A Simple Guide to Serviced Offices versus Coworking

Coworking spaces and serviced offices are to be found everywhere these days, and the sheer variety can itself be quite daunting. They're so common, it’s easy to assume that they’re as much a part of the 21st-century workplace as the water cooler. And, just like the office’s best place to network, flexible workspaces have been around since the 1960s.

Industry pros usually credit the Fegen Suites, created by an attorney and real estate executive Paul Fegen, as the first flexible office space. But the OmniOffices Group, an early predecessor of industry leader Regus, was already on the scene in 1962.

Regus still thrives, serving 80 locations across Australia, but serviced offices aren’t the only option today. Now there’s coworking, which was developed to serve the needs of freelancers, solopreneurs, and small teams. WeWork and Industrious are among the stars of this show.

Now with thousands of Serviced Offices around the world, there is no such thing as the average office - they are all different. Whether it’s the services offered, the quality of the buildings or fit-out, the budget, or the target audience - there really is a Serviced Office to suit every business.

Coworking spaces and serviced offices are similar in that they both provide flexible short-term solutions, but they meet different needs and have different lease structures or license agreements as they are termed in the serviced office world.

What Is a Coworking Space?

Not every business needs to rent an entire office. That’s where coworking spaces come in. The number of coworking spaces in the world is growing fast, as is the number of users. The Global Coworking Growth Study 2020 predicts that by 2024, there will be almost 5 million coworking tenants worldwide, an 158% increase over 2020.

Coworking spaces target individuals and small teams who need workspaces but are willing — and in many cases, actively want — to share. They usually work on a membership model, meaning that tenants pay a certain amount per month for access.

Members can rent a dedicated desk, meaning they get the same space every time they come in, or choose a flexible plan that lets them use any available “hot desk” in the room. There may also be options for private offices, depending on the provider.

The Benefits

Community without politics

Coworking spaces tend to host members from different walks of professional life. People occupying the same space aren’t just working on different projects; they’re working for different businesses and are likely to be in different industries.

Members still get to work side-by-side, without the competition and office politics that happen in a traditional office. The result? People who occupy coworking spaces thrive at about a six on a seven-point scale.

Balanced flexibility and structure

A lot of coworking spaces are open 24/7, so members can work on their own schedules. Members can choose to take advantage of this flexibility and work off-hours, an important benefit when a deadline is looming or a client in another time zone needs a meeting.

Often, though, members come during the workday to feel a sense of structure and shared purpose.

Available meeting space

Many coworking settings, if not all, let members sign up for meetings or conference rooms as needed. This alone can give coworking the advantage over a home office or coffee shop. A conference room just looks more professional than a corner table at Starbucks.

The Drawbacks

Rental costs

Working from home may be isolating, but at least it’s free (or, more accurately, already paid for). Even a coffee shop can give you space for the cost of a $5 latte. By comparison, a rented desk might seem costly.

Distractions

Coworking spaces are designed to facilitate a feeling of community, but sometimes that backfires. People make phone calls and meet at each other’s desks to chat… all of the things that distract employees in traditional offices.

Lack of control

For people accustomed to working at home, the shared space model can be an adjustment. Members don’t get to choose the internet provider, the level of heating, or even how often it gets cleaned.

What Is a Serviced Office?

A serviced office is an all-inclusive leased space that professionals and companies rent on shorter-term all-inclusive rolling contracts. The short-term lease lets the tenant grow or downsize as needed, without having to wait for the traditional multi-year lease to expire. As a tenant, you still get everything you might expect from a professional office space including security, cleaning, maintenance, and even parking.

Today’s serviced offices come in a variety of sizes, from a single dedicated room to a full building. Businesses of all sizes and types can find serviced office space with not just desks and chairs but also reception services, IT infrastructure, and meeting facilities.

The Benefits

Know your costs with all-inclusive rent

The rent for a serviced office typically includes furnishings, utilities, building maintenance, and other necessities that you would pay for out-of-pocket with a traditional lease. When you add up the cost of those other necessities, serviced offices usually cost less in the short term.

