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What Is Coworking – Pros & Cons, Hidden Costs of Shared Office Space

As telecommuting and freelancing become more common, coworking is turning into a viable alternative to working from home or a traditional office. While there are several advantages to coworking, including increased social interaction, access to conference rooms, and the ability to establish a better work-life balance, sharing office space can be more expensive than you think.

If you’re considering making the switch to coworking, consider all of the costs before diving in.

What Is Coworking?

Coworking is an office-sharing arrangement between individuals and (sometimes) small businesses. In some cases, the arrangement is very informal: A business owner who owns or leases a too-large office space then sublets desks and offices to others. Coworking spaces also operate as formal businesses, renting out desk and office space to freelancers, telecommuters, and even business travelers. Operation models vary, with some coworking businesses charging daily, weekly, or monthly rent, while others sell memberships that allow the member to make use of the workspace and its amenities. Coworking spaces usually don’t use long-term membership contracts or leases.

Space arrangements in a coworking office also vary. Some coworking businesses rent out desk space on a first-come, first-served basis – you bring your laptop to work each day and sit down at any available work space. Other offices are more formal, assigning out desks or offices to members. Depending on the space and arrangement, you may have formal offices and open plan seating available to choose from.

In addition to offering office space and shared use of amenities, some coworking space owners actively encourage collaboration between members by sponsoring networking events or “getting to know you” websites that allow members to introduce themselves to one another.

Why Coworking?

While working from home is a good option for some, other people choose to rent and commute to a coworking office every day. Here’s why:

1. Reduced Stress
Leaving work at the office is a lot easier when you actually have an office to leave. Working from home can be stressful, particularly if there’s not a home office or segregated work space to retreat to. Some people who work at home feel guilty if they aren’t working all the time. This can create tension with other family members while also making relaxation difficult.

2. Improved Time Management
Kids, pets, neighbors, delivery drivers, televisions, kitchens, and books are all big distractions. Many people find minimizing workday interruptions difficult, and numerous interruptions can turn an eight-hour workday into a twelve or fourteen hour one.

3. More Social Interaction
This isn’t important for everyone, but some folks appreciate getting out and having the chance to talk and interact with others in a business setting.

4. Networking Opportunities
Coworkers can be great prospects or sources of referrals.

5. A Professional Setting
A coworking office offers telecommuters and freelancers a professional, quiet alternative to meeting with clients at home or in coffee shops.

6. Low Maintenance Requirement
Management or owners of coworking spaces assume the responsibility for the maintenance of offices and shared equipment.

7. Less Expensive and Less Risky Than Private Office Rental
Renting a private office, particularly in a large city, is a pricy option. Rents are usually high, as is the cost of furnishing the office, buying office equipment, paying utility bills, cleaning the space, and paying contractors to address any necessary building maintenance. In addition, many commercial landlords require tenants to sign long-term leases. Tenants with cash flow problems, or those who need to leave town for business travel, may find themselves stuck paying rent even when they can’t afford it, or don’t need the space. Coworking allows members to share the costs of utilities, Internet, and office machines, while offering short-term membership plans.

Less Expensive Private Office Rental

Coworking Hidden Costs

While coworking can be a convenient and cost-effective alternative to working from home or renting a commercial office, it’s important to be aware of some of the less-than-obvious costs of working in a shared space. Of course, if you’re used to working in a traditional office, these costs might not be so “hidden,” but if you’ve been working from home, then encountering (or re-encountering) some of these expenses may catch you off guard.

1. Commuting
Unless your coworking space is within walking distance of your home, you need to account for commuting expenses. These vary, but include the cost of gas, auto maintenance, and public transit fares. Commuting also adds unpaid time to your workday. And depending on the parking situation at your coworking space, you may have to pay parking fees, too.

2. Child and Pet Care
If you plan to spend all day working away from home, you may need to pay for child care or pet sitting services.

3. Food and Drink
When working from home, you have your kitchen, coffeemaker, and groceries at your disposal. If you work away from home and don’t feel like packing a lunch every day, you’ll need to buy microwavable entrees to store at the office, or pay for lunches at local restaurants. Staying caffeinated is another issue: Some coworking offices provide basic coffee and hot water for tea, but the siren song of a local Starbucks or independent roaster may draw you from your desk more often than you’d like. Unfortunately, the cost of those lattes adds up quickly.

4. Socializing
Even if you’re careful to pack your lunch each day, and you stick to the coffee from the office K-cup machine, friendly officemates may still ask you to lunch, coffee, or after-work drinks. If you’re a solitary type, or don’t care about networking, turning down these offers may not be a problem. But, if you like to socialize, go ahead and recalculate your entertainment budget to accommodate these networking activities.

5. Storage
Some coworking spaces rent storage lockers to members who don’t have a permanent desk. The advantage to locker rental is that you don’t have to haul your laptop and other supplies home each night. The disadvantage is that the rent is an additional expense.

6. Technology and Electronics
Coworking spaces don’t usually include computer access, so plan on bringing your own laptop to work. In addition to your laptop, bring any peripherals you like to use, such as a large monitor, ergonomic keyboard, or trackball. While hauling these items to and from work each day is a possibility (as is forgetting them at home), you might be better served to save yourself the hassle by purchasing a second set of peripherals for the workplace.

