With the rise of remote and hybrid work styles, more and more businesses, freelancers and independent professionals are using co-working spaces.
So it makes sense that organisations, too, are increasingly looking at the option of renting co-working spaces to accommodate employees. However, when considering renting a co-working space, one of the primary considerations is the price.
Often, office rent takes up a significant portion of a company's operating expenses.
Co-working space prices are based on various factors, such as whether you intend only to use a hot desk or if you’re also looking to rent out other rooms, such as meeting rooms.
Given the flexibility offered by co-working spaces and the fact that you pay only for what you use, the cost savings can be substantial when comparing a co-working space and a traditional office.
How much do co-working spaces cost?
The cost of a co-working space could depend on your employee headcount, anticipated headcount change, location, anticipated lease term, and degree of uncertainty.
Other factors that will determine the cost of your co-working space include your price per seat and set-up costs.
Co-working spaces often charge separately for meeting room usage, with costs depending on the size and number of meeting rooms you require and your anticipated usage frequency.
How co-working spaces help reduce costs
Shared office space is often highly cost-effective, as you only pay for what you use. This means that if your company only needs 10 desk spaces at the moment, that is what you will be paying for.
In addition, with companies now embracing the hybrid work model, renting fewer desk spaces is feasible as teams can co-ordinate and set up a rotating attendance schedule.
Compared to co-working spaces, companies renting out traditional office spaces typically pay significantly higher costs as they must pay for rental expenses, capital expenses, space planning and operational costs.
With no need to kit out a brand new office, businesses could save considerably when opting for a co-working office space.
“In a shared office, costs for amenities are also included in the rent, and there are none of the hefty lease exit costs present in traditional office leases. Co-working spaces offer the additional benefit of a flexible month-to-month schedule, which means you can gradually increase the required space as you grow. In that sense, many co-working spaces are far more economical than traditional workspaces, which do not often take into account the changing needs of a business”, says Joanne Bushell, MD, IWG, South Africa
Several external factors can cause the rent of buildings to rise over the years of the lease for a traditional office space.
There are also costs for maintenance, such as fees for the upkeep of the conventional office space. Furniture, computers and kitchen appliances must also be bought (and periodically refreshed) for a traditional office space to ensure that the environment is functional and pleasant for employees.
By contrast, a co-working space has none of these costs. You are not responsible for paying for the maintenance of the office.
Are co-working spaces worth it?
“Co-working spaces give businesses great value for the price at which they are offered. Not only are they a cost-effective alternative to traditional office space, but they also provide companies with a chance to network with one another and form business relationships”, Bushell adds.
To understand if a co-working space is worth it, every business needs to conduct its own cost-benefit analysis.
Such an analysis will need to consider the financial cost of renting a shared space and the projected savings in terms of the effort and maintenance of a traditional office. In addition, businesses should consider their projected growth over the coming years. While traditional office spaces either need to be grown into (or get grown out of), shared office spaces can be scaled up or enable users to move locations as needs change.
Other more intangible benefits will stem from the environment and its ambience. Your staff may also benefit from the energy of a shared work environment and its opportunities for socialising and sharing ideas.
In short, the cost of a co-working space must be analysed holistically, with an eye toward many intangible benefits.
Start-ups, for example, have the opportunity to mingle with other business owners. As a small business, taking advantage of every networking opportunity that comes your way is essential.
Small business owners also have the responsibility of choosing a location and office that is suitable and beneficial for employees. If you are considering renting a co-working space, involve your employees in decision-making.
“You may ask them to take a vote, for example, or discuss their attitudes towards the idea. Involving them in the process increases your business agility and can improve the impact of a new co-working space on your employees. Facilitating this decision involves presenting the costs versus the benefits for each option. During the consideration process, look at a range of factors including commute times, personal preferences as well as the surrounding businesses and other elements that cannot be measured simply by forecasting profitability and analysing rental costs”, explains Bushell.
After such an analysis, many businesses find that the benefits of using a co-working space outweigh the costs.