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When Does Coworking Office Space Make Sense for Startups - And When it Doesn't

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Startups are known for their distinct private office spaces. From Ping-Pong tables to beer on tap, startup office spaces evoke a unique sense of culture. Many startups, however, have started to question the decision to set up shop in a private office space. More and more, they’re looking at coworking spaces as a viable—and even more effective—alternative. No doubt, the growth of coworking spaces is impressive. Today, there are approximately 18,000 coworking spaces worldwide. Fast forward to 2022 and the number is projected to balloon to nearly 26,000. Here are four reasons why you may want to consider jumping on the coworking bandwagon. 


Tapping into the freelance economy

The freelance economy is growing rapidly. Millennials and Gen Z, in particular, are gravitating towards freelance work. It’s estimated that 50% of US workers will engage in freelance work by 2020. 

While freelancers might not want to pack up their belongings and commute to a company’s head offices, many eagerly opt to work in coworking spaces. The structure and focus of a working environment outside of the home is attractive for many freelancers. A 2012 study by University of Texas at Austin professor Clay Spinuzzi revealed that individuals who don't work in a dedicated office often feel isolated, distracted, and unsatisfied the boundaries between their work and personal lives. In addition to increased structure, coworking spaces, with their conference rooms and meeting spaces, offer a sense of professionalism that the home does not offer. 

Increased scale

It’s a hefty undertaking to set up a physical office space. From navigating complex contacts to searching for locations to purchasing equipment, the logistics involved can be a big headache. Coworking spaces, with their flexible contracts and comparatively minimal fees, allow a startup to get off the ground quickly while maintaining focus on what really matters—scaling their business. 

Access to networking

When workers interact with the same set of colleagues each day, they tend to interact with a lot of like-minded individuals time and time again. This leads them to develop a very close-knit group of colleagues. In doing so, they miss out on developing the weak ties that esteemed researcher Adam Grant has demonstrated as being fundamental to personal and professional success. 

Coworking spaces create a ripe breeding ground for a powerful networking community to form. Working alongside people of different companies, you’re more likely to develop the weak ties that can propel you to new heights. 

Increased meaning 

Research has revealed that people working in coworking spaces view their work as more meaningful than those restricted to private office settings. As highlighted by Harvard Business Review, people who leverage coworking spaces see their work as more meaningful and feel more in control of their jobs. In particular, they don’t feel as strong of a need to assume a different persona to fit in and are more removed from office politics. 

Meaningful work has a domino effect. Workers who view their work as "very meaningful" work for an extra hour each week. These workers also have higher levels of job satisfaction and, in turn, productivity. Workers who rate their jobs as meaningful produce an additional $5,437 per worker each year. With worker burnout at an all-time high, meaningful work is in high demand and, in many cases, long overdue. 

There’s a reason that seven out of ten coworking business operators state that desk space availability cannot keep pace with demand. Indeed, Instagram, Uber, and Spotify all got their starts in coworking spaces.

When to upgrade out of a coworking space

Coworking isn’t for everyone and most companies eventually outgrow their reliance on them.  There are also some downsides to coworking. The first is that many are part of an open office plan where distractions are everywhere. Studies have proven that open space is not the best environment for getting things done. Even though most spaces include conference rooms you can reserve, there is still an overall lack of privacy. 

Another issue with coworking spaces is that it is hard to define aspects of your company culture. Even if you have a private office within the space, you are still limited to how you can deck it out. Most end up looking fairly stale compared to private offices. 

From a cost perspective, coworking is great for tiny teams. Yet, for has growing companies the cost skyrockets. Technically on a square foot basis, coworking is often 3-10 times higher!

While it’s a great option for freelancers, small teams, and remote teams, if you are building a HQ, you may very well need dedicated office space.