The way we work has changed—and continues to evolve. Traditional office leases are no longer the default option for many startups, freelancers, and even established companies. Instead, coworking spaces have emerged as a flexible, cost-effective solution for businesses looking to scale smartly without sacrificing professional infrastructure.
In fact, according to a 2023 report from Statista, over 1 million people in the U.S. are projected to work from coworking spaces by 2025, with global numbers showing similar momentum. With so many businesses rethinking how they use space, it’s crucial to understand the financial and operational implications of leasing in a shared environment.
Here’s what business owners, finance teams, and operations managers need to consider before signing on with a coworking provider.
Understand the Lease Terms—It’s Not Always “Simple”
Coworking space agreements can look very different from traditional office leases. Some are structured like short-term licenses, while others mimic more formal lease arrangements. It’s important to read the fine print—and understand whether the commitment qualifies as a lease under accounting standards.
If your agreement grants control over a defined space for a set period (even a private office in a shared facility), you may need to recognize a Right of Use Asset and corresponding lease liability under ASC 842. This is especially important for companies under audit or preparing financial statements.
When reviewing the terms:
- Clarify whether the agreement is a lease or a license
- Identify any service components (e.g., mail handling, reception)
- Understand cancellation policies and penalties
- Verify how costs are allocated across shared services
- Review renewal clauses or automatic extensions carefully
Don’t assume coworking equals casual. From a compliance perspective, it could have the same impact as any other long-term lease.
Weigh Flexibility Against Stability
One of the biggest draws of coworking is flexibility—but that can cut both ways. On the one hand, you can upsize, downsize, or relocate with minimal hassle. On the other, you may lack long-term guarantees on your preferred space, which can create uncertainty for your team.
Questions to ask before committing:
- What’s the notice period for terminating or changing your plan?
- Are there penalties for moving in or out of specific locations?
- Can you reserve the same private office long-term, or is space rotated?
- Is your access 24/7 or limited to certain hours?
- What happens if the coworking operator shuts down or rebrands?
Balancing flexibility and operational continuity is key. Make sure the plan aligns with your business’s growth horizon.
Budget Beyond the Monthly Membership
Coworking space pricing can appear straightforward—but additional costs can sneak in. While your base fee may cover Wi-Fi, coffee, and printing, other services can add up fast.
Possible added expenses:
- Conference room bookings outside your plan limit
- Additional storage or locking cabinets
- IT support or higher-speed internet tiers
- Parking or guest access fees
- Custom branding or furniture upgrades
Before signing, map out your team’s actual needs. Some businesses end up paying more in a coworking environment than they would in a small, traditional lease—especially if they’re unaware of the hidden fees.
Consider Culture and Fit
Coworking environments have their own culture, and not every space is right for every business. Some spaces cater to tech startups, others to solo creatives or remote workers. Consider how the space’s atmosphere will support—or distract from—your team’s work style.
Elements to observe:
- Noise levels and shared space etiquette
- Availability of meeting rooms or private phone booths
- On-site networking events or mandatory participation
- Cleanliness, safety, and staff support
- Demographics of current members (e.g., mostly freelancers vs. enterprise teams)
Taking a tour—and bringing a few team members along—can give you a better sense of whether the culture fits your company’s identity.
Location Still Matters
While coworking spaces often boast “work from anywhere” benefits, location is still a deciding factor. Proximity to clients, transportation, and talent pools can affect your team’s productivity and your business’s visibility.
Key location considerations:
- Is it easily accessible by public transportation?
- Are there nearby restaurants, gyms, or childcare services?
- Will your clients feel comfortable meeting there?
- Is the neighborhood safe and well-maintained?
- Does the location align with your company’s brand image?
Convenience isn’t just about commute times—it’s about creating an environment where your team can thrive.
Final Thoughts
Coworking spaces can offer game-changing flexibility, built-in community, and cost savings—but they come with trade-offs. Understanding the full picture—legal, financial, cultural—can help you make an informed decision that supports both your bottom line and your people.
Don’t let the casual vibe fool you. From whether to record a right of use asset for accounting purposes to navigating the fine print on shared services, these spaces require just as much diligence as traditional leases.
The future of work is here—and it’s shared, flexible, and fast-evolving. The smartest businesses are those that see coworking not just as a place to sit, but as a strategic asset that supports how, where, and why we work.
Photo credits: Coworking London