This article tries to help you negotiate coworking prices. As with any purchase negotiation, knowing which levers to pull and when to pull them will allow you to get the best possible result.

If anything, the fact that serviced offices are typically sold on short-term license agreements as opposed to long-term lease obligations gives you a lot more scope to create value by taking advantage of the market’s competitive nature.

Once you have made initial enquiries, reviewed suggested options and viewed (likely second or third viewed) a shortlist of buildings, you should have a clear number of properties with which to enter into negotiations.

All of them should have sent you initial proposals based on the offices you identified as suitable, and each proposal will be just that – a headline price for the room with any additional costs for IT infrastructure, amenity hire etc.

But going back to the levers you can pull to negotiate coworking prices – we have split them into a number of categories:

1. Competitive Leverage
2. Price
3. Stepped Rent
4. Fixed Rent Increases Beyond Initial Term
5. Staggered Deposits
6. Build Works
7. Meeting Room / Amenities / IT Packages
8. Timing With Sales Cycles
9. Availability
10. Enhanced Commissions to Intermediaries
11. Final Gambit
12. The Right Broker

Each of these is explored in more depth below:

Negotiate coworking prices – what to consider

Competitive Leverage 

You should have a number of plates spinning when it comes to competitive leverage – the more active negotiations you are engaged in, the more power you have as the customer.

Remember, the flex space market is a small world – all the operators will know each other and it’s also likely that the individual sales people you are negotiating with will also know each other. They will be aware of each other’s price points and probably how much availability they have / how well they are doing.

The options you will have in front of you will also be at brands within a similar quality range, so you will be engaged with direct competitors that are incentivised to win market share from each other.

Competition for your business breeds a better deal structure, so use this power to your advantage to negotiate coworking prices.

Price 

It’s tempting to focus on the lowest possible price as the main goal, but think about the longer-term when pushing here. Most flexible office contracts will be based on a relatively short occupation length – 12 months is very typical.

But if your intent is to stay at a building for a longer period of time than the initial term, trying to just negotiate coworking prices down in the first period will probably result in a steep increase at the point of re-negotiation down the line.

You should understand not only the current headline price for the property but also the office operator’s expectations for what the building will be achieving in the future. Aligning yourself correctly within these price points will give you a better long-term price experience.

Every flexible office operator will have a good idea of what their yearly price increases will be for their “headline” price. If you manage to aggressively negotiate down to, say £500 per desk per month, but the operator’s headline is £600 per desk per month with 5% year-on-year increases, then you could be looking at a jump from £500 per desk to £630 per desk at the end of your contract.

If your aim is to occupy a building long-term, you should be pragmatic about your 2-year / 3-year plan and structure your approach accordingly.

Stepped Rent 

One way to offset the potential shock of large end-of-contract price rises is to structure your initial agreement in a way that gives you a lower average price across the whole of your contract but that also achieves a level more acceptable to the coworking operator at renewal.

Implementing increasing steps in cost over the course of the initial term is one way to successfully bring both sides together.

Often, entering into a flexible office contract is based on some expectations around the growth of your business – starting off cheaper and building increases in the monthly price at fixed intervals can allow you initial savings to invest in growth, which can then take care of increases.

This structure also means you will see less of a shock at the end of your contract when negotiating a renewal, potentially even allowing you to renew on a no-increase basis.

Often the best approach is to have an open conversation with the serviced office operator about how their future expectations align with yours to enable a mutually-beneficial long-term relationship.

Fixed Rent Increases Beyond Initial Contract Term 

Regardless of whether you drive down the initial price or go for a “stepped” rent over time, you should give time to discussing the likely change in cost at the end of your agreed contract term.

Many clients forego this part of negotiations because their focus is wholly on the initial contract they are entering into.

But operators are also very interested in retaining their clients for as long as possible – so there is absolutely the need to talk about any guarantees they can put in place to give you peace of mind 6 months / 12 months / 18 months down the line.

Long-term peace of mind benefits you as well as the office operator, so agreeing a capped cost increase for your renewal is good forward strategy. Just make sure it is in writing as an addendum on your formal contract.

