Coworking Beats Office Leasing as a More Affordable Option in Many Cities

Working away from traditional offices has thrown a monkey wrench into what places work best for workers. Is it a work-from-home office, a work-from-traditional office or a work-from-coworking space/? 

Employers are asking this question with other questions arising. Where is it best for staff to work to keep everyone healthy? Where makes the most financial sense when not everyone has returned on a full- or even part-time basis or when layoffs demand a quick revision of what’s needed? And then, what about the cost and flexibility of a subscription-based coworking space? How does it compare?

CoworkingCafe.com analyzed how the costs of co-working compared to those of office leasing throughout the country and also considered the growing importance of flexible office space options. When it comes to the latter, the recently released results found that coworking memberships help employees diversify their routine—work in an office today and tomorrow at home; offer flexibility that can help businesses overcome challenges and growing pains; provide spaces for periodic work collaborations and also let them cut back when layoffs may be called for, seen recently in the tech industry. The reverse, too, can happen and businesses may need to ramp up staff—and space—and sometimes fast.  

The CoworkingCafe.com report looked at 146 U.S. cities in a hypothetical of where the spaces would accommodate a team of 10 needing 10 desks or 2,000 square feet over a one-year period. When it comes to the dollars and cents, the report found that in 96% of the cities analyzed, coworking was more affordable than office leasing and that coworking subscriptions cost less than half the price of an office lease in 17 U.S. cities.

Certain factors were included, which upped the cost of traditional office leases. The cleaning service fees for such space and people ran about $11,000 per year. Furnishing the office added a one-time cost of about $6,600 for desks and chairs. Both of these costs were factored into a coworking membership.

Certain markets registered significant trends worth noting. Of the top 20 cities where coworking subscriptions were less than traditional office space, 10 were in California. For example, in Santa Monica, Calif., No. 1 on that list, desks for a team of 10 cost almost $46,000 per year on average, compared to the traditional office lease rates of $121,000. This gap of 62 % was the widest among all U.S. cities included. In nearby Los Angeles, the city posted annual savings of $57,000 for 10 desks compared to the same space traditionally leased. And in yet another Southern California city of Newport Beach, the savings for coworking subscription leases were $43,000.

Other locations outside California also saw some significant savings when coworking was selected. These included Boston where coworking prices represented a 58% discount compared to traditional office leases and New York, which had a 57% discount for the same comparison. And in Jersey City. N.J., where apartment rents have skyrocketed, coworking costs for the same number of people or size office was $52,560 versus an office lease of $100,491, for a price difference of minus $47.7%. Again, coworking subscription leases were the more affordable options.

In the Midwest, prices were more similar than in other regions, though in some such as Oak Brook, Ill., outside Chicago, coworking subscriptions still were half the price of a similar traditional office space. In Chicago itself, the yearly savings for coworking subscription leases were almost $26,000.

However, coworking subscription leases weren’t less costly everywhere, and the report highlighted some of the cities that proved exceptions. Cincinnati and New Orleans represented the only two where the discount that favored leasing hit the double digits of 11% and 10%, respectively, but only about $4,000 in savings in both cities.  Tucson, Ariz., also favored office leasing, as did Albany, N.Y., and Franklin, Tenn.

While costs may not stay the same and those price comparisons may move up and down, the importance of flexibility seems more of a sure bet As the report said, “the demand for workspace flexibility is here to stay—at least for now—and companies will remain incentivized to diversify their office assets and be open to more adaptable solutions.”.