How Much Does It Cost to Rent Space?

Cost of a Traditional Office Space

The traditional office space model, while offering stability and familiarity, carries several financial burdens that its contemporary counterparts, such as coworking spaces and day offices, help alleviate. A significant cost disadvantage associated with conventional office spaces relates to long-term leases. In traditional settings, businesses typically enter into leases for a minimum of three years, effectively limiting flexibility and growth potential.

Many of these leases involve “upward-only” rent reviews, ensuring that the rent after a review will never be less than before. This uncertainty of increasing rental costs may put undue financial stress on businesses. 

Apart from the rent, businesses must also budget for additional occupancy fees, such as maintenance costs, property taxes, and interests on balances owed. If the business has sought an agent to secure the office space, the “finder's fee” adds an extra expense.

One often-overlooked aspect is the cost associated with “dilapidations.” Companies with long-term contracts often customize their offices to their liking, but as the contract draws to a close, they are liable to restore the space to its original condition, which can be quite costly.

In all, these different items tally into tens of thousands of dollars in cost for most businesses. This can add up to 10% of 20% of a business’ revenue—lowering operating margins and sucking up valuable time and energy in maintenance.

The Rise of Coworking Spaces and Day Offices

In recent years, coworking spaces and day offices have arisen as an alternative to the traditional office. Coworking spaces and day offices through providers like Davinci Meeting Rooms are a much more cost-effective and flexible alternative to traditional offices space. These spaces typically offer short-term contracts and the rental fees often include the cost of utilities and maintenance. Besides, the office is already furnished, so businesses don’t need to invest in setting up their workspace or restoring it to its original state. The cost, as a result, is more predictable and can be controlled more effectively in coworking or day office models.

Average Cost of a Coworking Space

The appeal of coworking spaces continues to surge, propelled by their inherently flexible structure, a boon for freelancers, startups, and well-established organizations alike. The U.S. Chamber of Commerce finds that a coworking space, depending on its location, ranges from as little as $200 per month in rural locations to as much as $700 in certain suburban or urban centers. Overall, the Chamber of Commerce averages between $300 and $400 a month. 

The Benefits and Drawbacks of Different Desk Spaces

Coworking spaces also cater to diverse preferences in desk types, thus affecting the price. For instance, hot desks in common workspace areas tend to be less expensive than private offices specifically built for individual teams or companies. While private desk spaces provide a tranquil environment suitable for productivity, they limit opportunities for interaction and collaboration. On the other hand, open desk spaces encourage cross-team collaboration but may be associated with distractions. One study found open desk spaces could, surprisingly, reduce employee collaboration by up to 70%.

Considerations When Renting a Coworking Space

Renting a coworking space entails more than just analyzing the cost. Businesses must contemplate several factors, such as the location’s convenience, services included, working environment, and availability of amenities like meeting rooms and refreshment areas. Other considerations include how often upgraded spaces like conference rooms will be required. Ideally, these should be accessible on an as-needed basis rather than held in reserve full-time.

Leveraging Meeting Rooms with a Coworking Space or Day Office

For businesses or solopreneurs who use a coworking space or day offices, the ability to reserve and use meeting rooms in the space can be a real plus. Following are some of the advantages rented meeting space includes:

1. Professional Environment. Rented meeting rooms offer a professional setting for conducting business meetings. They enable members to host meetings with clients, investors, or partners, thereby projecting a more refined image of their business.

2. Privacy and Confidentiality. Meeting rooms ensure a secure and private environment, where members can discuss confidential information or sensitive topics without concerns about eavesdroppers or interruptions.

3. Advanced Technology and Amenities. Meeting rooms in coworking spaces are often equipped with high-speed internet, audio and visual equipment, whiteboards, and refreshments, enhancing the meeting experience.

4. Reduced Distractions. These spaces offer a quiet, distraction-free environment, enabling members to concentrate on their work and avoid the noise and interruptions of a busy workspace.

5. Collaboration and Brainstorming. Rented meeting rooms provide a collaborative environment for members to work on projects, exchange ideas, and brainstorm new concepts. This collaboration fosters a sense of community within the coworking environment.

6. Flexibility and Convenience. Meeting rooms are easy to book and offer flexible booking options, such as hourly, daily, or weekly rates, making it easier for members to manage their schedules and plan their workdays more effectively.

7. Cost-effectiveness. Coworking spaces offer meeting rooms at affordable prices, eliminating the need for expensive office space or renting hotel conference rooms.

8. Professional Support. Rented meeting rooms often come with a professional support team that assists with booking the meeting room, setting up the equipment, and providing administrative support, thereby simplifying the process.

Flexibility Breeds Cost Savings and Avoidance

Given the increasingly hybrid nature of work, coworking spaces offer unique advantages in terms of location flexibility. Should your team size fluctuate or if you need a workspace in a posh location, coworking spaces can be rented at a much more affordable price compared to traditional offices.

Mistakes to Avoid When Renting Coworking Spaces

Comparing coworking spaces extends beyond analyzing the rent. It is vital to consider present and future space requirements. If a company is poised for growth, ensuring that the chosen coworking space can adapt to your evolving needs is key to avoiding potential problems down the line. 

In particular, when choosing an office space, the decision should not only be guided by cost but also by the features that best match your business’ needs. A workspace that promotes productivity and aligns with your company culture is equally important as affordability. Therefore, investing time in careful research and planning is essential to finding a secure, comfortable, and reasonably priced coworking space.

Indeed, the office rental landscape has undergone significant shifts, with coworking spaces emerging as a flexible, cost-effective solution. However, businesses must adopt a holistic approach when considering these options, factoring in more than just the cost to ensure the workspace ultimately aligns with their unique needs and long-term objectives.

About Patrick Spencer

Patrick Spencer (Ph.D.) is the President and Founder of TIRO Communications that helps companies develop, build, and manage content, customer, advocacy, and demand-gen programs. Included in its offerings is TIRO Cognition Insights, a data analytics tool that enables B2C and B2B businesses to pinpoint what their customers and competitors’ customers are saying and to identify corresponding actionable product, services, competitive, sales, and marketing intelligence. LinkedIn Profile: LinkedIn Website: www.tirocommunications.com