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How To Know When You’ve Outgrown Coworking Space

These days, many businesses get started in coworking spaces. Coworking spaces don’t require long-term leases, offer smaller spaces than you can get with a direct lease, and have tons of amenities that are helpful to growing businesses including front desk services, conference rooms, mail handling, and more. WeWork, the largest coworking provider, is valued at $20 billion and has 171 locations worldwide. Coworking spaces are a great option for businesses that are just starting out. But they can quickly become prohibitively expensive, and it can make sense to move to a traditional office with a direct lease.



The High Cost is no Longer Justifiable

When you’re just starting out, paying $500 for a coworking membership as one person can make sense. A small 2 person office for $2,000 can also make sense. But when you start getting to 5, 10, or 15 employees, the cost for space is too high. Nationally class A office space in central business districts averages around $50 per square foot per year. Similar coworking space costs $139 per square foot per year. That’s 181% more than if you were renting directly.

When your company size increases to between 5-10 people, you are able to rent a space that is double the size for the same or less money.

When You Already Have or can Hire an Office Admin

Many of the functions that a coworking space provides are functions that are typically provided by an office admin. Things like managing mail and packages, keeping on top of supplies, and taking care of other administrative duties. They’ll even make sure your very own office kegerator is full! If your company is at a point where you have or can afford to hire an office manager, this is a good sign that it might be time to move from a coworking space to a direct lease.

When You Want a More Permanent Presence

Between the short term leases and tenants constantly coming and going, the nature of coworking space is inherently transient. While this has advantages for freelancers, solopreneurs, and companies just starting out, it is an image that more established businesses likely do not want.

Moving into your own office space has permanence to it. A typical office lease is 10 years. Clients will take your identity more seriously when you have your own office space. In a coworking environment, you are limited to what they offer you design-wise; whereas, your own office space can be tailored to suit your company’s needs, culture, and brand.

Having your own office space is a sign that your company has made it.

While we are proponents of coworking spaces, and they are great for companies just starting out, direct leases are extremely advantageous earlier than most people might think. If your business has 7-10 employees, it often makes sense financially to move to your own office, along with all the other benefits that come with it.

If you’re not sure whether your company has outgrown a coworking space, give us a call. We specialize in helping small firms rent office space and have worked with many first time tenants.