12 Common Mistakes to Avoid When Choosing a Coworking Space

Renting a coworking space isn't new, but many companies are still unfamiliar with the terms and conditions, and what is standard versus non-standard. If you're not savvy about reviewing all the details provided, you might miss important points that could influence your decision on which coworking space to rent. Here are the most common mistakes we've seen over the last decade when renting a private office within a coworking location and how to avoid them:

1. Not Discussing Exit Fees in Advance

Exit fees, reinstatement fees, or cleaning fees—these terms often refer to the same charge you’ll incur when moving out of your office. Since coworking offices typically require no customization unless requested by you, this fee usually covers cleaning and painting costs. However, if any damage is caused by you, that will add to the standard exit fee. The caveat is that every coworking space has a different policy on how to charge this fee. Most operators will share this in advance, either calculated by square meter (e.g., $10 per sqm) or per head. They will also inform you if any additional damage beyond usual wear and tear will be charged extra. It's important to discuss these charges before signing the lease to prevent any future disagreements.

2. Assuming Downgrades Are Always Possible

Coworking spaces offer a lot of flexibility, such as changing office locations, staying for shorter terms, or upgrading your office anytime without penalty. However, when it comes to downgrades, it's best to discuss this possibility with your provider. Most coworking spaces will help you find a solution, such as moving to another location at the same monthly rent, but they may not necessarily allow you to move to a smaller office at a lower rate. Coworking spaces have to consider forecasted occupancies, so breaking a lease is not common. However, some might allow you to transfer your lease to another tenant if all conditions are met.

3. Not Knowing About Global Locations

Another great benefit of flexible leases over traditional ones is access to a larger community and locations across the globe. We've seen many companies who are members of coworking spaces and have free access to global locations, lounges, and more but never use them when traveling abroad simply because they are unaware of this. This is a unique benefit over traditional spaces, so it's best to utilize it as much as possible.

4. Choosing Too Short or Too Long Agreement Terms

Agreement terms are one of the most confusing aspects for many companies. Should you rent month-to-month for more flexibility, or for 3 months? Or commit to 2 years to enjoy lower rates? The price guide based on term is that the longer you commit, the lower the price. So, 2-year leases have the lowest rates but require you to fulfill a 2-year commitment, which can be long. For shorter leases, some may be tempted to choose 3 months, but 3-month rates are usually not different from month-to-month, and due to a 2-month prior renewal policy, you might need to renew the lease just a month after signing. Our general recommendation is to sign a 1-year lease, which is optimal for price and flexibility. You can enjoy relatively lower rates with no worries about renewing too soon or committing too long before making a change.

5. Adding Future Headcount in Occupiers from the Start

We've seen companies rent spaces that are too large due to future hiring plans, only to end up underutilizing their office for months and overpaying. This mindset is accurate only if you rent traditional space; however, the main advantage of renting a flexible lease is that you can upgrade your office as you hire and expand your team with no penalty or hassle since all offices are ready-to-move-in. There are no moving costs or trouble setting up a new office. It's ideal to rent an office for a maximum of +2 people from your current headcount and move to a bigger office later to reduce overhead costs and maximize space utilization.

6. Presuming Early Termination Can Be Done Anytime

Early termination, which refers to breaking your lease before the agreement end date, is generally not possible due to the terms and conditions. We receive many questions about what happens if you want to pre-terminate your office and move out. If you do not communicate this and just stop using the office, you will still receive invoices that are due, and you will be liable to pay until your lease ends. So there is no difference between using or not using your office when it comes to payments. That's why it's best to sign a lease with a length that you are comfortable staying.

7. Not Asking About Meeting Room Rates

Most coworking spaces will give you credits to use meeting rooms, whether in hours or dollars. A common mistake is not calculating the credits, especially if in dollars, and cross-checking them with your forecasted usage. Always ask about the hourly rates of meeting rooms and estimate how many hours you can use for free each month to be prepared for any additional costs for ad hoc payable usage.

8. Not Being Informed About the Daily Cleaning Schedule

Cleaning schedules or cleaners coming into the office at inconvenient times is another common complaint. In general, cleaners do a daily clean in the morning before you arrive at the office, empty rubbish bins twice a day, and do a deep cleaning weekly, like vacuuming. However, given that there are many offices in a location, they might not always finish cleaning before 9 am, so your daily operations might be interrupted occasionally. To avoid this, request a standard time for cleaning your office, or if you have an important meeting, ask for cleaning to be skipped for a day. Community teams are happy to help with such requests, so it's all about communication.

9. Assuming the Invoicing Cycle Is Not in Advance

Another mistake is believing that invoices are payable at the end of the month after the office has been used for a month. In reality, coworking spaces will charge you in advance. To start using your office, the deposit and first month's rent must be paid, and there should be no outstanding balance.

10. Not Checking Available Inventory for Future Expansions

It's always a good idea to ask how many offices the location has and what the occupancy rate is. This will give you an idea of the chances of securing the right office within the same location in case of a future upgrade or expansion. If not, most coworking spaces have multiple branches, so you can move to another location. However, we understand that the ideal scenario is to stay in the same location, so it's best to ask about the total available inventory.

11. Missing Auto-Renewal Emails

Did you know that your lease is subject to auto-renewal prior to the agreement end date, usually 2 or 3 months before? The first right of refusal for your office is always yours, so you will receive auto-renewal emails at the renewal deadline stated in your agreement. If you do not respond to discuss the rates and options and stay silent, your lease will be auto-renewed for the same length of time as the initial agreement, and there will be no possibility to roll it back. This, we believe, is the most important aspect of flexible leases. It's surprising how many companies ignore these emails and end up being renewed for a term they do not agree with. So follow the renewal timeline and make sure the renewal contact email is for the right person so that you can act to make any changes before the auto-renewal kicks in.

12. Not Getting Familiar with the Community Team

Community teams usually consist of a community manager, community associate, and cluster leaders. Community associates help you on a day-to-day basis with things like mail delivery and any internet or facility problems, while managers are there to assist with renewals, possible office changes, or any other requests. Getting familiar with the people who are there to help you will make your day easier.

We aimed to address the most common complaints from members and highlight mistakes often made when renting a coworking space in Singapore. Our goal is to help you enjoy a stress-free experience throughout your tenure. We hope this guide empowers you to ask the right questions and make informed decisions. Please note that these guidelines are general and may vary with different operators, so they should not be taken as always applicable. If you have any questions or need further clarification, don't hesitate to reach out to us anytime!