Published 21 March 2018 Category: Co-working, Entrepreneurs, SMEs, Startups, Business, Workspaces

Co-working vs. Office Space: Getting It Right

When the co-working industry started, most co-working owners were against creating closed-off offices in their spaces. The mood started to change as the industry learned how to add offices and integrate the concept of the co-working community. Owners found that offices had many advantages to the business of co-working, as well as benefits for the community as a whole but there comes a tipping point when offices do more harm than good.

To have a successful co-working space, you have to find the right balance between the two environments. Here are examples of office-to-co-working ratios and the effects it can have on the business and community.

0% Offices / 100% Co-working
The Pros:

  • Everyone appears to be equals

  • Potential to create a strong community

  • Accommodate a high number of community members

  • High potential revenue

  • Easier to start without much capital
     

The Cons:

  • Co-working is slow and more difficult to sell

  • Revenue could be low for a long time

  • Chaotic culture could happen

  • Higher labor costs and monthly operational expenses with more members

  • Limited audience to only people that want co-working

 
10% Offices / 90% Co-working
The Pros:

  • Office memberships provide more stable revenue

  • Offices are easier to sell providing revenue sooner

  • Offices bring in groups of community members at a quicker rate

  • Co-working space can accommodate large numbers of co-working members

  • High potential revenue

  • Expanded appeal to co-working members and small teams

  • Easy to maintain a co-working vibe
     

The Cons:

  • Higher startup capital required to build out a few offices

  • Potential problem of create tiers of members

  • Groups can dominate a culture

  • Owner is reliant on groups for large sources of revenue

 
50% Offices / 50% Co-working
The Pros:

  • Stable revenue with more offices

  • Revenue is easier to generate

  • Space can still accommodate a large number of co-working members

  • Expanded appeal of coworkers and small teams
     

The Cons:

  • High startup costs due to build out

  • Likely two-tiered membership

  • Limited interaction between members

  • Culture may be more difficult to maintain

 
90% Offices / 10% Co-working
The Pros:

  • Stable revenue

  • Easy to sell packages that generate revenue

  • Lower labor costs with self-sufficient offices

  • Still market yourself as having co-working and looking cool
     

The Cons:

  • Difficult to stand out from existing executive suite industry

  • Lack of collaborative culture

  • Less appealing to the co-working crowd

  • Low interaction between members

  • Lower potential revenue than pure co-working

As seen above, offices can be beneficial from a business perspective because it provides a stable revenue source that is easier to sell. Offices give co-working space owners peace of mind. However, when offices dominate the space and culture, it limits the appeal to only small businesses or teams–and doesn’t move the industry forward in a way that the co-working movement likes.

If you’re a new space owner, consider adding a few offices to provide some revenue and get people in the door. But stay committed to the co-working cause. A general rule of thumb - Have enough offices so the revenue covers the rent of the entire operation. This usually happens when 15% of the space is dedicated to offices. That way, the business can stay open while co-working takes off.