Coworking Space vs. Traditional Office Space-Which is Better?
In today’s office rental market in Singapore, people have more options than before. Coworking Space vs. Traditional Office, which is better? Everybody approach their business in different ways. Hence, the demand for the type of offices also varies. We like to share the advantages and disadvantages of coworking office space and traditional office space with you.
Coworking space has evolved over the years. Contrary to what many people believe, Coworking space today is more than just hotdesking and only for start-up. Coworking space has been used even for MNC in Singapore. Coworking offices are unique and can prove to be a smart choice for companies who are small-scaled. Avoiding high set up costs and more flexible lease terms, small corporations often opt for coworking office space in the beginning. Mostly located in the CBD, Coworking space offers great convenience and connectivity too.
Who should opt for Coworking Offices?
Coworking offices are best suited for the following businesses:
- Those who are looking for a temporary office space
- Businesses looking for a more corporate address.
- New businesses moving into new markets or territory.
- Companies requiring additional office space for a short-term project
- Those who can expand or arrive at the shut-down point unpredictably
Coworking offices are preferred by new firms, consultancy firms, representative offices and project teams from various industries relating to finance, IT or insurance.
Pros of Coworking Office
Flexibility: In Singapore, Coworking offices are preferred by new startups due to their quick availability and more flexible in the lease term. This is also vital for a company that has a more dynamic manpower growth. Companies don’t have to commit to a long lease term.
Cost Saving: Services like email support, IT infrastructure, internet & telecom connections, reception services, office cleaning, air conditioning, electricity and lighting, refreshments for staff and other utilities are included in the fee or charge on a pay per use basis so tenants don’t have to commit to long contracts and set up fees.
Shared Cost: Coworking office space also provide facilities and services such as copying services, seminar/meeting/conference rooms, etc. which can be shared among the tenants. These facilities take up space in the tradition office space and may not be fully utilising all the time. Hence, helping to save costs.
Move-in Condition: Most coworking spaces come equipped or fitted with furniture. In some cases, tenants can also customise their office space. Tenants can save some initial set up cost.
Prestige Address: In Singapore, a lot of coworking spaces are located in grade A office towers. Therefore, renting a coworking office means you can have a prestigious business address for your company.
Connectivity: Coworking offices in Singapore are usually located in prime business districts which is very near to most transportation options like buses and MRT.
Network and Collaboration: Being in a shared space means you have a chance to find complementary people that can help you.
Cons of Coworking Office
Higher Rental Price: Coworking space may prove to be more expensive over a long period of time. If your company strength increase, you may end up paying more rent. Typically, it costs around S$1,000 – $1,300 per month per person to rent a standard room in a coworking office.
Higher Operation Cost: Because of the increase in manpower, the chances of your team using the meeting rooms, photocopy machines also increases. This may lead to higher operating cost as coworking space charges these utilities on a pay per use basis. In-house facilities such as meeting rooms and conference rooms can be acquired at an additional cost of S$20-S$50 per hour.
Lack of Privacy: You will be among many other companies that are listed in the same coworking space. In some places, it can get crowded and noise can be an issue. Besides, your customer may lack the confidence to deal with you as they may feel that you will not be here permanently.
Work Place Safety: With the recent COVID 19 situation, being in a crowded office with strangers may poise higher health risk.
When a conventional office is rented in Singapore, it requires refurnishing and refurbishments to be done. Things to do like furniture setting, IT infrastructure, utilities, labour cost, etc. have to be paid by the tenant him/herself. Selecting a conventional office can be a tedious task but if your company is operating efficiently and experiencing good growth rates, you may want to select an office space that best suits your future business requirements. Although an initial capital cost will be incurred, the monthly rental payments would be lower than that of a serviced office.
Pros of Traditional Office
Customised Space: Traditional office space and layout can be modified to suit your the specific needs of your business operations.
Fixed Cost: You can better control or predict your rental cost by signing on a longer lease. Or you can have a clause in the lease agreement predetermined the percentage of increment when the lease expiry.
Corporate Image: Unlike coworking offices, you can design and renovate your office in accordance to your company corporate colours and design. This can enhance the client’s confidence when they visit your office space.
Cons of Traditional Office
Term Commitment: Most landlords will require the tenants to sign a lease term with 2 years or more. This may prove to be a challenge for some start-up.
A failure to predict the size of your company (in labour terms), you may end up leasing too little or too much space.
Set-Up and Maintenance: Responsibilities would increase with an addition to look over office issues like reception, phone answering, mail handling, utilities services, IT setup, and ongoing maintenance, office housekeeping, and so on.
Coworking Space vs. Traditional Office, which is better? For most new business, renting an office is part of the process. You can make better decisions with more information. You should consider all options that are available to you and not base your decisions on price alone. Keeping an objective mind will help you position your business better. Location, type of office space, rental, neighbourhood, amenities and services are all the factors you should consider.