Office sharing has become increasingly popular among businesses of all stages and sizes for good reason: it allows you to house your business in a professional setting for less, without the commitment and fees associated with a commercial lease. More and more entrepreneurs are becoming hesitant to commit to 3 to 5 years in a leased workspace. There’s always an associated risk that things won’t go as planned and you’ll be stuck paying for space you no longer need, or can no longer afford.
In their piece titled, Digging Deeper: What Coworking Tells Us About The Future of Commercial Real Estate, Amol Sarva and Jayson White predict that the shifts we’re seeing in businesses seeking flexibility over traditional office leases are merely, “The tip of the iceberg for an incredible wave of change coming to the commercial real estate industry.”
“From large companies to fledgling startups, the emerging office customer will increasingly seek flexible work environments that can offer more than just a desk. The key here is to consider the decisions smaller freelancers are making about coworking; they represent what major tenants and corporations are also starting to choose upstream. Employees are now shaping the way companies go about buying real estate and office space: from the ground up.”
Let’s take a look at some of the reasons more and more businesses are going the way of the freelancer and opting for flexible office space solutions…
More bang for your buck
It’s easy to see why businesses are shying away from traditional leasing — typical rents in New York are over $70 per square foot, but shared office space can easily cost half that, without extra overhead expenses like cable/internet, cleaning services and other utilities.
Yet, it’s not JUST about saving as much dough as possible…
We’ve found that PivotDesk customers, are happy to pay for premium shared space, knowing that they will still come out ahead in terms of cost. And firms that would have to settle for economy digs in a traditional lease agreement are finding that they can afford a higher-level shared property.
The median price of a booking this year is 75% greater than last. This partly reflects the general rise in office rents throughout the market, but it also indicates that our clients are tending to book more high-end listings.
This increase in the average prices paid for shared space also says something about the types of firms that are giving office sharing a try. While our clients were once primarily small startups and even individuals, we are now seeing more interest from larger, more established businesses. In fact, over the last year, larger businesses have come to make up 22% of our bookings and we continue to see that % increase.
So, larger companies, with larger budgets, are beginning to see the benefits of office sharing and are taking part in greater numbers. These companies are able to pay for premium space and still save money over traditional lease agreements.
Flexibility will set you free
As Sarva and White point out, businesses are wising up to the importance of making agile real estate decisions:
“Young businesses need to be nimble in order to succeed. Being stuck in a years-long lease is a nightmare for companies with hopes of scaling up or moving elsewhere. Even a five year lease can be too long for many larger companies. Convoluted leases with hidden catches can also be a problem.”
Many firms choose office sharing in order to buy time to build their company culture and assemble a stellar team. Without the commitment, fees, and upkeep associated with a commercial lease, firms can invest their capital in staff and in customer service. The money saved over leasing allows firms to hire top employees, while a well-appointed workspace helps attract those employees in the first place. They’re able to find space that fits the image they have for the company, often in more stylish and well-equipped locations than they could consider securing through a traditional lease.
More established companies can benefit as well, setting up in high-end space without high-end expense. You don’t have to compromise on style to find affordable office space.
The modern workplace is changing fast...
Are you keeping up?