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Chapter 1: What Is Coworking Space? Here’s Everything You Need To Know

Coworking is far from a new concept, yet continues to skyrocket in popularity. From the explosive growth of the Silicon Valley Tech Boom in the early 2000s to the unforeseen impacts of the Great Recession on traditional office spaces just a few years later, society has spent most of the past two decades navigating new reasons to venture into high-quality coworking spaces.

Then came the COVID-19 pandemic — and the subsequent global rise in remote work.

Before the pandemic’s peak, coworking locations were the fastest-growing type of office space across the entire commercial real estate market. Flexible workspaces have grown at an average annual rate of 23% since 2010. And despite a worldwide return to the traditional office, the preference for coworking among employees and employers remains the same.

While the verdict is still out on what the future will hold for coworking spaces, it’s clear that the demand for coworking solutions isn’t going anywhere any time soon. Recent research has shown that the number of coworking spaces is anticipated to double by 2023, with over 40,000 available spaces worldwide. It’s never been a better time to learn more about coworking solutions.

Whether you’re an individual or company considering renting a coworking space, or a commercial property owner looking to start a coworking space business, this Ultimate Guide to Coworking Spaces will take you through everything you need to know. Let’s start with the basics, including what exactly coworking is and the unique benefits of coworking spaces to consider.

What Is Coworking?

what is coworking | The Office Exchange

Coworking is a business model that incorporates shared office spaces to create an environment for independent work and team collaboration. Unlike single-entity office spaces, a coworking model encourages networking among local professionals across various industries to provide a workplace emphasizing community and beneficial partnerships.

Coworking spaces have been typically used by self-employed professionals, remote workers, digital nomads, and now more frequently, hybrid workers who seek a change in environment. More recent years have seen an uptick in the number of large-scale corporate entities and even up-and-coming start-ups that also opt for coworking spaces instead of traditional long-term office leases.

What Is a Coworking Space?

A coworking space is a single, shared office location that offers individual professionals and professional teams an area to work on projects individually or collaboratively. Compared to traditional office spaces, a coworking office space is distinguishable by its shared workspace areas and accompanying shared services, including WiFi, print services, and conference areas.

For individuals and corporations alike, the purpose of a coworking space is multifaceted. On the one hand, coworking spaces have long been regarded as a community hub for local professionals, whether for team members or lone contractors. Coworking offers a unique sense of community that exposes individuals of all industries to various workflows and processes.

On the other hand, coworking spaces have remained an ideal solution to the ongoing struggle to achieve a healthy work-life balance. Coworking spaces create a separation of work and home life for individual remote workers and offer a location for traditional office workers and even start-up companies to unplug from their typical work environment.

Coworking spaces serve as an effective perk for hybrid workers who split their time between a work-from-home model and a traditional in-office arrangement. The individuals employed on a hybrid basis and the organizations that establish hybrid workflows find convenience and collaboration in local coworking spaces that can open the door to entering new markets.

How Does a Coworking Space Work?

When understanding how coworking spaces work, it’s important to remember that most coworking solutions offer multiple workspaces and billing options to account for various use cases. Aside from the type of workspace being rented, a primary factor in how coworking spaces are priced is the level of expected use for the space rental — regular use or infrequent use.

Coworking spaces typically offer membership pricing options for those who require regular use, from month-to-month subscriptions to long-term agreements that can incur a discounted rate for an extended sign-on. These options are popular amongst remote team members, independent contractors, and freelancers who require a workspace daily.

Coworking spaces also offer hourly rentals and daily or weekly passes for those who require infrequent use. These options are great for individuals and corporations who operate on a hybrid work model and those who are either fully remote or in-office but still require an event, meeting, or collaborative space from time to time. They’re also preferred by traveling professionals and nomads.

Types of Coworking Spaces

Just like traditional office settings, coworking spaces will come in various sizes, locations, and amenity options to match the specific needs of a sole professional or company team. From private workspaces that provide a quiet space for project completion to open community spaces that encourage professional networking and collaboration, some of the options to choose from include:

Office Suites

Coworking Suite

As some of the most spacious options for coworking space solutions, office suites and full-floor office rentals are perfect for large teams looking for both spaces to collaborate and for workers to individually complete work. Office suite rental solutions typically include a workspace mixture of individual desks, private offices, conference rooms, and community areas.

