chances are you will run into some potentially... Read More
As the office space industry has evolved, companies are no longer forced to choose between leasing expensive traditional space or working exclusively from home. In the past few decades, a variety of options for office space have cropped up, coworking being arguably the most notable of these options.
In 1995, C-base, a type of communal office space, was founded in Berlin; by 2005, the first official coworking space had launched in San Francisco. Today, coworking is a popular office space solution for many freelancers, entrepreneurs, small businesses, startup businesses, enterprise companies, and more.
In 2019, there were more than 3 million people globally in coworking spaces; in the United States alone, there was 80 million square feet of flexible workspace, with 7.7 million square feet of coworking space in New York City! In this post, we’ll go over the basics of coworking: what it is, who it’s for, what the pros and cons are, and what questions to ask yourself before signing a coworking agreement.
What is a coworking space?
At its core, coworking is a type of office space in which a variety of professionals from different companies (or often, freelancers) work in a shared office. Members of coworking spaces are usually able to rent hot desk space, dedicated desk space, or even private offices, all at varying pricing tiers and usually on a month-to-month basis (with potential discounts for longer-term agreements).
Coworking spaces are often more affordable than traditional office space, especially for small companies and independent professionals, and offer more flexibility. Members share a variety of amenities including kitchen space, equipment, and meeting rooms. Those in coworking enjoy a turnkey experience — spaces generally come fully furnished, and provide at a minimum complimentary tea and coffee, but often other refreshments as well.
One of the perks of coworking is that it allows members to expand their networks by meeting other like-minded professionals. Coworking spaces intentionally foster this culture of community amongst their coworkers by hosting events, happy hours, classes, and more to bring its members together and create an innovative, connected atmosphere.
It’s important to note that though the typical coworking provider, such as WeWork, provides standard office desks, supplies, and amenities, many coworking spaces have tailored their offerings to appeal to those in specific industries. For example, creative coworking spaces offer photography studio space, podcast recording rooms, and more to its creative industry members. There is maker coworking space for craftspeople, space for writers, and more.
Who benefits from coworking?
Though we usually think of those in coworking as freelancers or early-stage startup companies, coworking is often utilized by other types of business as well. Non-profit organizations, for example, may opt for coworking due to their cost-consciousness. Some coworking companies also offer discounts for nonprofits as well.
Established small businesses may also set up shop in coworking spaces, desiring to avoid a long-term lease agreement but still needing some kind of private space. Finally, even enterprise businesses rent coworking space! Coworking space is often a great option for a satellite office, or for large businesses with employees around the world that want to avoid the hassle of managing their own real estate.
Additionally, offering prospective employees the ability to work flexibly in a coworking space makes companies more attractive places to work, and widens the scope of talent available to a business. One of the most notable enterprise moves to coworking was in 2016, when Microsoft announced that it would be giving a number of its New York employees WeWork memberships. Other large companies who have used coworking include Salesforce, Facebook, and Airbnb.
Pros of Coworking
There are many advantages to renting a coworking space, some of which we’ve already outlined above. Here are the top reasons why you may want to rent a coworking space:
- Affordability: For companies or professionals with tighter real estate budgets, coworking is a viable alternative to traditional office space. Traditional offices can be expensive — not just in terms of the rent payment, but in terms of all the expenses that go into setting up the space, like furniture, IT, and office management! Coworking services are often a better option for smaller businesses because it provides a move-in ready, all-inclusive experience. Upon arrival, coworking members have desks, high-speed WiFi, free coffee, furnished and fully-managed space, and more, the costs of which are all built into a monthly fee. Coworking is also more affordable than traditional space from a long-term perspective. For businesses who can’t accurately predict their future needs, taking on a long-term lease can be a financially risky decision — especially when considering the costs and time commitment associated with breaking a lease. A month-to-month rent option allows companies to remain agile and flexible.
