Modern businesses have requirements that are significantly different from traditional firms. For instance, many companies clamor for new types of workspaces that give them more options that can suit their tastes. In recent years, businesspeople saw the rise of services offices and coworking spaces, which try to disrupt the traditional brick-and-mortar corporate spaces of yesteryear. However, many leaders can get confused as they try to choose which option is more appropriate for their business.
So, what’s the difference between serviced offices and coworking spaces? Serviced offices and coworking spaces have distinct advantages that make them suitable for different types of businesses. Serviced offices are more appropriate for larger companies, while freelancers and small enterprises might better appreciate what coworking spaces have to offer.
In this article, we talk about the main differences between serviced offices and coworking spaces, as well as how they differ from more traditional models. As you'll see later, they are meant for, but not exclusive to, different types of businesses. We then list down reasons for an enterprise to choose the serviced office option. Finally, we cover the alternate side by listing the advantages of coworking spaces.
What do you think of when someone asks you to imagine the typical workplace? You would probably imagine a large building, perhaps a skyscraper or a sprawling complex of buildings. Inside, you would most likely imagine floors upon floors of cubicles and office rooms, probably with some conference and meeting rooms. Employees are confined for most of the day in their respective desks, only moving occasionally to go to the bathroom, cafeteria, or the nearest water cooler.
As you can imagine, this type of office environment can be very dull. With current research supporting the relationship between job satisfaction and job performance, more and more companies are trying to spruce up their workplaces. Many companies, from the newest startups to the most massive conglomerates, are investing millions of dollars in creating workspaces conducive to productivity, efficiency, and creativity.
Much of this innovation led to the development of serviced offices and coworking spaces. These two modern formats for the contemporary workplace arose because old-fashioned models are insufficient for many firms. Acquiring even a single corporate building entails extreme upfront costs. What more for an entire complex? Multibillion enterprises such as Google and Amazon might afford these options, but the majority of businesses will struggle with these methods.
We wrote an article, "How Important is it to have Office Space?" which underscores the importance of office workspaces.
Hence, serviced offices and coworking spaces allow companies, especially newer ones, to get decent workspaces with less hassle. Both types involve rentals; the company gives regular payments to the owner of the facilities for the continued usage of their space. This business model allows companies strapped on cash to have workspaces on their own at lower costs. This model also benefits the firm providing the workplace, as they get to profit from any excessive land and equipment they may possess.
Serviced offices strike a balance between traditional office spaces and coworking spaces. In this model, landlords rent out offices, rooms, and sometimes entire sections and floors to other businesses. Terms can vary, but clients are usually free to customize their own spaces as they see fit. In many cases, rooms come fully furnished with desks, chairs, computers, and other office equipment. Multiple companies may reside in a single building, and the administrators provide communal cafeterias, meeting spaces, and conference rooms.
Coworking spaces further push the idea of shared corporate workplaces. Unlike serviced offices, coworking spaces typically provide little private spaces for their clients. Instead, clients work in communal areas full fitted with office equipment. In many cases, coworking firms adopt an open office floor plan where employees work on large tables and are free to roam around. Like serviced offices, coworking spaces rely on admins for the upkeep and maintenance of all facilities.
The significant difference between these two types of flexible workspaces is the amount of privacy and autonomy they provide their clients. Clients in serviced offices receive rooms that are exclusively for their use only. They typically have some freedom to decorate and customize the space they use. However, common areas such as lounges and dining areas are public and cannot be customized. In coworking spaces, the entire space is open, so everyone must share the facilities and negotiate usage terms to maintain harmony and fairness.
What these two options share is that they can provide companies significant savings when it comes to obtaining workspaces. Both types of office spaces require significantly fewer upfront investments, mainly since the landlord retains ownership. Additionally, shifting to a leasing payment scheme allows corporate clients who don't have much cash on hand to still get offices for their employees. Hence, these two options are suitable for newer companies yet to break even or have only been operating for a few years.
By now, you understand why serviced offices and coworking spaces are all the rage in today's uncertain business world. That said, you still have to decide between the two if you plan on acquiring a new workplace soon. These two options offer different sets of benefits that make them attractive to different types of businesses. By knowing what each option has to offer, you are more likely to make a decision that maximizes benefits and reduces costs for your company.
As mentioned before, services offices represent a midpoint between wholly-owned spaces and coworking venues. Hence, they are a good option for corporations that might be intimidated by the radically new concepts that coworking methods introduce to workspaces. Serviced offices provide unique perks to their corporate clients.
Serviced offices are more flexible than traditional offices. In this aspect, they are similar to coworking venues. Companies can drastically change within a matter of months. For example, employee populations may rise and fall, internal methods may vary, and even the business model can pivot. These changes in work procedures and agents translate to changes in the workplace, so companies who want to anticipate change should consider serviced offices and coworking venues.
