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Coworking vs. Office Space: What’s the Right Mix?

When the coworking industry started in in the mid-2000s, most coworking owners were against creating closed-off offices in their spaces. Offices were perceived as ‘the man’ creeping into our chaotic perfect world of open and collaborative coworking communities. The mood started to change as the industry learned how to add offices and integrate office members into the greater coworking community. Owners found that offices had many advantages to the business of coworking, as well as benefits for the community as a whole but there becomes a tipping point when offices do more harm than good. To have a successful coworking space, you have to find the right balance between the two environments.Here are examples of office-to-coworking ratios and the effects it can have on the business and community.

 

0% Offices / 100% Coworking

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

 

Cons:

  • Coworking 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 coworking

10% Offices / 90% Coworking

Pros:

  • Office memberships provide more stable revenue
  • Offices are easier to sell providing revenue sooner
  • Offices bring in groups of community members so there are people at the space sooner
  • Coworking space can accommodate large numbers of coworking members
  • High potential revenue
  • Expanded appeal to coworking members and small teams
  • Easy to maintain a coworking-like vibe

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% Coworking

Pros:

  • Stable revenue with more offices
  • Revenue is easier to generate
  • Space can still accommodate a large number of coworking members
  • Expanded appeal of coworkers and small teams

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% Coworking

Pros:

  • Stable revenue
  • Easy to sell packages that generate revenue
  • Lower labor costs with self-sufficient offices
  • Still market yourself as having coworking and looking cool

Cons:

  • Difficult to stand out from existing executive suite industry
  • Lack of collaborative culture
  • Less appealing to the coworking crowd
  • Low interaction between members
  • Lower potential revenue than pure coworking

As you can see, offices can be beneficial from a business perspective because it provides a stable revenue source that is easier to sell. Offices give coworking 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 coworking 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 coworking cause. A general rule of thumb to follow? 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 coworking takes off.