Private Offices

Individual Private Office Space

For individuals or small teams looking for coworking rental options that are more private or tucked away from shared spaces, single-private office rentals are the way to go. Private office coworking solutions offer a private room in a shared coworking location that is separated from the busy community area but still includes typical amenities, such as WiFi and print services.

Conference Rooms

For many remote teams and single entrepreneurs, hosting client meetings can be challenging without a designated location. Fortunately, conference room rental options allow professionals to reserve a discussion space daily or hourly to help accommodate their specific needs. These rooms typically accommodate six or more professionals in a single table-sitting arrangement.

Event Spaces

Large Event Space

In addition to conference needs, there are also coworking rental solutions that can accommodate event needs. From team-building exercises and product training for corporate entities to social mixers for local freelancers, rental event spaces pose a fantastic opportunity for teams and individuals who operate remotely but require an event space from time to time.

Dedicated Desks and Hot Desks

Dedicated Desk Space

Some of the most popular coworking solutions on the market are dedicated desks and hot desk rentals. These solutions are preferred by independent contractors, freelancers, and remote workers who need more space to work but not as much as an entire office. Dedicated desk rentals provide renters with a designated area without the risk of others snagging the spot. In contrast, hot desk rentals operate on a first-come, first-served basis with infrequent and regular pricing options.

Community and Flexible Workspaces

Flexible Work Spaces

Of the many coworking space rental options, community and flexible workspaces are some of the most interesting cost-friendly workspace options. These areas often include a mixed assortment of work areas — such as couches, lounge chairs, hightops, and even desks — that are placed in a single open workspace. This rental option is excellent for individual professionals looking to operate in a workspace that hosts a community feel and encourages more collaboration and networking.

Who Uses Coworking Spaces?

When coworking spaces first boomed in the early 2000s, they were preferred by independent contractors and newfound start-ups who needed a place to work that wasn’t their home or garage. But as inflation costs and pandemic-fueled operations have shifted, so have coworking space demographics. Today’s coworking spaces feature a broader community of professionals, including hybrid or remote-based businesses, large international corporations, and even nonprofits.

Freelancers and Self-Employed Individuals

Since the birth of coworking solutions in the early 2000s, freelancers and self-employed individuals have dominated coworking adoption. According to a recent Global Coworking Survey, freelancers and self-employed professionals account for 42% of all coworking space users.

Outside of busy coffee shops and libraries, many freelancers or self-employed individuals don’t have many places where they can conduct work that isn’t a living room couch or home office. Fortunately, coworking spaces can provide these users with a productive environment that offers a sense of community amongst other freelancing and self-employed individuals.

Coworking solutions are also ideal for freelancers and self-employed professionals looking to separate their living area from their work area to achieve a better work-life balance for a self-employed professional. Coworking spaces offer cost-saving rental options compared to higher-cost private rental options, including designated desks and community area memberships.

Remote Workers and Hybrid Workers

The COVID-19 pandemic accelerated the preference for remote work seemingly overnight. And even once employees returned to the office, an Owl Labs remote work survey indicated that 77% of workers believed that remaining remote post-pandemic would make them happier with their positions. Many companies have also opted for hybrid work models to enable employees to work in the office part-time and complete the rest of their workweek remotely.

As with freelancers and self-employed individuals, remote and hybrid workers now require more work-life balance, especially post-pandemic workers. The productive environment and community feel of a coworking location are preferred by those looking to get out of the house and those who seek inspiration from like-minded community professionals.

Corporations and Conglomerates

Large corporations have recently begun to embrace coworking solutions’ benefits. With a higher interest in remote operations, large corporations have started ditching long-term leases and downsizing from large corporate buildings to provide employees with hybrid and remote models that include coworking memberships as an added perk to their position.

Corporations like Facebook, Salesforce, and IBM have embraced coworking to support remote operations and still provide a shared space to conduct business. Quarterly meetings, brainstorming sessions, and product training can be held in coworking spaces to promote in-person collaboration and better support individual worker productivity in remote locations.