However, these two flexible workplace options differ in how they encourage flexibility. In the case of serviced offices, they provide flexibility since the client company has exclusive access to a few offices on their own. Managers are free to modify the workspace as they wish. For example, they can add, remove, or rearrange desks; bring in their equipment; and change the décor to match their corporate branding.
Serviced office agreements may also provide the opportunity for clients to acquire more rooms or to sell back their rights to spaces they don't need. In these cases, companies are sure that their employees have sufficient place to work even as they continue to change and grow.
Another benefit shared by serviced offices and coworking spaces is that they provide convenience. Serviced offices come with enough equipment for employees to start working, so companies can start doing projects even from day one. There is less need to buy equipment or adjust the workspace, which translates to more useful work and higher productivity.
When clients rent out serviced spaces, they have access to both public and private rooms. For confidential matters, they can use their rooms instead of having to reserve public meeting rooms.
Serviced offices also supply utilities such as water and electricity. Many landlords bundle all costs, including rental and utility fees, into one monthly payment. Hence, clients only have to worry about one full amount instead of wasting time and energy tracing multiple bills.
The paperwork involved in acquiring your own space can be expensive and time-consuming. Before a company can work in their area, they need to purchase the rights to operate on a piece of land. They also need to hire contractors to construct facilities. Even if the company only intends to buy existing buildings, the regulations involved in the transfer of ownership rights can be challenging to navigate. For many companies, the time, money, and effort required for this endeavor are better spent elsewhere.
Renting workspaces is less of a hassle since there is less bureaucracy. Similar to how it's easier to rent apartment rooms than to own a house, coworking and serviced spaces require less time and have lower immediate costs. Companies willing to avail of rented space can focus more fully on activities that directly relate to their work, giving them a distinct advantage over their competition.
A significant advantage of serviced offices over coworking spaces is that they allow better control. For instance, a company might delegate specific sections of the workspace to different departments. These sections are typically placed in various offices, physically isolated from the rest of the company by walls and doors. Compartmentalization can also occur at lower levels, such as by projects or teams.
Assigning distinct boundaries might not work for all companies. However, compartmentalization can be beneficial for larger companies that contain separate work divisions. By keeping people with similar lines of work in the same area, compartmentalization allows people to become less distracted and to focus more on their work.
Compartmentalization also allows the company to delegate specific resources to the people who need them the most. In the same regard, the company can limit access to resources that are irrelevant for certain groups of employees, allowing them to retain their focus more.
As an example, what if your company has a sales or customer service department? Employees in these departments need to transact with clients regularly, mainly through calls. They also need access to the internet to be able to access emails and teleconferencing options. Putting sales or customer service personnel with other employees can be disastrous since co-workers might find them noisy and distracting.
Giving these departments their own space allows them to work more efficiently without fear of disturbing others’ work. The company can more easily provide them equipment, such as microphones, headsets, and webcams. Finally, the company can prioritize their connection speeds, giving their traffic precedence over other corporate communications.
Compartmentalization is more natural when businesses have better control over their work environment. Since serviced offices allow clients to modify their private rooms, clients are more able to make divisions and to sort their employees into compartments.
Another significant advantage of serviced offices over coworking spaces is the higher levels of privacy that they provide their users. Since companies have access to private workspaces, they can limit interference by outsiders. Even if the building itself houses multiple clients, each workspace is isolated from the others by security measures such as electronic doors and elevators linked to specific keycards.
Asking for more privacy may seem out of place in the modern business world, where the focus is on greater openness and fewer barriers to collaboration. However, privacy is essential for companies that undergo confidential work. For example, consulting firms deal strictly with clients, and they usually get access to their private corporate information. If this sensitive data were to leak out, it could jeopardize the client as competitors exploit the leaked information. In this case, clients might prefer to work with companies that can better secure their data, biasing their preference against firms in coworking spaces.
Privacy also matters for other types of companies, not just consulting ones. In fully shared working spaces, it only takes a careless employee or a snooping worker to leak information. This information may contain trade secrets, performance assessments, or even the personal data of the employees. Employee security can be put at risk if this information leaks out. Data breaches, if proven to be caused by negligence, can also expose the company to lawsuits and other legal cases.
There are other benefits to privacy, aside from security. Many leaders praise the advantages of open workspaces since these encourage better collaboration and stimulate higher levels of creativity. That said, many workers still prefer to have a space that they can call their own. Giving employees their personal private space allows them to better resist distractions and work more at ease. Privacy options can lead to lower stress and higher individual performance.
Serviced offices share many similarities with traditional, fully-owned offices. A corporate entity that has been operating for decades might feel more at home in serviced offices than in coworking spaces. The higher levels of compartmentalization and privacy should be more familiar to seasoned employees than the open desks and lack of cubicles provided by coworking venues.
