The question of the costs of an office is one that we naturally deal with very intensively. Already in the early days of Westhive, about two years ago, when we opened our first coworking space in April 2018, we focused on the question of the effective costs of a workplace beyond the pure office rent and the price per square meter.
The costs of traditional offices are underestimated
We came to one conclusion very quickly: the costs for traditional offices are underestimated. An analogy from the car industry probably applies best: the effective costs for the car are around three times the monthly leasing rate. It is the same with the office: the effective costs for the office are x times the basic rental price. How much more expensive will it be in the end? We will try to find out and make an example calculation.
In addition to the cost of rent, there are various other expenses
In addition to the basic rental costs, there are also the utility costs. These can easily amount to around 15% of the price per square meter and typically include the costs for heating (and cooling, if available), hot water and operating costs such as caretaking, waste disposal, cleaning of general interior and exterior areas, snow removal, etc.
If the office is offered as a shell or noble shell, there are also finishing costs. These range from CHF 1,500 to CHF 2,000 per square meter, depending on the standard of fit-out. For an office of 150 square meters in size, this means that the finishing costs amount to more than CHF 200,000, which must be depreciated over the term of the contract, depending on the length of the lease. The difficulty here is that the shorter the rental period, the higher the annual burden. In other words: the higher the flexibility, the higher the monthly depreciation costs. Meeting rooms also come into play here: they require valuable square meters, are rarely used to 100% capacity and place an above-average burden on the equipment budget.
In addition to the costs for equipment, there are also the costs for furniture. A workstation with table, chair and storage space costs between 1000 and 1500 CHF. The costs for the technical infrastructure (Internet access, WiFi access points, printers, etc.), the office equipment (flipcharts, whiteboards, document shredders, etc.) and the various consumables, such as coffee, tea & water, must also be taken into account.
Last but not least, cleaning and maintenance of the premises must also be taken into account.
The comparative calculation reveals: flexible office models are more cost-effective
On this basis, we have made the comparative calculation. The short version is as follows: an office of 150 square meters for 10 employees costs around CHF 1,000 per workplace at a rental price of CHF 280 per square meter per year, including expansion, for a 5-year contract term.
It is almost like leasing a car: in fact, it is about three times more than the pure monthly rental costs per employee. This is hardly surprising. In internal accounting, companies calculate monthly costs of CHF 1500 to 2500 per workstation, depending on the location and equipment of the offices, and this sometimes includes the cost of IT hardware. But even if you deduct these (by no stretch of the imagination can this be more than CHF 200 per month today anyway), you are still well above the CHF 600 to 1100 per month and workstation that a workstation costs at a flex space and coworking provider.
A company that chooses a Flexible Office solution can save up to 36% in costs compared to the traditional office model (calculation example: company with 10 employees, 2 meeting rooms, 5-year lease term, 5% annual growth).
Lack of flexibility is a cost driver
The greatest saving, however, lies in the flexibility of the number of workstations. It always comes into play when companies grow or shrink.
If growth is anticipated, the rental space must take this into account. A company that grows by 20% will need around 50% more space after two years and, in the traditional office model, will have to rent – and pay for — this space from the outset.
In the best-case scenario, the growth occurs, and the office is just the right size after two years. If growth continues, however, it quickly becomes too small. And if there is no growth, the office will remain too big. So you either pay too much — or you have too little space.
Conclusion: Flexible office models save money
The bottom line is: with the right flex model, office costs can be reduced in virtually all scenarios of varying team sizes and durations. And the built-in flexibility allows the company to “breathe” and adjust the number of workstations to actual needs.
Our office cost calculator shows the savings that are possible with a flexible rental model.
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