Can You Save Money if You Work in a Coworking Space?

I have good memories of my early years as a student and freelancer, when I would spend my mornings in local cafés to get a change of scene and see people. Today, working in a café and sipping a single drink for three hours seems less attractive. Coworking spaces, be it WeWork offices or local start-ups, are popular and growing in cities across Canada, in response to a higher demand. Mordor Intelligence forecasts a growth of over 8% per year in the coworking space market by 2029. These spaces attract self-employed workers, but also businesses, thanks to their great flexibility.

The Cost of a Coworking Space for a Freelancer

Working from home will always be more economical. It costs nothing more than what you already pay for rent, mortgage, electricity and Internet, to name only the most obvious expenses. But let’s face it, staying in the same environment day and night can get pretty boring, to the point of hindering productivity and stimulating… procrastination.

If you are a self-employed person who hesitates between staying at home and renting a space, try to compare the additional income you could earn versus the expenses. In 2022, the average cost of a private office in Montreal was $550 USD per month, compared with $350 USD for a dedicated desk and even less for a shared desk.

For example, let’s say you rent a dedicated workstation at Hedhofis for $419 CAD per month, so your annual expenses are $5,028. Fortunately, you are much more productive and complete tasks more quickly in this environment, freeing up four hours a week to take on new gigs. You find more work by networking with other people in the coworking space. If you charge $25 per hour or more to your customers, you’ll make more money renting this space than staying at home.

The Cost of a Coworking Space for a Business

The situation of a small business is different from that of a self-employed worker. Renting a coworking space lets you bring your team together without worrying about the constraints of long-term leases. The average term of a commercial lease is over 5 years, but it’s impossible to predict where you’ll be at that point! With coworking spaces, the company can optimize its costs by adapting to changing needs. Coworking spaces also include resources that support businesses, such as the possibility of renting meeting rooms, and a dining area or cafeteria.

Let’s take the example of a company that rents three private spaces (also at $419 per month) and a meeting room for two hours twice a month at $40 per hour. The employees work in a hybrid mode, so they don’t need 10 desks. It costs about $17,000 a year. Tailor-made, less expensive packages are available if you contact businesses like WeWork and Hedhofis directly for an estimate, so it’s up to you to compare prices before making a decision. Moreover, you can use this type of space even if your company has a lot of employees. They sometimes offer office space for teams of 100 people or more.

In Montreal, the average rent per square foot is $40.65, according to Avison Young. If each employee needs 50 sq. ft. of space, and the company needs a 200 sq. ft. meeting room, plus a bathroom and a small kitchen, at least 900 sq. ft. are needed. In this case, all employees could be in the office at the same time. The business owner decides to rent an office space of this size, which costs $36,585 per year.

Although an office with a long-term commercial lease is more expensive in this situation, the company could benefit from such a rental by building its brand image through their own office and fostering synergy among its employees, which can be more difficult in shared spaces. Indeed, the premises can help build team cohesion thanks to a layout designed especially for them.

When Is Coworking No Longer Profitable?

There are several rental formulas available, so read the following table to get a general idea of costs, but keep in mind that a customized formula could produce a different result! We used the average office prices of Mordor Intelligence (converted to Canadian dollars) and Avison Young. For the same number of workspaces, renting a traditional office quickly becomes advantageous.

As soon as the company includes four people, it may be worth renting a traditional office. However, bear in mind that it can be difficult to find space of the right size, and with a five-year lease, if you’re planning to grow your business, you’ll need to pay for larger offices from the outset. In addition, there may be additional costs, such as tenant’s insurance. All this means that it might be a good idea to put off renting office space for a while and go with coworking spaces instead.