Small Businesses, Start-Ups, and Nonprofits

Aside from freelancers, many start-ups (especially those in the Silicon Valley tech epicenter) were some of the first users of coworking solutions in the early 2000s. With little need for an expansive office suite but a requirement for a collaborative space and meeting rooms, small businesses and start-ups have come to adore coworking solutions for their networking and cost-saving capabilities.

In a study that assessed thousands of coworking spaces across the globe, 37.93% of renters were small to medium-sized enterprises, and 27.12% were start-up teams. These markets, alongside nonprofit organizations, have begun seeking coworking solutions as a cost-effective method to provide in-depth collaboration without a long-term contract or large-scale budget.

What are the Benefits of Coworking?

As coworking spaces become more popular nationwide, coworking space benefits have become a trending topic of conversation. Here’s how coworking spaces benefit users of all types.

Benefits of Coworking Spaces for Individual Professionals

Remote workers, freelancers, and self-employed professionals benefit from coworking in many ways. The flexibility of various space solutions, accompanied by multiple affordable pricing options, offers individual workers a selection of choices to match their work and amenity needs. A strong sense of community and collaboration in coworking settings supports work-life balance and eliminates the repetitive feel of at-home work.

Benefits of Coworking Spaces for Companies Looking to Offer Perks

In recent years, there has been a significant shift in employee expectations and the desire for remote work opportunities. Companies that offer remote positions can also benefit from providing coworking spaces as an added perk to support overall employee satisfaction and company reputation. Likewise, offering coworking options outside of the typical home office in support of employee satisfaction can drive higher levels of productivity that benefit both the company and its employees.

Benefits of Coworking for Corporations Looking to Downsize into a Remote/Coworking Model

As more corporations exit the traditional long-term office lease to save on costs and offer employees more flexibility, popular businesses have begun adopting coworking space rentals as a better solution for their teams. Corporate giants like Pinterest have recently decided to break multi-million dollar leases to supply greater remote flexibility for their workers.

Aside from highly coveted flexibility, businesses can also save on high costs by eliminating long-term leases and recycling these savings into their employees. From coworking membership options that provide employees with community and collaboration to health resources that support employee wellbeing, savings from coworking can drive employee satisfaction.

Benefits for Property Owners Looking to Get Involved In the Coworking Space

Outside of the actual users of coworking solutions, like independent contractors and corporations, the coworking industry also poses a profitable opportunity for property owners looking to own and operate coworking spaces. Whether located in the city center or outside a large metropolitan area, remote professionals and teams can now operate anywhere they wish.

The recent rise in remote work has created significant opportunities for sizable property owners to get involved in the coworking space and develop unique coworking options to help professionals flourish. There are tons of coworking models to adopt, from small-scale hot desks and conference rooms to entire event spaces.

Coworking Spaces Vs. Other Office Space Alternatives

Despite the above benefits of coworking, certain corporations and independent contractors may argue that local office space alternatives can serve the same purpose — perhaps at a fraction of the price. However, like most situations, when it sounds too good to be true, it is. Look at how coworking spaces compare against other local office space alternatives.

⦁ Home Offices. While the era of remote work pushed many to adopt working from home, the home workspace can still be burdened by family distractions and burnout from minimal work-life separation. Likewise, without the necessary square footage, many individuals are left to work from non-ergonomic and non-productive spaces like the couch or kitchen table.
⦁ Working from Coffee Shops and Cafes. When looking to venture outside of home workspaces, many individuals often land in coffee shops and restaurant cafes. Unfortunately, these options are often overwhelmed with noise distractions, unreliable (and even unsecured) WiFi, and other disturbances that can interrupt a workflow or meeting.
⦁ Traditional Office. A traditional office setting may be comparable to a coworking solution, but it still lacks in many areas where a coworking space shines. A traditional office setup requires costly long-term commitments, including utilities, furniture, and start-up costs. Without the proper layout and amenities, workers may feel stifled and uncomfortable in their workspace, which can further impact productivity and satisfaction.

The Average Cost of Coworking Spaces

Several factors determine the average cost of a coworking space. For instance, location, size, and supplied amenities are just a fraction of the many elements that dictate coworking space pricing. However, another huge factor in pricing is the coworking space provider themselves.

