Maintenance
Part of Coworking space: what a license agreement gives you
Getting coworking space comparison right the first time
Compare five ways to house a small team, coworking among them, by mechanism: what you hold, how fast you start, who fixes the building, and what leaving costs.
There are five ordinary ways to put a small team somewhere, and they are not five prices for the same product. A coworking space supplies two of them: the open desk and the private room.
Named operators differ in what you hold, how fast you can start, how quickly you can stop, and what happens if the arrangement fails. Compare them on those mechanisms and the shortlist usually cuts itself down to two.
What to take away
- The first question is not cost. It is whether you are buying an interest in land or a permission to use somebody's space, because everything else follows from that.
- Speed and flexibility are bought with a higher recurring figure. That is the trade, and it is a reasonable one when the future is genuinely uncertain.
- Every route has an exit, and the exit is where the arrangements differ most.
- Compare WeWork, IWG (Regus and Spaces), Industrious, Convene and Serendipity Labs first; they differ on contract length, fit-out and price.
The five routes, with named operators
Open desk in a shared space. A seat, not a place, and the cheapest per person. WeWork sells month-to-month hot desks for typically $200 to $400 per person in major US markets, plus day passes for $29 to $49. Regus sells lounge access from about $100 to $300 a month.
Private room inside a shared space. Your own lockable area, with the operator's services around it. Industrious sells all-inclusive private offices with services in one price, typically $500 to $1,000 per person per month. Convene leases full suites and floors with on-site food and meeting space, usually on one to three year terms.
A sublease from another occupier. You take part of somebody else's leased space, with their landlord's consent. LiquidSpace lists sublease space and short-term offices; Carr Workplaces sells private offices and virtual office plans from about $100 to $200 a month.
A short direct lease. Your own space, your own landlord, a shorter term than usual.
A conventional lease. Your own space on a full term, fitted out to suit you.
The comparison, by mechanism
Open desk
- What you hold
- Permission to use
- Named operators
- WeWork, Regus, Spaces
- Time to occupy
- Days
- Time to leave
- Notice period
- Capital before day one
- Minimal
- Privacy and confidentiality
- Low
- Who fixes the building
- Operator
- What happens if the party above you fails
- You may lose the space
- Typical cost per person, per month
- $200 to $400 (WeWork), $100 to $300 (Regus)
- Cost at the end
- Notice
Private room
- What you hold
- Permission to use
- Named operators
- Industrious, Convene, Serendipity Labs
- Time to occupy
- Days
- Time to leave
- Notice period
- Capital before day one
- Minimal
- Privacy and confidentiality
- Moderate
- Who fixes the building
- Operator
- What happens if the party above you fails
- You may lose the space
- Typical cost per person, per month
- $500 to $1,000 (Industrious)
- Cost at the end
- Notice
Sublease
- What you hold
- An interest carved from another's
- Named operators
- LiquidSpace, Carr Workplaces
- Time to occupy
- Weeks, plus consent
- Time to leave
- Whatever the sublease says
- Capital before day one
- Low, if fitted
- Privacy and confidentiality
- Depends on the layout
- Who fixes the building
- The head tenant, then the landlord
- What happens if the party above you fails
- You may lose the space
- Typical cost per person, per month
- Market rate, often 10 to 20% under a direct deal
- Cost at the end
- Whatever the sublease says
Short lease
- What you hold
- An interest in land
- Named operators
- Local landlord
- Time to occupy
- Weeks to months
- Time to leave
- Term, plus any break
- Capital before day one
- Moderate
- Privacy and confidentiality
- High
- Who fixes the building
- Landlord
- What happens if the party above you fails
- Not applicable
- Typical cost per person, per month
- Market rate plus fit-out
- Cost at the end
- Reinstatement, if any
Conventional lease
- What you hold
- An interest in land
- Named operators
- Local landlord
- Time to occupy
- Months
- Time to leave
- Term, plus any break
- Capital before day one
- High
- Privacy and confidentiality
- High
- Who fixes the building
- Landlord, per the lease
- What happens if the party above you fails
- Not applicable
- Typical cost per person, per month
- Market rate plus fit-out
- Cost at the end
- Restoration and dilapidations
The row that decides more than people expect is the one about the party above you. In three of the five routes there is somebody between you and the building, and their arrangement can end for reasons that have nothing to do with you.
The distinction underneath the table
The first row is the important one. A license is permission to be somewhere, structured to end quickly. A lease is an interest in land with statutory and contractual protections.
Which one you have depends on what the document does, not what it is called. The practical consequences are set out in coworking space.
For a sublease the position is different again: you are taking part of an existing interest, so your position is only as strong as the head lease behind it. The general shape is described under sublease, and the questions to ask about the document above yours are in commercial leasing.
What each route does to the building questions
Some things are properties of the building, not of the arrangement, and they follow you across all five routes.
- Whether the space performs when it is full. Air handling is designed against a reference such as ASHRAE 62.1, and the practical test is a visit at the busiest hour.
- Whether everyone who works with you or visits can get in and use it. Where space is open to the public, the duties described under ADA Title III apply regardless of who your contract is with.
- Whether the address permits what you do. On the flexible routes the operator has usually settled this for general office use, and if your activity is unusual it is still your question. How to find out is in zoning and permits.
Choosing between them
Four questions, in order.
Choosing a route
How confident is headcount twelve months out?
Low confidence -> flexible routes (WeWork, Regus)
High confidence -> longer commitments (Industrious, Convene)
- How confident are you about headcount twelve months out?Low confidence points at the flexible routes, and the premium you pay is the price of that uncertainty. WeWork and Regus sell month-to-month terms; Industrious and Convene want longer commitments.
- How much of your work is confidential or on calls?That decides between an open desk and a room faster than cost does.
- How specific is the space to what you do?The more specific, the stronger the case for holding your own interest and fitting it out.
- What happens if you are wrong?Model the exit for each route before you model the cost of staying.
If the answers point at a conventional lease, the sizing work comes first, and the method is in office space. If they point at a purchase, the capital comparison is in commercial buying.
The comparison people skip
Compare exits, not entries. On flexible routes, the exit is a notice period, while on a sublease it is whatever the document says, which may be nothing. On a lease, it is the term, any break, and whatever the end-of-term clause requires you to put back.
Two arrangements that look similar at the start can differ at the finish, and nobody negotiates the finish.
Common questions
Is a private room just an expensive desk?
It is a different product. What you are buying is control of a door, and whether that is worth the difference depends on how much of your work cannot happen in a shared room. Industrious and Serendipity Labs price that control at roughly $500 to $1,200 per person per month in most US markets.
Is a sublease riskier than a direct lease?
It carries a risk a direct lease does not, because your position depends on somebody else's compliance with their own lease. Ask for a copy of the head lease and take it to a property lawyer.
Can I move between these routes easily?
Moving from flexible to fixed is straightforward and slow. Moving the other way is straightforward and expensive, because you are usually leaving a term early. Plan the direction you are most likely to travel.
Which one is cheapest?
Over a short horizon, usually an open desk from WeWork or Regus. Over a long one, usually a lease. The crossover depends on your headcount, the fit-out you would need and the local market, so build both models rather than trusting the general answer.
Which coworking operators should a small team compare first?
WeWork sells month-to-month desks. IWG's Regus and Spaces run a large network, with lounge plans from about $100 a month across 3,000-plus locations. Industrious sells all-inclusive private offices, Convene sells hospitality-style suites on one to three year terms, and Serendipity Labs sells franchise-run team suites. Ask each for the exit terms before the entry price.