Only pay for what you use

Whether it’s meeting rooms you only use once a day or desks for future hires, Serviced Offices offer flexibility to grow your office space as your business grows and only pay for what you need.

Get down to business faster

Serviced offices usually come ready to go and can be tailored to meet your needs. In most cases, the only item on a new tenant’s to-do list is to choose the office layout. Everything else — conference rooms, lounge and kitchen areas, and more — are already there. The settle-in process is quicker, so tenants can start working faster.

Shorter leases give flexibility in times of uncertainty

This is a big draw for many tenants to serviced offices rather than traditional leased space. Many facility management groups have lease minimums as short as three months. On average a 12-month term will get the best lease rate in a Serviced Office and is still much shorter compared to the three-year minimum more common in traditional office leases. The shorter lease term means that a business can grow faster or downsize as needed without having to wait for a lease to expire.

Adjust with less disruption

Serviced office tenants often have the chance to rent more or less space in the same building. Instead of having to change their business address and move all of their stuff, the company just has to sign a different rental agreement. Along with simple and shorter legal agreements the overhead to move is much lower than traditional leasing.

The Drawbacks

Higher long-term rental costs. Based purely on footprint, the monthly rent per square foot is often higher for a serviced office than a standard commercial lease. That’s because the serviced office comes with — well, services, and the longer term commitment of traditional office leases.

The flatmate problem

Most serviced offices have multiple tenants. Larger tenants will often rent their own suite of meeting rooms and even whole floors or buildings. For those sharing bathrooms, break rooms, kitchens, meeting rooms, and parking areas. Fortunately, there’s a huge choice of office space available and so always something for every type of business, and the operator of the space is always on hand to make sure the shared services are clean and working as needed.

Meeting room access

One of the common questions we hear is how are shared meeting rooms booked at Serviced Offices? To ensure meeting rooms are available when needed, most Serviced Offices have an online booking system and charge a small fee for usage. The charge incentivizes people to only book what they need and ensures a fair availability of meeting rooms.

How Do They Compare?

Serviced offices and coworking spaces have different features and selling points, but neither is objectively better than the other. It all comes down to what the renter needs.

Who Are the Renters?

In general, coworking spaces are best for individuals and small start-up teams that don’t yet need their own offices. Serviced offices are most popular with start-ups and small businesses, many of which are transitioning from a home office to traditional business space.

Serviced offices also attract larger companies looking for remote offices for staff closer to home or as a trophy HQ at a prestigious address and somewhere staff can come to collaborate. There are also entrepreneurs and freelancers who choose serviced offices, especially when they need a more professional private space to meet with clients.

The need for privacy or more dedicated space for a larger team may draw a renter to serviced offices and away from coworking. Likewise, the need for community might nudge a person toward coworking. In many other ways, the two setups are similar.

What Are the Similarities?

Serviced offices and coworking spaces are designed to provide flexible working solutions, so it’s no accident that they look the same in many ways. For example, both provide a wide range of amenities, from free meeting room access to facilities that let tenants park their bikes and shower.

Both involve the sharing of common spaces, a feature that helps businesses and professionals to save costs for non-core space. Whether it means sitting side-by-side at a table or sitting down for lunch in the floor’s break room, coworking members and serviced office renters can make new connections or retreat to their own desks as needed.

Costs

Serviced offices and coworking spaces tend to have similar costs per person, but since serviced offices cater to larger teams, the overall lease costs are higher.

At WeWork, the average cost for a team of one to four people ranges from $620 in Boston to $850 in NYC. Many other operators offer space for as little as $400 per person per month to $1,250 per person per month.

The basic costs per person are comparable for serviced offices. Regus has offices available for as little as $483 per person, which works out to $1,450 per month for a three-person team in Parramatta. Sydney costs range from $1,090 to $1,499 per person per month, but the total cost depends on the office size. The company’s 33-seat office, for example, costs $44,979 per month.

Making the Decision

There’s a lot of variability in both the serviced office and coworking space markets, much more than an overview article can cover. There are differing amenities, location differences, and varying setups between providers.

Rubberdesk has thousands of flexible space options listed across 50 states, all of which are available to reserve online. Take some time to browse what’s available, or give us a call for a custom quote.

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