Large-scale coworking spaces and chain rental solutions often base their rates on local real estate trends, where professionals can pay an arm and a leg just for hotdesk membership. Not to mention, they’re also not very transparent with their pricing. Many popular providers of coworking spaces tend to hide their upfront costs in the long-term contracts they require users to agree to.

Fortunately, there are smaller, individually owned and operated coworking space solutions that are much more transparent in their user pricing. A preference for smaller-scale coworking space solutions has grown throughout COVID, as more remote professionals have relocated outside the busy city locations where large-scale coworking solutions typically reside.

A quick look at The Office Exchange marketplace can better demonstrate how coworking cost varies. For example, individuals seeking a coworking space in the Denver area could expect to pay $35 per day for a designated desk. On the other hand, larger companies needing a training room to fit a more extensive team could expect to pay upwards of $1,000 daily in San Francisco. 

For property owners looking to jumpstart their coworking business, understanding the general average cost depends on the specifics of your coworking space. The building location, required utility costs, maintenance budget, and expected amenity offerings will determine the overall average monthly costs of owning and operating a coworking space.

The Future of Coworking

It’s no secret that COVID-19 restrictions and shutdowns heavily impacted the coworking industry. Thankfully, much of the industry has begun rebounding back to pre-pandemic levels — and may even be slated to surpass them. Industry research has shown that roughly 5 million professionals will work from coworking spaces by 2024, a whopping 158% increase from 2020.

The number of coworking spaces is expected to double by 2024 compared to 2020 and exceed more than 40,000 locations worldwide. While these numbers may seem surprising when factored into the burden of COVID-19, it’s important to remember that the pandemic significantly shifted individual workplace expectations and company work models to accommodate remote work preferences better.

Because of this significant uptick in interest surrounding coworking solutions, coworking as a business model also holds excellent viability and profitability for those looking to get involved. The versatility of coworking spaces for both short-term and long-term users creates multiple revenue streams for entrepreneurs and commercial property owners looking to open their own spaces.

From hotdesks to private office suites, the sheer variety of coworking space options supports multiple revenue streams, especially when factoring in multiple payment models like daily and long-term pricing. Likewise, entrepreneurs can offer à la carte services, such as an in-house cafe or a professional print service, to provide additional profit potential beyond membership fees.

How to Find Your Ideal Coworking Space

Now that you’re geared with a proper understanding of coworking spaces, what purpose they fulfill, and who they could serve, you’re ready to select the ideal coworking space for you. You’ll want to keep a few factors in mind when choosing a coworking space as an individual versus selecting space as a company or corporation, especially regarding rental preferences.

If you’re an independent contractor, remote employee, or hybrid worker, consider these guidelines for finding your ideal coworking space:
⦁ What are your top amenities? (ex., WiFi, printing capabilities, dining options)
⦁ Do you require a private workplace? (ex. community hotdesk vs. private office rental)
⦁ What are your location preferences (ex., city center, general metropolitan area)
⦁ What is your anticipated level of use? (ex. long-term membership vs. day pass)
⦁ What is your daily, weekly, and/or monthly budget? (ex. $20 per day, $500 per month)

If you’re a corporate entity, nonprofit organization, start-up, or small business, consider these guidelines for finding your ideal coworking space:
⦁ What are the top needs of your team? (ex., conference space vs. individual desks)
⦁ What is the purpose of the coworking space? (ex. meetings, training, and team events)
⦁ What are your team’s capacity and size needs? (ex. amount of employees vs. size of space)
⦁ What is your preferred location? (ex. coworking location vs. employee living radius)
⦁ Do you need one-time, daily, weekly, or long-term pricing? (ex. personal or company memberships)

With the above answers in mind, you can head to a coworking space marketplace like The Office Exchange to filter for a space that best matches your individual or team needs.

How to Establish or Promote a Coworking Space

From San Francisco to New York City, phenomenal coworking spaces can accommodate individual employees, small-scale teams, and even large-scale corporations. However, to stand out from the competition, entrepreneurs must know how to properly establish and promote their coworking space to obtain short-term and long-term users.

Chapter 2 of The Office Exchange Coworking Guide will discuss how property owners and landlords can establish and promote a successful coworking space using a 10-step approach. These steps include determining start-up costs, hiring employees, and developing a pricing structure and revenue plan that best fits your operation. Keep reading to learn more.