Since the advent of COVID-19 and the explosion of hybrid working, co-working has been praised as an innovative disruptor to the real estate market. However, does co-working really offer a viable alternative to the traditional office or is it simply too good to be true?
We seek to unpack some of the key considerations which you should bear in mind when deciding whether co-working is the right fit for your business or if a traditional office space would be a better solution.
What is co-working?
Although everyone is able to define the traditional office, co-working is a fluid term which can be more difficult to conceptualise. Nonetheless, WeWork have sought to define co-working as “an environment that’s designed to accommodate people from different companies who come to do work. [It is] characterised by shared facilities, services and tools”.
The most frequently cited advantage of co-working spaces is that they are flexible. Unlike a traditional office which will usually require a fixed term lease for a medium-long term, co-working offers the opportunity for businesses to utilise short-term leases with pay as you go terms depending on the number of desks you require. Arguably, this allows start-ups and small businesses to account for their changing economic outlooks and grow their office space in accordance with their fluctuating work force.
However, it should be remembered that co-working is more susceptible to changing market conditions and there is little room for negotiation on the terms of these leases. Thus, they are usually heavily weighted in favour of the landlord. Similarly, there is no flexibility in the customisation of the office to fit your business needs. You cannot change the office layout or the amenities available. For instance, if your business requires a specific form of WiFi connectivity or a high level of privacy, these needs are unlikely to be met by a co-working space.
2. Costs and scalability
Co-working spaces usually have lower overhead costs compared with a traditional office. Items such as office facilities, reception services, administrative services, internet, printers and so on are shared between a number of companies meaning that you can reduce the overall base costs required for the space.
Nonetheless, lower costs are not synonymous with cost-efficiency. It may be possible that you do not require all of these services, these services could be provided by one individual like an office manager, or they could be automated. Likewise, it is inevitable that there is a ceiling to the scalability of co-working spaces because of the operating costs. Ultimately, business growth leads to more being spent on the co-working space to accommodate a growing workforce. This ultimately leads to profits stagnating. Therefore, if you have a growing team, a traditional office may be the way to go.
3. Professional image
While co-working does offer a more professional front than a fully remote businesses, a huge drawback is the inability to add any branding or logos to your workspace. This means that you are unable to create a professional identity both internally and externally. Undoubtedly, the funding and stability required to secure a lease for a traditional office space sends a clear message about the establishment and permanency of your business.
In summary co-working does offer many benefits, but such benefits may be outweighed by having your own office space. Traditional office space has also significantly moved forward, with many types of office space available to meet the individual needs of your business.