What are coworking spaces?
Coworking spaces are a new phenomenon for entrepreneurs that first originated in 2005 in San Francisco, Coworking spaces provide a happy medium between traditional office spaces and home offices. In the simplest terms, a coworking space is where people from different companies come to do work in a shared infrastructure with shared facilities, services, and tools. They are collaboration hubs and social spaces where workers from different backgrounds come together to share their experiences and explore new ideas.
How do coworking spaces work?
Coworking companies rent buildings from property owners under long-term and multi-year leases. They then transform the space to offer different community-oriented features. These features may include cafes and common areas. They then rent out the space at higher prices but under more flexible lease terms i.e. month to month. The tenants of these spaces are not just entrepreneurs but can include freelancers, remote workers, and other independent or nontraditional workers that cannot afford a traditional office space for themselves. Coworking spaces are where a community of entrepreneurs work separately on their own ventures but in the same location.
What is the difference between coworking spaces and traditional office spaces/ home offices?
Traditional office space may often be too expensive for entrepreneurs with limited resources. Traditional office spaces more frequently than coworking spaces require their tenants to sign multi-year leases that can last 3 to 5 years. Entrepreneurs are reasonably hesitant to make these long-term commitments associated with these traditional office spaces. Especially for new business owners, it can be difficult to commit to an office space without knowing how quickly they will grow and need to upgrade from the office space they originally signed a lease with. Coworking spaces often offer month-to-month term leases. This provides more flexibility in moving to different spaces depending on the trajectory of the enterprise. These spaces are often more expensive than traditional office spaces by month. However, you can avoid other costs from certain services such as printing by sharing the costs with other businesses occupying the coworking space. Coworking spaces also often provide a more creative and individualistic environment. Per a study performed by the University of California, 37% of coworking spaces offer stereotypical startup features like ping pong tables and bean bag chairs that minimize the rigidity that is associated with more traditional office spaces.
Entrepreneurs may instead decide to start their business in a home office, garage, dorm room, etc. These spaces are more affordable and convenient but can limit how many employees the entrepreneur can take on and the hosting of clients. Entrepreneurs are also more susceptible to experiencing loneliness which can worsen the emotional turmoil that comes with the creation of a new business. This is compared to coworking spaces that allow networking opportunities with the physical proximity to different companies. It provides a more communal space that limits isolation and provides social support.
What are the types of coworking spaces?
There are many different types of coworking spaces. There are many possibilities to customize the build-out of the space. Figuring out what types suits your endeavors the best can be difficult. However, to make this decision easier, we will provide a few types of coworking spaces available to you.
1. Conventional or Open
This is what usually comes to mind when someone discusses coworking spaces. This type doesn’t focus on one type of business or individual. Its primary setup is one that is more open and collaborative. These spaces are less private but as a result a bit more affordable than other types. They also tend to have a more casual and well-lit atmosphere that encourages a more innovative and cooperative spirit.
2. High-end or Full-service
This type tends to have nicer amenities than more conventional and open coworking spaces. They provide a more luxurious environment and greater convenience. An example is industrious sites that provide commercial kitchens, food, and beverages to its workers. WeWork is an exemplary instance of a coworking space under this type. They also tend to be more open and casual but provide more convenience than a conventional type of coworking space.
This type of space is often utilized by companies and teams who desire more privacy perhaps to enable higher concentration for their employees. Privacy can mean a lockable door, maybe even a private floor. An additional advantage to this type of space is that you may be able to show your own corporate branding and have conference rooms unique to your company. When hosting clients, this can be advantageous and look more professional than potentially previously mentioned types of spaces. They often cost considerably more than other types of coworking spaces.
4. Industry-specific/ specialized
This category caters to specific industries and can include health care providers, law firms, creatives, and other specialized services. This type of space can cater to the particular needs of a tenant. They provide more privacy and customization options depending on the nature of the industry the space serves.
5. Corporate or professional
This type is often utilized by the more professional type of tenant. It is more budget-friendly than high-end spaces and provides more privacy. It can often be associated with dimmer lighting and less energy than other types of spaces. Regus is one example of a corporate coworking office space.
What are some benefits of working spaces?
There are many factors that have driven the rise of coworking spaces including the benefits these spaces offer to tenants. Some of the advantages have already been mentioned and are listed below. This list is not exhaustive.
1. Increased flexibility
As mentioned above, coworking spaces do not often require commitments to long-term contracts. The shorter leases allow greater flexibility in those companies that are just starting out and can more definitively gauge their growth and the need for a different-sized space. This can also make things more affordable for young companies as they pay monthly rather than upfront for several years.
2. Community/ networking
Coworking prevents isolation. Friendships may develop between entrepreneurs at coworking spaces. This provides social support to tenants, especially during difficult times such as the establishment of a young business. Building these relationships can also unlock opportunities and business connections.
3. Enhance productivity
Working alongside other entrepreneurs can also increase motivation as working around other people can make individuals want to work harder and give you energy. Physically traveling to a space also regimens your schedule.
4. Higher creativity
Chatting with friends and colleagues in these shared spaces can unlock new thought processes and perspectives that you hadn’t previously considered.
5. Lower costs
Sharing amenities such as reception services, internet, and printers with other companies can decrease the costs of these services in the long term. Businesses can avoid charges like these associated with longer-term real estate leases.
What are some disadvantages of coworking spaces?
These spaces are not always the most ideal work environments for some businesses. Some downsides of coworking spaces can include:
1. Limited customization
Because you are sharing a space, at times members do not have much say in the shape, design, and layout of the office. If the coworking space is too small or doesn’t have the utilities you want, you may need to look at a different type or outside of a coworking space.
2. Lack of privacy
Coworking spaces are often more collaborative and social hubs which can mean less privacy. If you are a part of a bigger corporation that desires more privacy for instance because you have undisclosed projects that you are working on, you may want to look at a more private subtype of coworking space or a traditional office.
3. Limited branding
Many coworking spaces may not allow branding or your company logo to be displayed. You may have to shop around as your options may be limited when compared to traditional office spaces in terms of your ability to show your brand when hosting clients.
Is a coworking space right for me?
Coworking spaces attract a variety of groups from small businesses to some larger companies. Microsoft has utilized coworking spaces, specifically WeWork spaces, in New York City. Employees have reported increased productivity, higher job satisfaction, and access to collaborative communities found in WeWork’s spaces. Whether coworking is best for your business will depend on what type of service you provide, whether you would prefer a more private vs. collaborative space, and other factors such as budget.