Innovation is always welcome, but embracing traditionalism doesn't necessarily lead to rejection of innovation. It all boils down to the individual values and preferences practiced by each corporate entity. For many companies, they treasure perceptions of traditionalism. If they are looking for new workspaces, these companies will make suitable clients for landlords who lease out serviced offices.
Traditionalism is also essential for many corporations who want to project perceptions of stability and reliability. They may have clients of their own who would prefer working with well-established companies. To maintain their image of time-tested tradition while still reaping the benefits of flexible work locations, these companies might want to invest in serviced offices.
Serviced offices offer a more traditional atmosphere compared to coworking spaces. They encourage better compartmentalization and provide more privacy for employees. Workers are free to work without the distractions that come from open work layouts. They are more likely to act as themselves since they don’t have to worry about other people seeing their work all the time.
At the same time, serviced offices are more able to give people more opportunities for interaction, especially with employees from other companies. Since some facilities, such as dining areas, are communal, employees get to converse and befriend people outside their immediate corporate network. They get to hear about perspectives and experiences from people working for different employers. The higher level of variety can motivate workers and increase their job satisfaction.
In this manner, serviced offices provide many of the benefits that come from both traditional offices and coworking spaces.
Is your company strapped on cash? Do you need office equipment? If you said yes to both questions, serviced offices might be the superior option for you and your company.
As their name implies, serviced offices provide the essential equipment that companies need to function. Most spaces come with office desks and chairs, as well as communication equipment like phones. Serviced offices also provide utilities, saving you the hassle of having to apply for electricity or water services.
Also, the landlord holds the responsibility for maintaining these pieces of equipment. If one device malfunctions due to old age, the administration steps in to provide replacements and workarounds while the device undergoes repair or replacement. Unless you or your employees intentionally destroyed the equipment, you typically don't have to shoulder expenses related to equipment upkeep and maintenance.
A unique perk of the serviced offices is that they make it easier for companies to manage phone communications. For instance, many clients might prefer to transact with companies who are reachable through the phone. Serviced offices have phones that they can assign to companies, practically giving them their numbers. In other cases, serviced offices only use a limited number of phone numbers but provide rerouting services to ensure that the call reaches the right business.
By providing phone access with varying levels of customization, serviced offices allow companies to present a professional communication avenue to their clients. These companies don't have to worry more about getting a phone since the landlord usually bundles all related fees into the monthly payments.
Serviced offices might seem tedious at first. Some of them are similar to the traditional office setup that we described earlier in this article. However, serviced offices don't have to be dreary, soul-sucking locations.
For instance, companies residing in serviced offices are free to modify their private rooms as they wish. The most common reason for changing the workspace is to cement the corporate branding. However, companies can do more than just plaster on their logo and slogans on the walls.
Companies are usually free to repaint the rooms, change the flooring, or even swap some of the equipment. With this approach, the benefit that serviced offices provide is autonomy. The company is free to redecorate the space.
The reason that many serviced offices look dreary is that they expect the companies themselves to decorate the rooms the use. In their perspective, it’s risky to devote resources in fully decorating the rooms, only for companies to step in and undo their work. Businesses should look at this case an opportunity to fully customize the location.
Now that you know the benefits of serviced offices, it’s now time to look into the advantages of coworking spaces. These shared quarters share many advantages with serviced workspaces, but they have perks of their own. These advantages might matter more for smaller corporate entities, as well as freelancers working on their own or as part of a team.
For more details, we have a detailed article on coworking entitled "What is CoWorking? (7 Benefits of Coworking and 11 Coworking Hidden Costs)."
Perhaps one of the best innovations of coworking spaces is the unprecedented level of accessibility they provide. Are you a freelance writer or a startup team who needs a place to work? Just go to the nearest coworking space, pay the fee, sit down, and start hustling.
Coworking spaces have all the amenities that any worker needs. There are communal tables and chairs, as well as food, water, electricity, and Internet access. Additionally, most coworking spaces offer pricing tiers with varying payment schedules. The most common payment scheme is monthly, but many locations can also charge weekly or per session in terms of work hours.
If you are unsure yet if you or your company can commit to a more permanent workspace, try out coworking spaces. Their pricing options allow you to work now even with minimal commitments.
The minimal time and effort it takes to secure a spot in a coworking space are perfect for businesses with a transient nature. For example, if, for some reason, a working group needs to move from one working location to another rapidly, they might prefer coworking spaces above other options.
Coworking spaces are famous for the amount of flexibility they provide. Versatility is one of the major selling points of coworking spaces.
Do you have an employee who's unsatisfied with their current location within the workspace? They can quickly move around the entire space and find a spot where they can work. Coworking spaces are entirely for public use, which means that employees can't hoard spots or limit others from getting their places. All members of the community can negotiate to reach locations where they can work at their best.
