August 06, 2021 by Andrea Rajic
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If anything, the coronavirus pandemic taught us how to budget, be more resourceful and come up with cost-effective solutions. With remote and hybrid work models booming, the cost question is now raised about office spaces.
Do we need office buildings or can we go for something more convenient - and affordable? Are flexible workspaces more economical than our classic office leases?
We’ve prepared a cost comparison to help you decide what works better for your business.
Over the past few years, the world of work has changed beyond recognition. More and more companies are ditching the traditional way of working (almost half of the companies in finances, HR, and technology) and embracing the hybrid work model, so they may determine that third spaces are a better option for their teams now.
What exactly is the difference between an office space and a flex space?
In a traditional office:
Meanwhile, if you opt for a flexible workspace:
Both types of offices have their pros and cons, and it’s on the company to decide what conditions will work the best.
However, there may be a significant difference in pricing between the two options so many companies are starting to reconsider their choices.
For example, in 2021, traditional office leases in the US cost between $8 and $23 per square foot on a monthly basis, depending on the location. On the other hand, there are flexible workspaces, which typically have good offers for companies and turn out to be more affordable in most cases.
You may have already gotten the idea of the aspects in which these cost discrepancies may appear. Both leasing a “forever” office and renting a flexible one have their pros and cons when it comes to expenses, but let’s dig a bit deeper into the cost comparison so you can decide what fits into your budget more easily.
In 2020, the average office size in the US was around 200 feet. It, of course, depends on how big your team is and who’s working remotely or coming to the office. So, say you’re leasing an office in the traditional sense and it costs you around $15 per square foot (based on the example we mentioned in the previous section) for your 15-people team - that’s around $3,000 per month for rent.
And what about flexible workspaces? Based on the information available online, you could rent a private office for $500-$3000, depending on how many people you’re looking to accommodate.
When renting a long-term office space, you’re less likely to get a discount - your monthly rent is always the same.
However, if you check out a third space website, you’ll see that they typically don’t publish prices for office rent - you need to send an inquiry to calculate the costs.
It’s because flexible workspaces often offer custom-made prices and discounts to fit your needs and provide the best service possible. If you’re planning to settle down in a flexible workspace for a few years, you are typically able to negotiate a more affordable price and choose different types of subscriptions.
Companies that rent offices or office buildings have additional expenses that overcome the rent paid to the landlord. There are also:
Some companies even supply their kitchens with food and drinks and add other amenities so their monthly costs can go up quite a lot - it reaches almost $5000.
And here are some other expenses that many seem to forget about: what if you need to relocate? Moving your entire office would cost much more than just picking up your stuff from a flexible workspace and going to another. Also, potential repairs in the office would have to go out of your own pocket.
With a traditional lease, it’s hard to plan in advance. We’ve seen many startups scale and grow over 10 times in a single year with their headcount doubling, or even tripling. If you set up in a small office because you couldn’t have predicted such growth, moving to another, a bigger office may represent a significant expense.
However, at least you get 24/7 access to your office in case of emergency. But when renting flexible office spaces, you can only use the premises during the space’s working hours. There are exceptions, though, that allow around-the-clock access.
Flexible workspaces, however, are a completely different story. The cleaning service and utilities are not your concern in this case and are included in your monthly fee. You typically have access to multiple amenities while working in such a space. For example, you can get a coffee or two for free, use free Wi-Fi, or the chill-out room when you want to take a break.
Some coworking spaces charge for additional amenities, usually for use of conference rooms, parking, office supplies and equipment such as scanners and copy machines, etc. In that case, the prices may slightly increase.
Although there are flexible workspaces that offer larger conference rooms and offices that are a good fit even for teams larger than 50 people, it seems that the vast majority of them is more suitable for small to mid-sized teams. That’s why they’re great for startups and small businesses.
A flexible workspace can be a fantastic and cost-effective solution if your team is distributed around the US or the world and you want to provide a workspace for them other than their home - just locate a nearby third space and book a seat for your employee, or a small office if there are more people. On the other hand, large corporations may find conventional office leasing more affordable, especially because they’re able to control the space and have long-term plans.
Still, before opting for this solution, it’s always good to calculate the potential costs of renting flexible offices and comparing them to find the ideal choice. Research has shown that flexible workspaces are steadily beginning to gain more popularity among corporate clients, too.
Back in 2018, the demand for flexible offices among corporations increased by 21%. Many find flexible workspaces ideal for short-term team expansions or providing additional workspace for independent contractors, like when they’re testing new markets.
Putting pros and cons on a piece of paper has always been an effective tool to help you make a decision. Additionally, you can calculate your potential costs to get an idea of how much renting a space for your team may cost. Many coworking spaces offer free quotes or calculators so you can compare your options before you choose.
Overall, a flexible workspace is usually a less expensive option. The prices may vary depending on location, your team size, your needs (dedicated desks, private offices, larger rooms, etc.) but it’s possible to negotiate a good deal and when all the expenses are taken into account, regardless of the length of your stay, your annual payment for a coworking space will be lower than a conventional lease.
However, it’s critical to consider your needs and plans for the future before you pay your deposit. It seems that a flexible workspace is a good starting place no matter what your business goals are since you can easily adjust your contract depending on the number of people on your team or, even move when you outgrow your initial office.
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