The Costs of Traditional Offices vs Flexible Coworking
When it comes to finding the right space for your business, there are a bunch of different factors that you’re likely considering. What sort of feel do you want the office to have, and what sort of amenities? Will you possibly be upsizing or downsizing in the next year or a few? What sort of community would you like to have as neighbours?
An average saving of over $85,000 per annum over 5 years*
Coworking spaces offer many social and logistical benefits. Whilst these contribute to a thriving workspace and workforce. The underlying factor for what space you choose will likely be what can fit into your budget.
At CoWork Me, we speak to people every day who are going through this decision making process. As we are in the midst of a Pandemic, organisations are having to weigh up the options for a cost-effective workplace. It is clear that a question companies are asking themselves is:
“What are the costs involved with coworking spaces compared to a commercial office?”
It’s a tricky question, with lots of time and information needed to answer. The good thing is, we’ve done the work for you.
Have a look below at the detailed comparative estimated costs of coworking for a small business of 10 people here in Melbourne. These are from both a renting and coworking standpoint.
Here are the calculations
Rent
$60,000 per annum
We based these figures primarily on word of mouth, as well as time spent looking at real estate website realcommercial.com.au.
Searches where limited to spaces of over 130 square meters and based in St. Kilda, with an additional radius of 1 km.
Receptionist
$55,000 per annum
Based on information about the average salary of a receptionist in inner Melbourne, provided by indeed.
Utilities
$3,850 per annum
Electricity
Based on the average amount of electricity used at 10kWh per day, and with an online quote from Momentum energy of $120 per month.
Average deduced through: SME businesses in Victoria (considered 20-199 people) use an average of 20,000kWh per year (or, 55kWh per day); based on a report on ‘Small Business Retail Energy Bills in Australia‘ by Energy Consumer Australia (see page 32 ‘Victorian Electricity Bills April 2018’).
We then worked back from this average to estimate a team of 10 would use 10kWh per day.
=$1440 per annum
Internet
Based on an online quote from Telstra for unlimited monthly internet for a small business.
=$1200 per annum
Water
(Alright, buckle in. We’re going for a ride.)
Costs are based on those charged by South East Water for small businesses.
These are:
Water service charge: $116.64
Sewerage charge: $439.88
General drainage charge: $136 (charged by Melbourne Water)
Amount per kilo litre of water: $3.12
Amount per kilo litre of sewerage $1.81
The base rate for water service, sewerage, and general drainage charges is:
116.64 + 439.88 + 136 = $692.52 (or, 57.71 per month)
The accruing water costs are worked out as follows:
A person uses approximately 50L per day at work, based on this report.
Cost per day for water:
Number of litres used per day X number of people in office X cost per litre
= 50 X 10 X .00312
= $1.56 per day in water costs
Cost per day for sewerage:
Number of litres used per day X number of people in office X cost per litre of sewerage
=50 X 10 X .00181 per liter
= $.905 per day in sewerage costs
We work approximately 22 days a month.
Total accruing water costs per month for 10 people:
= (cost of water per day + cost of sewerage per day) X 22
= (1.56+.905) X 22
= 2.465 X 22
= $54.23 in total accrued costs for water and sewerage per month
In summation, the average monthly cost for a small business is:
⇒ total accrued costs + base rate for water service
= 54.23 + 57.71
= $111.94 in monthly costs
= $1343.28 per annum for water
Staff Amenities
$2,400 per year
Based on estimates found online of $14,400 for an office of 60 people; 14,400/6= 24,00, as approximate for 10 people
Cleaning
$7280 per year
Cleaning: costs about $35 per hour, based on prices for Melbourne found online.
At two cleaning sessions a week, for 2 hours each:
= $140 per week
= $7280 per year
Initial Fit Out
$90,236
We based this price on an online quote by Apexei, based on an office fit-out of approximately 130,000 square meters, including:
- Small reception
- 1 large office
- 1 boardroom
- 1 meeting room (up to 10 people)
- Medium kitchen space
- Medium storage
- Mid-range fit-out
Conclusion
When comparing a commercial office to a flexible coworking space for 10 people, the numbers are in favor of coworking. When taking into consideration the large initial fit-out costs, yearly expenses such as the internet, utilities, rent, cleaning, amenities, and receptionist staff over 5 years, there’s a saving of over $400,000+ to be made, not to mention the other benefits a company will experience by being part of a thriving business community.
* Keep in mind that these values may change, based on the individual company’s discretion. The prices we’ve quoted are estimates based on our own research, and right at the time of publication. We encourage you to do your own research based on your own needs and hope that by sharing our own working and estimates we help you to develop an understanding of the involved costs of coworking and renting an office space.