We wrote an article, "What is Desk Sharing?" that delves deeper into the practice of desk sharing.
Is your corporate population unstable? With coworking spaces, your employees can continue working while still leaving room for further expansion. A working group can rearrange themselves so that everyone has a suitable spot where they can be productive.
Coworking spaces provide unparalleled levels of flexibility compared to other workspace options. Perhaps the only weakness they have in this aspect is that they can't accommodate very rapid growth. If a company gains too many employees, it might be better for them to find another workspace where they can fit.
Coworking administrators take care of all the logistics. They are the ones responsible for land acquisition and the construction of the facilities. They handle all equipment maintenance, as well as the buying of new ones for the community. Additionally, administrators process utility payments, as well as repair and expansion projects.
Hence, companies should also think of coworking arrangements as a type of outsourcing. Enterprises who use coworking arrangements can worry less about janitorial or IT services since the administrators provide these services. These types of agreements are useful for small, newly established startups who need to focus more on growth and profitability.
Coworking spaces are the cheapest option when compared to serviced offices or traditional workspaces. The landlord retains full ownership of the location, so they charge less for other companies to use their space. When comparing upfront costs, coworking spaces are far superior to traditional offices, where companies have to get full ownership of the land as well as the corporate facilities.
Much like serviced offices, coworking spaces usually bundle all payments into a single recurring fee. In this manner, companies only have to take note of a single amount, making bookkeeping and records management simpler. Due to the lower upfront costs, companies tend to save more from coworking arrangements, especially if they do not have long-term residence plans.
Coworking spaces make the open office layout accessible. They are one of the main drivers of the workspace trend that uses fewer barriers and encourages higher levels of openness.
The ideal coworking space looks a lot like a high-end coffee shop or library. Coworking spaces utilize unorthodox office furniture such as beanbags and couches to encourage sharing and collaboration. There are few, if any, spots that are isolated by barriers. Everyone is free to interact with one another.
Open layouts encourage camaraderie, mostly because employees are in better proximity to each other. Workers also have to cooperate to ensure fair usage of all office facilities. Teams find themselves more able to collaborate due to the open atmosphere.
Open office layouts are not for everyone, as stated earlier in this article. However, they are perfect for businesses that need to capitalize on creativity, collaboration, and flexibility. Companies that rely on intense collaboration between and among teams should also find coworking spaces extremely useful.
Another perk of coworking spaces is that they encourage networking. It’s practically impossible to work effectively in shared office spaces without interacting with other people. Hence, employees get to know each other more deeply in open office setups than in different types of offices.
Coworking spaces are also non-exclusive. They usually cater to multiple business entities, all of which have to share the facility. There are no private spaces, so everyone, at one point or another, will work in the communal areas. Hence, it's relatively easy for employees to build professional networks with people from different companies. Sometimes, employees even meet workers from other industries.
Collaboration is a big part of coworking spaces. Even the name itself says that participants should expect significant coworking with each other. The open workspaces mean that employees will have to learn to work comfortably with each other to become successful at their work.
Coworking spaces train employees to work in collaboration with other people. Employees get to practice their teamwork and communication skills. What company wouldn’t want to see these traits in their employees?
Many coworking spaces offer community events that involve the participation of employees regardless of their affiliation. Aside from providing variety and fun, these events are also an excellent way for employees to network themselves and their respective companies. These events also serve to strengthen the bonds between the different members of the coworking community.
Another positive aspect of the open office format is that it encourages creativity. When employees surround themselves with people from different backgrounds and specialties, their ability to think laterally improves. Having people with varying skills who work together can lead to innovative breakthroughs.
Many problems, both in the corporate world and outside it, require multidisciplinary approaches. By increasing the capacity of your company for creative thinking, you can make the company more resilient in today’s uncertain and ever-changing world.
Coworking spaces are a modern concept in office workspaces. They inherently challenge the notion that workspaces exist to isolate the company from the outside world. By embracing openness, coworking spaces provide a modern feel that many new companies can appreciate.
Many coworking spaces feature modern trends in interior design since the implementation of coworking practices is relatively new. Many of their facilities feature décor reminiscent of art galleries. These workspaces are aesthetically pleasing and help provide variety for employees.
Coworking spaces make things simple for the companies that use their facilities. Companies only have to worry about the actual work they have to do since everything else is the responsibility of the administrators.
Should I switch now to serviced offices or coworking spaces? Not so fast. Assess first if a location switch is something that you or your employees want. Despite all the advantages of newer workspace setups, they are not for everyone. Any switch also entails additional costs for your company. Assess your priorities and see if they match with what these options can offer you.
How do I choose my workspace provider? Make sure to do ample research first. Not all landlords are equal, and some offer substandard services. Check your priorities and see if your potential provider can address them. Get reviews from past clients. Visit the facilities yourself to see if they can give what they promise.
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