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Can't afford an office on rent? Try co-working spaces, they're much cheaper

Co-working spaces are the new garages of entrepreneurs. While many successful entrepreneurs started their businesses out of garages in the past, new-age ones with limited funds are heading to something known as co-working spaces. The benefit: They get an office with ready infrastructure at affordable rates.

Saving on upfront costs and the flexibility of scaling up or cutting down on office space based on the business’ performance are making co-working offices a big draw for those wanting to start a new venture with limited resources. These are the reasons why Turbot HQ India, a start-up, preferred a co-working space instead of setting up its own office. “For a start-up like ours, the growth in employees depends on the success of the product. At co-working office, we can expand as our business grows,” says Rajesh Mohanty, director Turbot HQ India.

Apart from the flexibility and availability of ready working spaces, the shared workplace can also work out to be more cost-effective than taking a standalone office on rent. But cost and comfort aren't the only factors leading to the growth of shared offices. These workplaces also help build communities by allowing like-minded individuals to connect with each other.

Demand explosion

In the first quarter of the financial year 2018 (Q1FY18), flexible workplaces accounted for 11 per cent of the total office lease market. The number was negligible in the corresponding quarter of the previous year, according to a Cushman & Wakefield India report. Another report from real estate consultant JLL India says that the co-working offices will see a growth of 40-50 per cent in calendar year 2018.

Cheaper than a private office 

Comparing the cost of a co-working office with a private one taken on rent is not a matter of simple calculation of monthly payouts. When an organisation takes an office on a lease, it needs to commit for a specific period, and could also end up paying brokerage and legal fees. Security deposit, furniture, cabins, and other elements all need upfront cash. Then there are recurring costs such as rent, electricity, housekeeping, security, maintenance, pantry, and so on. But when you go for a co-working space, all you need to pay is the rent. The lessor takes care of everything else -– be it internet, photocopies or even the office boy.

Co-working spaces charge differently based on the needs of their customers. Typically, most offer three models. An organisation can opt for flexible seating -– it's called the hot desk -- where the employees don’t have a fixed work station. They just enter the office and occupy any place that’s available. The charges are the lowest in such an arrangement. Then there’s fixed-seating where you get a dedicated space. There’s also an option of a private office -– a separate area, customised to your needs just like having your own office on rent.

Service providers also offer short-term leases, and an organisation can also take a seat by the hour. “The charges are, on an average, Rs 12,000 per member per month, which translates to Rs 144,000 per member a year. The price stays in the bracket of Rs 9,000–13,000, depending on which part of the country a company is taking up space,” says Neetish Sarda, founder, Smartworks. WeWork says that it reduces the cost of running an office space by approximately 15-20 per cent. “Costs related to renting an office are brought together into one easy membership fee, which can be upgraded and downgraded at your convenience,” says Karan Virwani, CWeO, WeWork India.

According to a study by Cushman & Wakefield India, flexible seating comes out to be cheaper than going for your own office. In Bengaluru’s CBD location, for example, the co-working flexi-seat rental is 20 per cent cheaper than a traditional Grade-A office of 60 square feet in the same location, while the numbers stand at par in Gurugram. In Mumbai these seats are eight per cent cheaper. Fixed seating, however, is either at par with, or a slightly more expensive than, running one's own office. But if an entrepreneur opts for a private office with a co-working service provider, it will be more expensive than going for his own office. However, for enterprises opting for a private office, co-working operators often offer bundled packages along with some discount during the negotiation stage. “Service providers go out of the way for enterprise customers who opt for private offices. If they want specific security arrangement, infrastructure, segregation of seating between teams, a particular desk size, colour schemes, or anything else, the service provider fulfils these requirement,” says Ankit Jain, founder, Skootr.

Beyond costs

Besides costs and flexibility, the culture and work environment at co-working offices also set them apart from traditional business centres and shared spaces. “The culture and sense of community are the biggest differentiators from traditional or shared working spaces. We are a collaborative space where all members and their businesses grow and thrive together due to regular exchange and collaboration,” says Virwani. "Budding entrepreneurs as well as established business owners work out of the same space, where they get to know one another and realise that their businesses can complement one another."

To let their members benefit from the community, co-working offices regularly conduct events for their customers. There are networking events providing opportunities to interact with the in-house member base as well as external audiences. There are panel discussions or sessions with leadership and executive-level speakers on various emerging technologies, trends and issues and even investor meets to give entrepreneurs access to angels and venture capitalists. Co-working offices are also designed for taking care of many things like the best use of light and colour combinations. “We employ psychologists and office design specialists armed with adequate know-how as to what’s best suited for marketing, coding, research, finance and other such roles across multiple industries,” says Sarda of Smartworks.

The environment at co-working spaces is also slightly casual with a host of events and parties thrown in, though certain players like Skootr offer a more serious environment that focuses mainly on private offices sans the events.


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