When choosing an office space, there is a lot to think about and many different options, usually boiling down to traditional longer term leases vs more flexible coworking arrangements. Traditional leases offer stability and customisation, whilst coworking offers super competitive pricing (when you factor in everything that goes into a traditional lease) and flexibility.

Here at The Cluster, Australia’s first professional coworking space, we get to speak to people regularly about their office and business needs and what would work best for their team. For them, it’s essential to understand if a turn-key workspace solution or a more traditional office lease (a total blank canvas) works best for their brand and team. There is a lot to consider, and here we highlight the key differences!


Penthouse office of the Cluster, customized by previous tenants, Palantir

Many companies choose a traditional lease as they feel it can give their business the most professional and personalised aesthetic possible. A commercial office lease allows you the total autonomy to customise and operate exactly how you would like to. You can choose your operating hours, floorplan and carefully curate the first impression when visitors walk through the door. Whether you desire ridiculously enormous desks, a slippery slide between floors or a velvet-laden feature wall, the possibilities are endless & completely yours to decide.

Moving a large or established business to a coworking space sometimes comes with the worry that the business may lose a sense of brand identity. This however is not necessarily the case. Here at The Cluster, you will not find our branding anywhere, and this is very much on purpose; we want your clients to have the impression that this is your office, and only yours!

Coworking has also become immensely popular in recent years with large enterprises, including tech giants, Facebook and Microsoft. A global coworking provider recently reported that nearly 40% of their client base hails from enterprise companies. Business such as these have utilised the option to customise the private office exactly how they like, or completely take over an enterprise suite over an entire floor! This alone shows the magic of coworking and why more enterprise customers are turning to it for office solutions.


Flexi spaces mean you can work how you like

Today’s marketplace is a dynamic, fluid and competitive, meaning flexibility is on offer which may be important for companies who are unsure of growth or even market conditions.

A typical office rental in Melbourne’s CBD, (according to realcommercial.com.au), averages between $15,000 to $80,000 per annum depending on size and desired location  While a traditional lease may appear to be significantly cheaper when compared to coworking, committing to a 5 or 10 year fixed term can be a huge financial risk. Lock-in contracts also offer little adaptability for a company, especially in times of financial turmoil and uncertainty. If your business doesn’t scale at the pace you predicted, you may end up paying for space you have no use for. On the other hand, if your business scales up more quickly than expected, you can end up starting the process all over again while trying to negotiate a release from your long-term contract.

One of co-working’s bestselling points is adaptability. If you’re a start-up or freelancer, workspace flexibility gives you the control of when and how you work. This ensures that you’re only paying for what you need & what you use. Even mammoth international enterprises are jumping on the coworking bandwagon, and not just to save a pretty penny! Whether they just need a short-term space to get a project team or even a more permanent arrangement, coworking offers all the wiggle room needed, without the enormous lock-in commitments. At The Cluster, rapidly growing teams such as Impact Traffic have outgrown a singular desk and now occupy a small army of them! The range of rental space available, from casual hot-desk areas to large private offices, means you have the freedom to hire the perfect space for your needs, with the luxury of changing your requirements with short notice periods.

With the impact of Covid on the economy, businesses and workers, many are now turning to coworking for everything that it offers, which seems fitting for a post-covid world. Employees now want more flexibility to work from home and the office, and business owners can see that the social aspect of coworking and flexibility will play an important role in the future.


The views of the Cluster

Traditional leases generally seem to be a lower cost option when compared to coworking, when comparing the base rents per square meter. However even with incentives from landlords, there is still the cost and headache of set up costs around fit outs, furniture, plus significantly higher legal expenses.  These costs can set you back tens of thousands of dollars in initial set up on top of your base rent. On-going costs like a receptionist can cost a company $50,000 a year on average (as reported by indeed). In addition, electricity, water, internet, regular cleaning & maintenance staff, all add up. Once you factor these “other” costs in, your initial commitment has snowballed into a figure much larger than you were expecting – yikes!

Coworking’s best feature, by far, is its all-inclusive pricing. If you’re a start-up who only needs a desk one day a week, or an established organisation who needs room to grow, you get the most bang for your minimal buck. Depending on your package, co-working space can cost anywhere from $3,000 a year for a casual desk (with a lot more than a desk included in that price) to over $100,000 a year for a luxurious enterprise suite with a private kitchen, meeting rooms and all the bells and whistles you could imagine!

For example, here at The Cluster, having any sort of membership means the following are yours for the using: stunning, thoughtfully designed workspaces  and meeting rooms over 3 floors, multiple receptionists, utilities, IT support, cleaning, amenities such as snacks and beverages, plus social & networking events such as breakfast clubs or Friday night drinks! These are all services that can quickly become costly when integrating them with a more traditional lease.

With all the fabulousness that goes with an all-inclusive office, do be careful and mindful when looking around at coworking spaces. Some spaces (usually the larger ones), have lots of add-ons and hidden costs, meaning that your monthly expectations of costs are not always met. It is important to check the fine print and understand that not all spaces are as inclusive as The Cluster when it comes to pricing. Make sure you are comparing apples with apples when making your decision!


Friday night drinks (and pizza) at the Cluster

Community is key to coworking and can work in your favor if you want it too. As the saying goes, it’s not what you know, it’s who you know. Coworking can deliver enormous value with access to networking and social interactions, often resulting in business development opportunities or just great friendships.

Whilst a traditional lease can mean your team stays cohesive and close-knit, it leaves little room to organically expand and connect with businesses around you. It is certainly possible to arrange your own networking and social events but these will take up additional time & energy out of the day-to-day running of your business, so why not leave that to us!

An enormous benefit to coworking is the immediate ability to socialise, network and collaborate. If you’re an accounting freelancer and need some help with website development, chances are you can do some quid-pro-quo with another business in your space to share expertise and cut outsourcing costs. There is also instant access to a variety of events that are organised and run without you having to lift a finger or dip into the company budget. Anything can happen at these events……maybe you will run into an old colleague during the office’s Breakfast Club and reminisce over a coffee. Or maybe you will just come up with a wild and innovative business idea with a fellow coworker over some Friday night Furphys.


When deciding what office space is best for your business, it is worth understanding the pros and cons of traditional leases vs coworking. If long term leases and digging into your pockets to pay for extra unknown costs doesn’t sound up your alley, then join the coworking revolution where the only thing you’ll be digging into is the 3pm snacks!