How to Know When It’s Time to Go From Coworking Space to an Office
According to a Coworking Resources report, the number of coworking spaces worldwide is expected to more than double by 2024, surpassing 40,000. The report also indicates that nearly 5 million people will be working from coworking spaces by 2024, an increase of 158 percent compared with 2020. Coworking Insights found that startup teams make up 27 percent of the coworking user base, and small and medium-sized businesses make up nearly 38 percent.
Leasing a coworking space for a business has a number of benefits, especially if a company is still young. These turnkey-ready spaces often come with flexible lease terms and reduced capital expenditures. Costs typically range from $500 to $1,500 per desk per month, giving companies the ability to easily scale as their needs change.
For growing companies, though, they can become overly expensive when headcount increases significantly and many companies find it’s time to level up to their own space.
Signs you’re ready
One of the clearest signs a company is ready to transition to more permanent office space is when it has outgrown its coworking space. As a general rule, companies should think about moving into a short-term lease or sublease when they have more than 75 employees.
Cost is usually the primary factor that leads companies to seek their own office space. Using average figures for coworking desks and office space square footage, at $1,000 monthly per head, a coworking space would cost $900,000 per year for a staff of 75. Comparatively, with an average asking rent of $45 per square foot per year in major U.S. markets — assuming a firm would need approximately 12,000 square feet for a staff of 75 (160 square feet per employee) — its yearly cost would be $540,000.
Benefits of traditional office space
For companies looking to take the plunge, having their own office space can have a number of benefits. A Facility Executive report found that workers value private spaces where they can get their work done peacefully. In a Clutch survey of 503 full-time employees, more than half said they prefer a private office over the open floor plan or cubicle office style commonly found in coworking spaces.
For a firm, having its own office space provides greater privacy for the company overall, but having consistent access to meeting rooms also provides greater opportunity for collaboration. Though coworking spaces often offer private meeting rooms for members, companies that require these spaces on a more consistent basis might not be able to access them when needed.
Overall, a firm having its own office puts a face on its brand. In a private office, companies are better able to establish company culture and tailor the space to meet their unique needs. It also gives a company a professional client-facing environment, allowing it to maintain confidentiality and privacy when meeting with clients.
Making the transition
Finding an office space once a firm is ready can take time — up to 24 months on average, depending on the scope of the office space needs. Additionally, in competitive markets where space is limited, it might be more difficult to find available space that meets the company’s specifications. Also, in tight markets, expect to find increasing asking rents and fewer concession packages. Once a firm decides it’s time to move out of a coworking space, it needs to start the office search process immediately.
Transitioning into one’s own space is about more than hiring a broker to help find a location and facilitate the transaction. A workplace strategy team acts as a firm’s compass, navigating and reimagining its workplace. They help implement a hybrid workplace, maximizing productivity and navigating the new world of work, through everything from social distancing-minded facility development to virtual wellness programming.
A project management (PM) team is also essential and navigates the special nexus from the moment a deal is closed to the day that clients first step into their office. They manage build-outs for clients from building due diligence through design, technology and outfitting. Fees for project management services are calculated in a transparent manner to suit the specific scope and constraints of each requirement.
Early engagement of a PM team gives the best opportunity for it to anticipate and eliminate unnecessary costs, schedule delays, and process, often resulting in saving far above the initial cost of engagement. Ensuring a firm has an intentional workplace will draw employees into the company’s collaborative space, and attract top talent for the best possible employee experience. A thoughtfully designed space offers the freedom to showcase a unique brand and culture, ensure radical adaptability, and boost employee engagement and satisfaction.
Petra Durnin is the head of market analytics at Raise Commercial Real Estate.