Traditional Office Space VS Coworking: Which is More Expensive?

coworking space vs traditional officeIt depends on the market you are in and the number of employees your company has, however in general if your company has more than 5 employees it's typically about 20% to 30% more expensive to lease coworking space.

At the end of the day you have to evaluate the total cost of leasing office space as it's more than just lease rates. You also have to evaluate the value of flexibility, amenities, and day to day operations.

Why is Coworking Space More Expensive?

Coworking providers like WeWork rent space directly from building owners (aka landlords) typically for 5-10 year lease terms. Even though they negotiate and receive a tenant improvement allowance they still significantly come out of pocket to complete the build-out and furnishing of their spaces. In addition they have full time staff on duty for day to day operations. To recoup their investment AND to make a profit they typically charge on average 20% to 40% above the rents that they pay to the landlord. 

Should I Rent Traditional Office Space or Coworking Space?

If you are unsure about the future of your company whether it will experience rapid growth or be able to survive the next 12-24 months then you should stick with coworking. If you only have 5-10 employees then coworking might be the least expensive alternative.

However if your company is stable or growing and you have more than 10 employees then renting traditional office space will probably be better suited for your needs.

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