Coworking vs leasing
Design studios come in all shapes and sizes. We work from a variety of spaces; from the spare room at home to palatial, commissioned accommodation. Because occupancy costs – after wages – makes up a considerable percentage of a studio’s overhead, where, and how, designers work is always an interesting topic of conversation.
Greg and I are often asked about benchmarks – what designers should be paying per square foot, how much room to allocate per person and what an appropriate ratio might be, for turnover/rent or turnover/wages. It comes up so much we’ve dedicated one full day in the Business of Design week to talking benchmarks, and levers … but I digress. This article is about the value (or not) of co-working spaces.
Coworking spaces are currently even more topical as everyone watches WeWork implode. They continue to bleed money, this week co-founder Adam Neumann stepped down as chief executive to be non-executive chairman and they shelved a planned public float. People are starting to ask if the product itself is flawed…
As a studio owner that has spent much time and energy buying toilet paper, tea bags and washing tea towels, I can absolutely see the value of coworking spaces.
And so can many other designers it seems – there’s a plethora of coworking / flexible space operators across Australia. Last time I googled – and it continually changes – Australia has 160+ locations housing over 30,000 individuals. And that’s not counting the plethora of studios sharing a spare desk or two.
Globally, co-working space accounts for about 20 per cent of the total office market with predictions it will continue to grow and expand significantly. The most recent growth has been in shopping centres. Think about it – parking is easy, the centres are accessible and the location convenient.
Coworking spaces are an easy option for designers. There’s no negotiation with landlords, utilities or internet companies. There’s no furniture to buy, no printers to purchase. It all just lessens the mental load of managing a design business. What’s not to love?
Plenty it seems.
The negatives
Problem is, like all things, convenience comes at a cost. We’ve seen a lot of designers lured to shared workspaces by the offer of low overheads. Problem is the sector is so crowded spaces need to increasingly offer ‘extras’ to keep clients onsite. The result is increased costs that are, after a time, just passed on as rent.
Edem of Studio Badu – a regular at our Business of Design breakfast – recently decided to move from her coworking space because her rent literally doubled within a relatively short period of time. Sure, it’s an easy option to packup your computer and move – there’s often another ‘space’ just a block away – but all of that takes energy away from the real task at hand – designing and servicing clients.
A LinkedIn conversation I had with colleague and AGDA Vic Chair Luke Van O followed a similar vein. He described a recent conversation with a peer who’d recently moved to coworking to lower overheads. It didn’t take long to discover he was paying about 25% more than Luke does for VAN O’s office, which is about 4x the size.
Luke went on to say the savings he made in rent meant assets like servers, switching, printer, desking, white goods and furniture were paid for in the first year by the difference in cost of the lease.
And then we discussed the issue of privacy.
Many coworking spaces are open plan. Those that pay extra for designated office spaces are often housed in glass fishbowls, lacking the privacy needed to handle sensitive corporate work. While that works for many, it’s a deal-breaker for some.
The positives
One of the main advantage of shared accommodation is the networking: with colleagues, with potential clients and with suppliers. In an industry where many designers work alone, and mental health issues are often linked with loneliness, there’s a lot of advantages over working from home.
It’s also good in our industry where a majority of studios are less than 5 employees. It means Friday night drinks don’t have to involve sitting around talking to the same people about the same things. Each week there’s an opportunity to meet new people, others to chat and fraternise with.
In addition, many of the spaces offer inhouse learning – weekly talks about a range of topics. And they have cafes and boardrooms on call so clients can come to you.
Take away
There is no right nor wrong answer. What works for some, doesn’t work for others. And it’s about timing. Coworking spaces do seem better suited to startups, and the less mature studios where the space nurtures and lets them concentrate on their business.
It does – like all things convenient – come at a cost but the bottom line is, it’s a more professional option than working from home.
Contrasting and comparing the two options will continue to be discussed, because rental is a sizable component of a studio’s overheads. And that brings our conversation back to the beginning.
Rent – and how much that should contribute to overheads – is just one of the levers we discuss in our Business of Design week masterclass 7. 6 levers to create more value in your design studio is a masterclass for design studio owners and managers wanting to explore different ways to improve profits. It’s all about different ways to adjust pricing and/or productivity to improve value, without of the need to add staff or get new business.
Love you to join us.
Want to continue the discussion? Email Carol or Greg.
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Carol Mackay
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After 30+ years running a graphic design firm, Carol pivoted from client-focused projects to consult to the design industry. Now with the Design Business Council she uses her experience, and research, to help designers build robust, sustainable businesses, and help businesses integrate, and profit from, design.
The core of the DBC is the building a design community – over 85% of designers work in businesses with less than 5 employees, many less than 3. That means designers don’t have the same support network of other professionals. The DBC’s solution is supplement paid gigs with mentoring breakfast meet-ups, informative UNseminars and practical workshops in Melbourne, Perth and Sydney.
In 2018 Carol co-founded the Clear Communication Awards, and the Business of Design Week. Both will be run in 2019
An archive of her design work at mbdesign.com.au.
Her current work can be viewed at designbusinesscouncil.com and designbusinessschool.com.au.
