Given the choice, most employees want to spend at least some time working from the office. According to a 2022 survey, 57% of employees with full autonomy to choose where and when they work preferred a hybrid model over working in the office full-time or being fully remote.
But office buildings are expensive to lease or own. And for most organizations, it’s simply not worth it to pay for space that goes unused. As you consider the most cost-effective ways to give employees the space they need to be productive, investing in real estate may not be the right move for your business.
Increasingly, organizations of all sizes and industries are turning to coworking spaces. With thousands of coworking spaces throughout the US and more all over the world, odds are there are some near you. In this guide, we’ll cover everything employers need to know about coworking spaces, including:
- What coworking spaces are
- Who uses coworking spaces
- Benefits of using coworking spaces
- Drawbacks of using coworking spaces
Let’s start with a definition and the various types of coworking spaces available.
What are coworking spaces?
A coworking space, sometimes referred to as a flexible office space, is a workplace where employees from different organizations share the same space or building. These organizations are co-tenants, and they may lease the facility for a single employee or team, or their entire company.
Coworking spaces are basically SAAS: “space as a service.” Depending on the type of coworking space and how the owner operates it, tenants may have access to particular parts of the facility at specific days and times, or they may have 24/7 access. As with a traditional office space, workers may be able to reserve workstations in advance, or simply find one that’s available upon arrival.
Coworking spaces are usually flexible enough to facilitate many types of work and work activities, making them appealing to a wide range of organizations. However, there are also different types of coworking spaces designed to accommodate particular needs, so there may be a coworking model that’s particularly suited to your business.
Types of coworking spaces
Not all coworking spaces are the same, so it’s important to find one that’s conducive to the type of work you intend to do, the number of employees you need to find space for, and the kind of workplace you’d like to spend time in. With some models, you’ll only have to share amenities, not workspaces. And with others, you may share everything (or nothing) with professionals from other organizations.
Open office
Many coworking spaces are modeled after traditional offices, and simply have an open floor plan with numerous workstations which anyone can access. This doesn’t necessarily mean it’s a sea of desks though: some may use activity-based working models to create multiple work environments within that open space.
This model allows many people to work in the same space, but unless you’re leasing an entire floor or separate zone of an open office, it means your employees may have to work near noisy neighbors or worry about disturbing others. However, this also maximizes one of the potential benefits of a coworking space: cross-pollination. Your team will naturally be exposed to a wider range of professionals, some of whom may work in adjacent industries, solve problems your organization is experiencing, or even have significant experience in your field.
An open office layout means that for better or for worse, people who use the coworking space have a lot more exposure to one another.
Private workspace
Some coworking spaces are optimized to allow more teams or individuals to have their own distinct space. This could take the form of reservable booths, meeting rooms, or neighborhoods. Private workspaces can help address privacy and security concerns about coworking spaces by ensuring employees have space to discuss sensitive topics. But generally, these coworking offices still require tenants to share amenities like kitchens, lounges, bathrooms, and other common areas.
Unless you’re reserving an entire floor or facility, the privacy you should expect to find in this type of coworking space will likely be more about giving employees the freedom to work, talk, take calls, and collaborate without interruptions or distractions, rather than ensuring that no one else will ever see or overhear their work.
Larger private workspaces may sometimes be referred to as executive suites, which give workers more privacy and may include private amenities.
Incubators and accelerators
Incubators and accelerators are specialized types of coworking facilities intended for startups and entrepreneurs in growth mode. Incubators cater to startups, while accelerators focus on established businesses that want support to grow. With these types of coworking spaces, it’s more of a partnership than a typical landlord-tenant relationship. In addition to office space, they typically provide training and consulting services to help entrepreneurs and other business leaders fill in gaps in their experience and take their organization to the next level. Additionally, incubators typically culminate in venture capital funding.
Who uses coworking spaces?
Years ago, you could assume coworking spaces were for companies that couldn’t afford to lease their own office. But the convenience and cost savings this model provides can appeal to a range of organizations of different sizes, stages, and industries.
Startups are one of the groups most likely to use coworking spaces because they can get up and running quickly without making a major real estate investment. Coworking spaces are move-in ready and complete with all the amenities a new company needs (especially if that coworking space is a business incubator).
But small businesses, agencies, contractors, and individual knowledge workers may also choose coworking spaces when they need a location to be productive. Since these facilities tend to offer flexible short-term leases with prices based on the number or workers or scale of your organization, it’s easy to ramp up or down your occupancy expenses as your needs change.
Even enterprises and large organizations have reasons to use coworking spaces. If you have a distributed workforce, it can be impractical for employers and employees to have a dedicated office. Providing a stipend to use a coworking space or renting one directly ensures that employees always have a convenient workspace where they can be productive. And if the purpose of required time in the office is collaboration, coworking spaces give organizations with distributed workforces greater flexibility to find locations that make sense for teams to collaborate in.
Coworking spaces were once a small niche, but today, most modern office-based organizations can likely find some value in considering a coworking space.
Benefits of using a coworking space
Coworking spaces tend to have several key advantages over traditional workplaces. If your organization wants to lower your occupancy costs or prioritize agility and scalability, a coworking facility might be a good investment.
