The simplest arrangement is a large company subletting its extra space to another company. This is particularly common to law offices, MD practices and Advertising Agencies.
Usually, a company goes through a cost audit and downsizes its team or moves it to another building, but wants to keep their current offices. In order to cover the costs of unused space, it decides to sublet a portion of its office space to another company they know or have been doing business with. The latter case is particularly efficient in optimising costs in regards to project management and business negotiations - less time is spent on arranging calls and meetings.
There are many benefits of sharing an office, such as cutting costs and allowing for a better usage of the space, but it can have some shortcomings:
- More people requesting access to meeting rooms
- Higher office management costs (cleaning, printer ink, office supplies and so on)
- Faster wear and tear of office equipment
- Potential NDA issues if the space isn’t properly divided
- Setup costs (dividing the space with fake walls)
- Management Software costs (resource management, reception desk software, meeting room management and so on)
We have painted a picture grimmer than we should have. Sharing an office offers many advantages over owning your space 100% - all costs are shared, your employees get to meet and mingle with new people, forming a coworking community, and, best of all, you’re exposed to more business referrals - especially if you’re sharing your space with a business partner.
In either case, putting together an Office Sharing Agreement will save you a lot of trouble in the future. More on how to craft the perfect agreement (at least in the negotiation phase) in an upcoming article about Decision Architecture.
The future of work?
There have been so many articles, essays and books on the “future of work” that the topic has become a buzzword - there’s definitely interest in it, judging by Google Trends Data. Shared offices are the present trend and, in an increasingly more unpredictable economy, they are here to stay. An offshoot of this is the co-working space, an office area built specifically for SMEs/ SMBs looking to share their base of operations with other like-minded companies.
Sharing an Office vs Shared Office Spaces (or coworking spaces)
The past few years have witnessed an explosion of Shared Office Spaces, Business Hubs and Coworking Spaces. These are, simply put, offices-as-a-service. Their best selling point is removing a lot of the administrative overhead associated with maintenance and office management, for a relatively low monthly fee. Popular with startups, budding entrepreneurs and veteran freelancers, the number of coworking spaces in the United States alone is expected to reach 26,000 by 2020, able to host up to 4 million people. That’s almost Panama’s entire population.
There are a lot of advantages to renting out a desk with a coworking space:
- One bill to worry about (pay once, get a desk and facilities included)
- Prices are a lot more flexible (and can scale with your needs)
- A lot of coworking spaces are part of a network, so your subscription can get you a desk in multiple buildings; this is great especially if you travel a lot
- You can rent out meeting rooms on a per-need basis (if they’re not already included in your subscription)
The coworking and shared office trend probably has its roots in Chiat/Day’s office hoteling practices, but “coworking” itself is much newer. It all started in 2005 with Brad Neuben, one of Dropbox’ Machine Learning Software Engineers who was, as he describes it, “pretty broke during this period”. He wanted to work on his own projects, he was deeply passionate for Open Source, but also wanted to be surrounded by like-minded individuals; thus, he “decided to create a new kind of space to support the community and structure that I hungered for and gave it a new name: coworking.”. Brad had tried starting something similar in the past, but at a smaller scale and with no success: “In 2003 I started an earlier group called a Nine to Five Group and advertised on Craigslist. This was a group that would meet at coffee shops and casually work together. It was not a success and I stopped doing it after about a month.”
10 years after starting that first coworking space in San Francisco, the number of businesses following this model exploded, their numbers doubling year over year.
A coworking space works in a similar manner to a shared office, but its main focus is on providing tenants with bespoke services and building a community. A shared office is just that - two or more businesses looking to cut costs and work within the same office. If you’re looking to partner up with a like-minded company, rent a portion of a coworking space or list your own space, you can give LiquidSpace a try. They’re awesome and highly flexible.
Operating a coworking space
The surge in popularity of this real-estate business has come at a cost - many coworking spaces offer only the basics and neglect two core features of what can make or break this kind of enterprise: culture & purpose. As with any other entrepreneurial forray, it all starts with a solid business plan. Coworking Resources, a prominent repository of coworking resources highlights the importance of learning what the market needs and expects; one way of doing this is through competitive analysis. Once you’ve started your coworking business and need a way to easily deal with your tenants’ space needs, have a look at our new solution for coworking spaces.