As part of a global research program Impacts Savills analyzed the cost of a subscription to a coworking center and the effective net rent for a traditional high-standard office for a company with 10 employees in 16 cities around the world. It turns out that coworking space is, on average, 40 percent cheaper than traditional space, although significant variation between locations is noticeable. The smallest differences in the cost of renting coworking space and a traditional office can be seen in Sydney, Singapore, Amsterdam and Paris, while the cheapest coworking relative to traditional office space is offered by Mumbai, Hong Kong, Los Angeles and Madrid. According to Savills, in terms of cost, the lowest subscriptions in coworking centers can be found in Mumbai, Madrid, Shanghai, Amsterdam and Los Angeles, while the most expensive locations are New York and London.
“Coworking space can serve a variety of functions and is often an affordable alternative for small and medium-sized businesses. Also for startups, as it allows them to invest in their own growth instead of incurring the costs associated with renting or investing in office space arrangements. Any mature office market that has a large cluster of startups and scaleups should have differential pricing, but our analysis shows that in some locations the differences between coworking space and traditional space are small when all the costs of opening an office are taken into account. This creates new challenges for some companies, which will be forced to choose cheaper offices on the outskirts of cities. It’s important to get the balance right, as small and mid-sized companies are often the lifeblood of the broader economic ecosystem.” –
Cal Lee, global director of the Workthere platform and flexible office space expert at Savills, comments.
“We are seeing instances of public funds being used and private investors being engaged to offer cheaper, subsidized office space. These types of solutions are badly needed for cities to provide affordable offerings that support local economies. Many owners of traditional office buildings already offer flexible office space or serviced offices in their buildings, as they recognize their growing appeal to tenants and the additional energy they can bring to the business ecosystem. This, however, has contributed to a narrowing of the rental cost differential between the two types of office space while blurring the lines between them.” – Adds Jeremy Bates, Head of Leasing Markets EMEA, Savills.
“In the Polish market, we also observe that building owners are increasingly bolder in meeting the expectations of smaller tenants. We predict that in the coming years having a flex operator in modern office buildings will become not only desirable, but necessary. This will allow the restructuring of the lease portfolio by consolidating smaller leases into one shared space giving them time to grow and free up space for larger organizations. Looking at the cost of leasing flex space in the center of Warsaw, it is comparable when entering into a 3-year traditional office lease of 300-400 sqm, assuming that the tenant also had to contribute financially to its arrangement, furnishing of conference rooms, office and kitchen equipment and hiring someone to handle the reception desk,” adds Jaroslaw Pilch, director of office space, tenant representation at Savills, who also heads Workthere in Poland.
