Co-working Spaces: the New Trend in Real Estate

In the global real estate market, a new business model is emerging. This model has been referred to by many names, including Co-working spaces, also known as on-demand workspaces, shared offices, and co-working areas. The spiraling costs of real estate have given this workspace model a boost. This model benefits companies not wishing to be tied down by long-term leasing obligations but instead want a flexible and cost-effective structure. This article will take a closer at the trend of shared office space.

Why Companies Choose Co-Working Spaces

  • Cost: This method is beneficial for startups. The majority of startups today are in hi-tech. They need offices with video conferencing facilities, VOIP phones, internet lease lines, etc. Setting up these features from scratch is expensive, especially for startups that are often strapped for money. This plug-and-pay model is both economically and operationally viable. This is more expensive per month for a new company. This model is cheaper for more giant corporations by about 25%
  • Infrastructure: The cost of an operation can be cut without affecting infrastructure quality by co-working spaces. These shared workspaces often have conference rooms; some even offer video conferencing. The infrastructure is ready-made from the first day. The company can concentrate on its core activities instead of spending time and money on administrative tasks that add no value to the customer.
  • Travel Convenience: This model is often chosen by multinationals in cities of Tier-2 or Tier-3. These companies can use a fully-fledged local office. They have a small team of 10-15 people. They want to maintain the quality of their office space and the facilities they offer their employees. They also want their offices centrally located, because many of these employees are in the sales department. This is why shared workspaces are a viable option. Other teams share infrastructure. These other teams could be from a completely different organization.
  • Reduced commute times: Many employees in large cities are tired from commuting to and from their jobs for countless hours. Many commutes to and from work for four additional hours on top of their nine-hour day. This commuting time does not add any value and should therefore be eliminated. Shared workspaces are one way to stop this. Workers should not have to travel to a single location to work. Workers should instead be allowed to log on to the nearest Shares workplace center, and the time saved by not having to commute results in happier employees who can work longer hours on tasks that add value for the company.
  • Flexibility: In traditional offices, increasing the size of an organization becomes a problem. A company, for example, may wish to increase the number of employees by ten. They must, however, rent an additional office for at least ten employees. Renting a new office is the only option. They can also squeeze ten more employees into the current office. This is not true with shared workspaces. Renting desks is flexible. Companies can get as many or as few desks as they want for however long they like.

Shared Workspaces: Problems and Solutions

  • Cost Allocation It cannot be easy to allocate costs for a shared office. In a fully-leased office, the company pays all electricity, water, and property taxes. In a shared office, the fees must be divided. Here is where the disagreements start. Some companies think that headcount is a better metric for allocating costs. Some companies believe headcount to be more appropriate. Since the bill will be shared, the companies won’t be incentivized to reduce the use of electricity, water, or other scarce resources. The developers are trying to avoid this problem by including these costs in the lease price. This can lead to resource waste and disputes.
  • Privacy Shared workspaces can be cheaper and have better infrastructure. Most companies, however, would feel uncomfortable locating their most critical operations in such facilities. This is due to a simple reason. The risk of data or intellectual property theft is high. If the strategy of a business is revealed to competitors, that company may also lose its competitive advantage. The shared workspace model cannot overcome this problem.


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