Coworking vs. Traditional Office: Are You Paying Too Much For One Or The Other?

Companies relying solely on quoted lease rates when choosing between coworking spaces and traditional offices could find themselves unintentionally choosing lease options that are more expensive in the long run. 

Preconceived notions about coworking prices versus traditional office rates stump many tenants at the bargaining table, particularly when they fail to look past the original quoted prices, WorkSuites CEO Flip Howard suggests. 

"People assume coworking is a lot more expensive," Howard said when asked some of the preconceived notions he has found in the market. "Honestly, it used to be more.

"When an office grows to more than 10 people, the scale then weighs in favor of traditional office space," Howard said.

While they are more locked into space, tenants can include options that allow them to grow steadily and avoid the coworking premium.

"If you are looking for office space for 10 people or less, shared office space, or flexible workspace or coworking, is almost always, in every case for any amount of term, going to be more affordable (than traditional)," he said. 

Other market experts consider as few as three employees a benchmark for determining when coworking is going to be too expensive compared to a traditional lease. 

"Typically, if you are three employees or over, you are kind of at that break point where it makes more sense to lease traditional office space," said Grant Pruitt, the president and co-founder of Whitebox, a brokerage that specializes in representing tenants.

Some employers still may choose coworking for three or more employees; however, above the three-person threshold, they will pay a premium for the flexibility of coworking, Pruitt said when discussing what he personally observes in the Dallas-Fort Worth area. 

Flexible office space has grown at an average annual rate of 23% between 2010 and 2017, according to data from JLL.