Co-working can be an attractive option for small and growing companies. For instance, a co-working lease/agreement can provide flexibility in terms of space constraints and may provide abundant amenities, such as ping pong tables, a gym and a decked-out kitchen with kombucha on tap. However, a businesses owner must weigh the positives as well as the negatives.  But given the nature of co-working spaces, there are privacy issues that business owners have to grapple with. Most importantly, in my view, business owners should focus on the dollars and cents. How do entrepreneurs identify the break point of where co-working is no longer a viable option to accomplish their business goals? And when is a co-working space too expensive? These questions are especially important to every firms’ chief financial officer.

Pricing Models in NYC

In this post, I wanted to share some co-working pricing models from some of the co-working companies currently operating in NYC, including Industrious, KettleSpace, Regus, Spaces and WeWork. Unfortunately, these companies do not openly share space dimensions, and instead provide quotes on a per-person, or per-amenity basis.

Service Provider	Monthly Cost	Notes
Industrious	$1,141	Premium spaces.
KettleSpace	$49	Sit at a table in a café and get free coffee.
Regus	$387	Traditional co-working spaces.
Spaces	$518	Dedicated desk in a shared space.
WeWork	$613	Standard private offices with added amenities.

These are average costs based on data available at each service provider website. Costs vary based on services and amenities. Check co-working service provider website for their latest pricing.

An apples-to-apples comparison would show that these co-working spaces are costing commercial tenants more per square foot than the typical tailored NYC office lease, albeit with added services and amenities. Through my research, I’ve found that a co-working company can charge at least 10 times more per square foot than a traditional office space. Sure, co-working takes all the hard work out of customizing a space, but one may wonder at what stage a business can lease their own space, splurge on similar amenities and still spend less than what a co-working service provider charges. For smaller companies co-working makes a lot of sense, but at some point the costs may become too cumbersome to sustain a company’s growth.

Benefits of a Traditional Office Lease

A traditional lease has many benefits. This lease can give a tenant substantial control over their space. This is paramount for a company that wants to focus on customization and seeks for its brand to resonate throughout its office locations. A buildout for a financial services company will vary compared to one for a technology startup or a medical practitioner. Not only should the physical space be different, but each will have different technology, cybersecurity and plumbing requirements, for example. In fact, some landlords may also be willing to cover the expense of building out the space for a new tenant. What’s more, a business may have more financing options and easier access to funds with a traditional lease.

Is Co-Working for My Business?

The decision to go co-working or a traditional space will vary for each type of venture out there, and there’s no magic formula that fits all. In addition to cost savings, a traditional office lease can help to fill requirements such as branding, technology, cybersecurity, plumbing and financing. Some of the co-working pundits tout the flexible nature of a co-working agreement as a reason not to sign a traditional lease, but a properly drafted traditional lease that allows for a sublease can provide flexibility in a traditional lease situation. Focusing on the bottom line, the office space expense may be one of those make or break decisions for a burgeoning business. With strong tenant representation, an astute business owner can minimize this expense and boost their bottom line.