Coworking Space VS Traditional Office Space Rental: Cost Edition
In Malaysia, our MCO might be nearing its end (hopefully) and we need to plan our next moves soon and be ready when the time comes. As this pandemic continues to affect every business financially, we need to take our business budgeting more seriously than ever. As we know WFH is never effective and efficient for a business, when getting business back on track, a dedicated workspace should be our priority. Thus, the No.1 concerning factor is: the Cost.
In this blog post, we have made some calculations and comparisons between coworking spaces and traditional office workspaces. We hope this simplifies some concerns you may have during your office searching.
The first thing we usually look for during office searching is: the Rent. An average office space of 1000-1500 square feet in a decent area around KL may cost around RM3,000-RM5,000. Let’s even take the lower end of RM3,000. An 8-pax room in our coworking space would cost around RM4,600 (4-pax room around RM2,300). In our experience, many would just look at this figure and think the coworking space is the more expensive option and be deterred by it.
However, many neglect the fact that an office cost way more than just the rent. Here we list down the average operating costs (per month) that come with an office with the size we mentioned above.
- Electricity: RM400
- WiFi: Business Unifi RM360
- Cleaning: RM350
- Stationary/Printing supplies: RM200
- Toilet supplies: RM100
- Maintenance and Services: RM200
- Pantries supplies: RM200
- Photocopier renting: RM100
- Insurance: rm100
- Total: RM2,160/month average
Another big cost other than the above is the Renovation. During my research on this writing, I planned to just put in the. normal / slightly cheaper renovation cost of RM50K. But when I asked one of our ex-resident’s on their renovation cost on his new office, he replied to me word for word:
“I would also think that the cost to have a nice looking office was important to me too. Like I can pay just a little, cheaper than coworking space, but have a sh*tty accountant like office. (Then what will cost me is the team’s motivation to come to office, my ability to hire good talent who wants nice offices)”.
“If I want to have a nice looking office that the team likes and people that I hire would want to join us, then I need to spend much more, which you can argue is way costlier than coworking space price!”. The next message I received was “Around RM150k! 1.5k sqf space”.
Let’s not go there and just take RM80K into our consideration for renovation.
Take note though, here we didn’t even mention about the additional cost of hiring a front desk (which usually coworking space included benefit), a 2.5month deposit on traditional office rental plus a 2-3 years fixed contract.
Now we calculate the total cost that would incur in 3 years in a traditional office space rental:
- Rent 3,000x36 = RM108,000
- Renovation = RM80,000
- Monthly cost 2,160x36 = RM77,760
- Total = RM265,000
Compared to an all included 24/7 coworking space with nice renovation: 4,600x36 = RM165,000
You can simply saved RM100K plus the flexibility of lease. In our coworking space, we only require a 1 month notice for cancellation. For traditional offices, you probably be stuck to a 2-3 years contract minimum.
All in all, whether short or long term, you will probably save more money than a traditional office with the flexibility of expansion as well as contraction immediately. With the additional ease of mind that you don’t have to worry about the constant toilet’s piping clog, internet issues and loss of brain cells regarding constant office operation problems. It is safe to say that coworking is definitely the way to go.
We are currently running a MCO PROMO and do check it out if you are considering a work space for your business whether a 1pax or 10pax capacity.