Coworking spaces are on the rise as an up and coming, hip alternative to the traditional office; but contrary to popular belief, new and trendy doesn’t always mean more expensive. When it comes to traditional office leases, there are actually a substantial amount of unforeseen costs that you probably aren’t accounting for when choosing the perfect office space to suit your business needs.
We’ve already talked about traditional office space rentals vs. flexible coworking and shared office space, but only touched on true costs of the comparison. So here’s the Bridgeworks insider breakdown on what these different types of offices are really costing you and your business.
Office Space Costs
Let’s start with an average New York City office space. Leasing a two-person office (roughly 100 sq ft) in a relatively reputable area starts at around $2,000 per month.
Since you are locked in to commercial office space leases (3-5 year terms), things tend to add up quickly.
The forecast on this cost isn’t looking any brighter down the road either—with real estate projections predicting commercial property rates for businesses to be steadily increasing.
Now let’s take a look at some of the costs that aren’t included. Full disclosure, it’s a long list.
- Commute $450/month
Unfortunately, we have not invented teleportation devices yet, so you will have to pay for your everyday train, subway, and Uber.
- Broker 10-15%
Finding your office space can be an expensive process in itself. If you want to find a good space and have a variety of options, there’s going to be a broker fee included.
- Furniture $10,000
Because each business is unique in it’s needs, the landlord will most likely leave it to you to design and furnish your office. Be prepared for costs up to $1,000 per desk. And that’s just the basics, no ambiance or personality in décor included.
- Maintenance and Cleaning $200-$500/month
Office buildings will likely have pre-arranged service agreements for routine cleaning and maintenance. So while you probably won’t have to go out and hire a cleaning company, you will still be seeing part of the bill.
- Legal Fees – $1,500
There are usually a number of legal costs involved in a commercial office space rental agreement. If you haven’t budgeted for a lawyer or surveyor, you probably should.
- Tax – 6%
Some commercial property owners opt in to tax the renter when leasing office space. Be sure to ask your landlord if there is the additional cost for tax, and take a look at the registration before thinking you landed a budget-friendly deal.
- Utilities – $200/month
Water, electricity and waste disposal are sure to add a few more dollars to your monthly rental agreement. Not to mention if your office features heat, security…the list goes on.
- Office Supplies – $100/month
Sure they’re small, but paper, staplers, printer ink, pens, post-it notes and all those minute necessities of a productive workspace are sure to add up each month.
- IT – $150/month
Solid internet connection and phones are a must in the office. Wi-Fi certainly won’t be included with your lease, so budgeting for routers, comm. lines, cable, and installation should be planned for.
- Equipment – $4,000
From printers to copy machines and TVs for team presentations, tech equipment can get pretty pricey in an office.
- Amenities – $50/month
Aside from the basics, a happy office space should offer things like coffee, a water cooler, and refrigerator for employees to store a packed lunch. (We might be biased, but social bikes and ping pong tables make for a pretty great office, too.)
What do all of these hidden costs have in common?
Well, they are all pre-determined and therefore nonexistent if you choose to set up shop in a coworking space instead. Coworking spaces offer the privacy of a conventional office, all-inclusive amenities, and flexibility to cancel month-month. Pretty much a no-brainer if you ask us.
Coworking Space Price Comparison
Coworking spaces can cost as low as $45/month, which gives access to a conference room or workspace for the day.
If you are looking for a full-time space to work, the cost is still cheaper than your typical office, ranging from $300/month-$450/month.
If you need a dedicated private office in a coworking or shared space, prices range from $750/month-$2,000/month on average (for a 4-6 person office, 2-3x cheaper the NYC).
Best of all the terms are flexible meaning cancelable month to month. Coworking and Shared office spaces take care of all the office necessities, so you can focus on more important things.
*Calculations based on NYC commercial real estate and office averages