7. Office Services
Not all coworking spaces are created equal. Some offices offer free use of the shared copier/printer/fax machine, while others may charge you for this use. Similarly, some offices include the cost of WiFi in the rent, while others charge extra for connectivity, or require you to supply your own hotspot for security reasons. It’s important to know exactly what your rent covers before signing an agreement so you can account for any extra expenses.

8. Office Supplies
Plan to purchase your own pens, envelopes, staples, paperclips, and other standard supplies.

9. Clothing
Coworking means you can no longer work in your pajamas with a mess of uncombed hair. While most offices don’t prescribe a dress code, there’s a general expectation that members appear pulled-together and presentable. Additionally, commuting to work increases the wear and tear on your clothing and shoes as you brave the elements. Prepare to increase your clothing and personal grooming budget once you sign on for coworking.

10. Treating the Sniffles
If you’ve ever worked in an office, you probably have not-so-fond memories of colds, flus, and other illnesses that periodically took over the workplace. Unfortunately, shared workspace means shared germs, so prepare your immune system for a nasty shock.

11. Taxes
Coworking membership fees or rent may be tax-deductible, but so are home office expenses. Talk to your tax adviser to determine whether switching to a coworking space will affect your tax liability, and if it does, by how much.

12. Insurance
Check your lease or membership agreement to find out whether the space is insured and whether the insurance covers accidents or losses suffered by you, your clients, or your visitors. If it doesn’t, talk to an insurance agent to learn about your coverage options. This is an important issue, so you may want to run the office’s insurance coverage past your lawyer.

13. Theft
It’s common for security in coworking spaces to be lax, especially since members come and go freely without real supervision. Unfortunately, this leaves your work and personal items vulnerable to theft.

Coworking Spaces Security Lax

Minimizing Costs

Despite the extra expense, many people feel that coworking offers great advantages over traditional home or commercial offices. If you decide to sign a coworking agreement, here are some ways to minimize costs:

1. Prepay Your Rent or Membership
Some coworking spaces offer discounts to members who prepay their dues or rent. Ask the space manager if this is possible. If so, also negotiate a written refund agreement in case you have to leave town or return to your home office.

2. Look Beyond Monthly Rent Figures
Remember, the real cost of coworking isn’t just your rent or monthly dues. Find out what’s included in your coworking membership and what costs extra. Only then should you crunch your numbers.

3. Location, Location, Location
When possible, choose a coworking space that’s close to your home. Close proximity allows you to save on commuting time and expenses while also giving you the freedom to run home for lunch. If there are no work spaces close to your home, simplify your life and save time by choosing an office that’s close to shopping, banking, health clubs, or your favorite hangouts. If you travel a lot or if you frequently work with out of town clients, look for an office near the airport. You also want to consider factors like parking and proximity to public transit. Time is money, particularly if you’re a freelancer, so don’t underestimate the importance of accessibility when choosing an office.

4. Store Lunch and Snack Foods Onsite
If your coworking space includes a kitchen, keep frozen entrees, microwavable soups, and sandwich fixings at the office. Buy a large food storage container, write your name on it with a permanent marker, and fill it with sandwich wraps, cold cuts, and cheeses so that you can make your own lunches. Having these items on hand reduces the temptation to dine out or have food delivered.

5. Take Advantage of Coffeehouse and Restaurant Promotions
Any time you can avoid paying full price, you should. Many restaurants offer dirt-cheap lunch specials, so be sure to ask local eateries for their lunch menus. Some coffee shops offer a discount if you bring your own mug or thermos. Also, be sure to ask your favorite stops about punch card loyalty programs.

6. Make Public Transit Commutes Productive
If you don’t get carsick, use commute time to catch up on professional reading or to review emails. If reading while in motion doesn’t work for you, listen to industry podcasts on your way to the office.

7. Look Into Commuter Tax Benefits
If you’re a telecommuting employee, find out whether your company participates in a commuter tax benefits program that allows you to pay for public transit passes with pre-tax dollars deducted from your paycheck. These programs can save you hundreds of dollars each year.

8. Review Transit Pass Options
Keep track of how much you spend each month on bus and train fares. Many public transit companies offer multiple fare structures, so take the time to review each of your options to ensure that you’re getting the best deal.

9. Negotiate Deals With Local Businesses
Local merchants that are unaware of your coworking space might be willing to offer special deals to its member base. Talk to the manager of your coworking space to find out if he or she is willing to talk to local businesses about offering special discounts to you and your officemates.

Final Word

Technology makes coworking a great alternative for freelancers and telecommuters who don’t want to work from home. Still, it’s important to acknowledge all of the additional expenses associated with coworking. Factoring these expenses into your budget before deciding to join a coworking space is a wise, and essential, step in managing your business and personal finances.

Do you use a coworking space? How is it working out?

Lainie Petersen holds master's degrees in Library and Information Science, Theological Studies, and Divinity, and spent five years working in regulatory compliance for a major education publisher. A lifetime Chicagoian, she recently spent almost a year living in the woods of Southern Oregon before deciding to head back home to her family and friends.