Lower occupancy costs
With a coworking space, you only pay for the space you need or the number of people who need to access the facility. You’re not on the hook for an entire building, and whether the space is near capacity or nearly empty, you’re only responsible for a fraction of the upkeep costs. Even with submetering, it would be difficult for a landlord to identify the utilities each coworking tenant uses, so a percentage of utilities and other maintenance and upkeep costs are built into your price.
Just as hybrid work enables more employees to work with a smaller pool of resources, a coworking space allows more companies to work with a smaller real estate footprint. And less space means lower occupancy costs.
Flexible leases
Owners of coworking spaces expect tenants to come and go more frequently. And since they may lease to individual knowledge workers as well, they typically want to keep the barrier to entry as low as possible. So you can usually expect short-term leases and pay-as-you-go pricing. Instead of committing to an office for years, a coworking space may let you sign for a month, a quarter, or a year at a time. Many coworking spaces even offer day passes. This flexibility makes it easy to pivot as your circumstances and employee needs change, and gives you more options when it comes to your short-term real estate decisions.
Simple transitions
Coworking facilities are move-in ready, complete with all the amenities, services, and equipment your team should need to hit the ground running. You don’t have to worry about setup, design, or decor. The workstations are already there waiting for your team. You may be sacrificing control over these elements of your workplace, but you gain a straightforward move with fewer tasks, expenses, and transitions.
Scalability
Thanks to the simple pricing model and short-term leases, a coworking office makes it easy to ramp up or down operations as needed. As you hire more people or employees move on, increasing or decreasing space and costs is hassle-free.
Collaboration
Over the last few years, one of the main reasons organizations have pushed hybrid employees to spend time in the office is that it helps facilitate and encourage collaboration. When employees are in closer proximity and have easier access to one another, they’re more likely to discuss their work, problem-solve together, and draw from each other’s experience and expertise. Whether you already have a dedicated office or not, a coworking space can make this collaboration more accessible by establishing a location that’s easier for everyone to commute to.
If this is one of the reasons you want to use a coworking space, however, it’s important to confirm that the office you’ll be renting has meeting rooms, neighborhoods, and other spaces that are conducive to group work.
Networking opportunities
Networking opportunities are a passive benefit of coworking spaces that could be a boon to your organization. In many coworking offices, employees from different organizations and industries share common areas and may even work side by side, exposing them to different possibilities, solutions, and experiences.
There may be an agency that solves your exact problem or that can help you scale. Perhaps another company that has just been through your situation. As workers gather in the kitchen, lounge, or cafe, they may learn from one another’s mistakes and collect valuable insights they wouldn’t be exposed to in a traditional workplace.
Speed
When you want to buy or lease a traditional office, the due diligence, purchasing, and outfitting process of buying or leasing a traditional space takes far more time than accessing a coworking space.
New companies can get started with a coworking space far faster than they can move into their own office. And established companies can easily expand into new territories and quickly provide a physical presence in new cities or countries. It’s a workplace on demand, rather than one you have to take the time to build or buy.
Disadvantages of using a coworking space
Any organization can use a coworking space for some types of work. But depending on your industry, circumstances, and priorities, they may not support the kind of workplace you want to facilitate. Here are some of the main reasons why a coworking space may not be right for you.
Less control over your workplace
For some companies, a readymade workplace is perfect. As long as the facility has everything your workers need, the rest may feel more like aesthetics. But what if you want to optimize your space, or try a specific workplace model, like activity-based working? And even if a move-in ready workplace has enough space to accommodate your organization, that doesn’t mean it will be able to satisfy employee demand for particular kinds of space. Are there enough meeting rooms, or are they big enough? Does it have the right mix of private workspaces to collaborative areas? Does it have the amenities that matter most to your employees?
When you own or lease an entire office, you have a lot of freedom to determine its layout and configuration. That’s just not the case with a coworking space. You also run the risk that a coworking space may close locations, or a new owner may want to use the facility for something else. If you own an office or lease one long-term, you don’t have to be as concerned about sudden changes like that.
Lack of privacy
Some coworking spaces have plenty of private workspaces where calls and conversations won’t be overheard, and workers can get things done without being interrupted by noisy neighbors. But a lot of them have open floor plans, and employees can’t reasonably expect to work in silence. Depending on the type of work they need to do, a coworking space may not provide enough privacy for them to feel comfortable or productive.
Potential security risks
A coworking space’s lack of privacy and control over the work environment goes hand in hand with security concerns. If employees handle sensitive information or you have more specific security protocols you need to follow, this isn’t the kind of space you should rent. A coworking facility will certainly have basic security practices in place, such as a key or badge scanner for entry, security cameras, and perhaps even staff on site. But if it would be a problem for someone outside your company to have exposure or even potentially access to your work, those basic security measures won’t be enough to address the risk.
That said, some coworking businesses go further than others to make their facilities secure enough to facilitate sensitive work. GSA recently implemented the first coworking spaces for government agencies, and that involved establishing a baseline for the security measures every agency needed before employees from different agencies could share the same workplace. To enable GSA’s new use of government office buildings, we reconfigured our office booking software, Tango Reserve, to enable employees to reserve workspace in facilities where their employer wasn’t already a tenant.
If security is important to your organization and the work you do, you can’t assume a coworking space will share your standards, but it’s worth discussing before making a commitment either way.
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