‘Too risky and too expensive’: Is the traditional office space outdated?

More often than not, the hybrid work debate is framed as a competition between two competitors: the remote stay-at-homers and the office loyalists. But is co-working a viable third way?

The roots of co-working

When San Francisco-based Brad Neuberg took a job at a start-up, thereby giving up his hard-won freedom as a self-employed consultant, he did so willingly. What he wanted was the structure and community of a more traditional role.

After finding himself once again disillusioned at work, Mr Neuberg looked for an alternative to the loneliness of self-employment and the rigid inflexibility of the traditional office role.

In 2005, with an ongoing $300 monthly loan from his father, Mr Neuberg rented some space from a nearby art gallery and began the world’s first modern co-working space (a term he coined, though it had been applied differently elsewhere). The space was his for two days a week so long as he made no permanent alterations and packed the space down at the end of each day. At first, the uptake was slow.

Until it wasn’t.

The rise of co-working

“[Co-working] has firmly established itself in Australia, with low-risk, highly functional flexible workspaces becoming the preferred choice for businesses fed up having to deal with difficult landlords, expensive office set-ups, maintenance, underutilised spaces, and make good arrangements when they leave,” explained Mr McAllen.

He added that fixed-term leases are increasingly being seen by businesses as “too risky and too expensive”, while flexible agreements better allow them to adjust their costs and scale their operations in response to changing market conditions.

“It isn’t just start-ups and small- to medium-sized businesses that are transitioning, we are seeing large organisations, corporate head offices and government departments making the move. Offices are changing as risk appetites reduce,” added Mr McAllen.

That said, many are less than enthusiastic about the co-working phenomenon. Some claim that the cost benefits of co-working as an alternative to traditional office spaces are overstated. According to Rubberdesk, in Sydney, the median monthly office rate is $948 per person, while the median monthly co-working desk rate per person is $643.

These savings are substantial but must be weighed against the desirability of having a private working space. Apart from cost, many point to issues like privacy and security concerns, distraction levels and noise issues, inconsistencies in amenities and services, and a lack of personal space as reasons to avoid co-working arrangements, said Servcorp.