- Flexibility: Coworking spaces are ideal for companies that want to stay flexible. As mentioned above, coworking affords businesses the option of only committing month-to-month (or even day-to-day, for workers who are largely remote!), instead of getting stuck in a 3 to 5 year lease and forgoing flexibility. Additionally, coworking space operators are skilled pros when it comes to providing services to businesses with changing needs. They offer a variety of office options, from flexible desk space, to dedicated desk space, to private office space, which makes it easy to scale your business size up or down as needed.
- Collaborative environment: What better way to expand your network and get inspiration than working in the same space as a diverse group of creative entrepreneurs and professionals? For independent professionals and companies, coworking workspaces are hotbeds for collaboration, culture, innovation, and networking. You’re able to meet coworkers who are trying to solve similar problems to yours, or who may be able to impart some useful knowledge to you, which can assist greatly in your own business growth. Bounce ideas off of your coworkers, get business advice, and maybe even go into partnership with a fellow coworking member!
- Hassle-free: No need to spend time figuring out too many details. With coworking, all you have to do is show up — the coworking operator takes care of the rest! But if you do care about the details, some coworking space operators offer custom build outs for businesses looking to add their own flair to their space.
- Events and more: To promote a culture of community within their spaces, coworking spaces host a variety of events, including happy hours, classes, networking events, and more. Combined with the day-to-day chances to collaborate with coworkers, this is a great opportunity to meet other professionals, be a part of a culture, and expand your network.
- Professionalism: Do you take frequent in-person client meetings, or just generally have professional meetings with people outside of your organization? Hosting a meeting in your coworking space comes off as more professional than taking meetings at home, since they generally have bookable or first-come-first-serve conference rooms. First impressions are key to your credibility as a business, so you want to make sure you have a polished environment where you can invite clients and guests.
Cons of Coworking
Coworking isn’t necessarily for everybody. Here are a few reasons that coworking may not be the best option for your needs:
- Lack of privacy: In a coworking space, you admittedly don’t have a lot of privacy. You’re working around an abundance of external people, so there’s bound to be some unintentional eavesdropping. And it’s important to remember that you might be working around potential competitors who could overhear your calls or conversations. While most coworking spaces have meeting rooms and phone booths, you may not always be able to get a private space to chat if they’re all occupied. Additionally, if you work with highly confidential information, coworking may not be for you.
- Productivity woes: Some people thrive in bustling workspaces, but they’re not for everyone. There’s a lot going on at any given time, so if it’s hard for you to work amid distractions, you may want to opt for a different office solution. However, there are an increasing number of coworking spaces that aim to provide a zen, quiet environment that may be more conducive to productivity for some.
- Cost: While affordability is often one of the pros of coworking, it doesn’t necessarily apply to all parties. If you’re a solo entrepreneur with a limited budget, you may prefer more budget-conscious remote workspaces like libraries or coffee shops. Alternatively, if you have 10 or more employees, traditional office space may end up working out to be cheaper.
- Less control: Because they’re externally managed, you’ll have less control in a coworking space than you would in an office of your own. There may be certain rules and restrictions that you might find limiting — for example, you might not have the hourly flexibility that you would in a traditional space. You’ll also have fewer options for customization, and some may find sharing amenities inconvenient.
What to ask when considering coworking space
When deciding between coworking and traditional space, or coworking and working from home, it’s important to evaluate your day-to-day needs, your long-term needs, your values, and the cost-effectiveness of coworking for you and your business. Here are some questions you’ll want to consider when deciding whether coworking space is right for you:
- What are the amenities I need for my business to thrive? Will I have access to those amenities in coworking space?
- Can I afford the price point for my desired coworking setup with my preferred amenities?
- In addition to the monthly rent cost, are there any additional fees?
- Is privacy crucial for my business?
- In what environment do I work best? In what environment does my team work best?
- Will coworking space boost or hinder my productivity?
- Will I have many business meetings with external parties?
- How highly do I value community and culture?
- Is coworking more cost effective for my team than traditional office space (considering the size of my team)?
- Would I benefit from collaboration with external parties?
- Can I predict what my business will look like 6 months from now? A year from now? Three years from now?
We’re here to help you answer the above questions and find the best space for your business, whether it’s coworking, a shared space, or a traditional office. Contact us today to get started on your office space search.