To Cowork or Not to Cowork?



Should you stay or should you go?

You have the idea no one else has thought of. You’re small—maybe it’s still just you, or maybe you have a few of the best and the brightest at your side. Working remotely from home is great in theory, but spending each day in pajamas turns out to be less than ideal when it comes to innovation, not to mention motivation.

The angel investor you fantasize about hasn’t swooped in yet, so money is still tight and until you get a big injection of VC money, co-working might be a good alternative to dedicated space.  But, suddenly people start to catch on that your widgets are better than everyone else’s and you begin hiring a business development team, CTO, CMO, and COO, your shared office feels cramped, and your rent bill doesn’t seem as intimidating as it used to.

You wonder whether it’s time to graduate…

Coworking- What’s it about?

Coworking originated as a system that allows for individuals or small companies to cut costs on rent by working from a shared office space.

Typically a coworking organizer rents a large space, builds it out with several offices, conference rooms, and a large open area; provides services such as internet, cleaning, and refreshments; and rents offices and desks to individuals or small businesses.  Tenants (members) then have free roam of the facility and shared access, on a reserved basis, to conference rooms.

Most coworking spaces will usually only require lease terms of a few months providing flexibility to grow and contract as needed.

Over the past several years the coworking movement has evolved into much more than a convenience and economic decision- It’s become a place for young companies to collaborate with like minded entrepreneurs over a beer or coffee at the stocked communal kitchen, feed off the buzz of your neighbor to the left who just closed their Series A, and chew over a line of code with their neighbor to the right.

While each coworking facility has its own flavor, if done right each becomes its own community of businesses that feed off of each members’ successes and experiences.

“This all sounds great! Where do I sign up?!” you say. Not so fast… if flexibility in lease term is paramount coworking is a no brainer- but if privacy, personal space, frequent need of conference rooms, and in some case monthly rent are important then a dedicated office space might be better for you.

The Case for Office Space

Always wanted to have a putting green in your space? Need an office, a conference room, two call rooms, or decked out kitchen? Having your own dedicated office space puts you at the helm of determining how to construct your space however ascetic or lavish it may be.

Don’t worry about erasing your whiteboard every night- your secret is safe. Getting boxed out of the conference room for important impromptu conference calls is a thing of the past! Crank up that Beiber song you love! Dedicated space provides privacy, convenience, and the freedom work how you like.

However with great space comes great responsibility. Moving into your own space is kind of like kind of like moving out of your parent’s house and into your own apartment- you’ll have to consider the little things that you took for granted like making sure that the plastic cups are stocked at the water cooler, that there’s paper in the printer, figuring out “why is the internet down”, and “who is going to clean this place!?”

The Bottom Line ($$$)

Things are pretty straightforward for 1-9 employees but once a company becomes a minyan it’s time to rethink coworking from an economic standpoint as the cost per employee of a dedicated office continues to decrease with every hire.

Depending on company’s style of workstations, each employee typically occupies 120-160 rentable square feet (RSF). This includes area for circulation, conference rooms, and other communal areas. When signing a lease most companies will assume 150 RSF+ per employee and as they hire push the spaces limits to 110-120 RSF per employee.

At 10 employees, assuming 150 RSF per employee (RSF) at $52.00/ RSF the monthly rent at this 77 Sands Street office space drops $2,000/ mo below a private office at coworking space. For this reason co-working is ultimately a transitional or temporary sort of work space, and not one conducive to long-term business development and growth.

Type of Space Monthly Rental Cost (1 Employee) Monthly Rental Cost (10 Employees)
Coworking- Desk Share $383 $3,830
Coworking- Assigned Desk $568 $5,680
Coworking- Private Office/ Team Room $1,183 $8,500
Dedicated Office Space (200-1,500 RSF) $866 $6,500

One caveat is that coworking spaces tend to be cramped quarters allocating a scant 50-60 RSF per person. This is approximately 1/3 of the amount of space a company would typically occupy so you’re paying more for less space. See how much space you need with our office space calculator.

What should you do?

So, when exactly is the right time for you make the leap to a dedicated space that is not shared with anyone else? That depends on what you’re measuring by. If you expect your company to grow in the next 6 months but don’t know by how much or need space quick, then you need coworking space- the flexibility of renting a private office on demand within a co-working space is a better option than a standard lease. Find out how much time it takes to lease space.

If you like to have a spacious work environment, frequently bring clients or host events then you probably need your own space—clients won’t be very impressed that you’re sharing a desk with another company, let alone the entire office. An alternative is the Headquarters as a Service model like Knotel. Most firms that make the leap from co-working to standard leased space advise switching once you can gauge  growth for the next year and once it makes financial sense to do so.

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