Negotiate coworking prices: Staggered Deposits 

In a cash-strapped economy, the initial pain of handing over 2 to 3 months’ worth of rent in advance as a deposit (often on top of your first months’ rent in advance) will often be the biggest issue for clients.

Whilst there is a very small number of coworking operators that will sell offices on the basis of no deposit being needed, 99% of the market will need up-front security.

But there is nothing preventing you from discussing the possibility of a split or staggered deposit payment. Half up front with the remainder half-way between signing the contract and occupation is quite common as a middle ground if the operator will entertain it.

Some serviced office operators may even consider taking a proportion up front with the remainder (and the first months’ rent) being due at some point close to when you physically occupy the space.

Inclusive Build Works 

If your office requires any construction (private offices, meeting rooms, special partitioning etc.) then this is often a clear opportunity. Asking the coworking operator to absorb some, or all, of the associated costs is always a good idea.

Most flex space office buildings are launched with a specific budget allocated to design & build. Often there is a surplus left over, sometimes from large customers coming in as anchor tenants and taking whole floors – which means that any budget for building out more smaller offices on that floor would have not been spent.

If you believe that build works will be needed as part of your requirements, asking about the history of how the building was filled is a good idea. If one or two very big clients came in early, it’s likely there will be some budget available which has already been allocated at the start of the space launching.

Again, be mindful of balance. If you feel that long-term rental discounts are more important, then focus on those and take on the one-time cost of build to better-structure your long-term rental obligations.

But if you can get both, so much the better!

Meeting Room / Amenities / IT Packages 

If you are intending to use on-site meeting room / space hire services as opposed to having dedicated space in your office for this, there is often scope to agree on an inclusive number of hours (or credits) as part of your contract.

A lot of the time, ancillary services can add up to quite a bit – so this can represent a significant value-add to your service package.

Find out about all the on-site services which carry an additional charge and always ask for these to be included, to one degree or another, within your agreed monthly rate.

IT / telephone costs also fall into this category. If any of your needs fall outside of those included within the base price, you should consider asking if they can be bundled into the price.

Also make sure that any agreed concessions of this kind are itemised on the contract as an addendum.

Timing With Sales Cycles 

Always remember that the acquisition of a flexible office space is a sales transaction – this means that it represents a financial incentive for the sales people involved. This will likely be both the sales rep from the coworking operator, but also the intermediary / broker if you are using one.

During the early and viewing stages of your search, try to find out how they are rewarded – understanding their sales target cycle will allow you to position your final negotiation tactics strategically.

If they need to get deals over the line at the end of a given month, for example, you are much more likely to exert greater pressure on their need to hit a certain number of sales if you time your commitment to coincide with a key point in their sales pipeline. This understanding can help you negotiate coworking prices more effectively.

Availability 

Understanding the bigger picture beyond the office you are negotiating on will help a lot. Try to find out what the occupancy levels of the building are.

It is also good practice to ask about the broader state of the operator’s building portfolio. If they are expanding as a coworking brand with 3X new buildings due to open doors in the coming months, for example, there will be greater pressure to get steady income through the door to support this growth.

Availability-wise as a rule of thumb, any building below 80% occupied is likely to be in need of winning business, even if it has to do so on a discount. Occupation rates are a key metric in the serviced office market, often just as important as the average price achieved across a building portfolio.

So if you can identify suitable space in a building which is below 80% occupied and part of an actively-expanding coworking brand, this can be a fertile environment for getting a much better deal.

Enhanced Commissions to Intermediaries 

Sometimes a back door to finding out about how much a building needs deals is to ask about any increased fees / incentives they are offering to intermediaries / brokers.

In our opinion, you should absolutely make use of an intermediary to help you find suitable flex space. They are free of charge to use and usually create a very competitive environment for your business because office operators 100% know that you will be dealing with all of their competitors.

If a specific building is giving the middle-man a bigger fee for getting deals through the door, then there must be a reason for this. Usually this reason is the need to boost occupancy in the building.

Question your broker about which properties on your shortlist are offering enhanced fees. You will often find that those represent much better targets for pushing harder on discounts and concessions.

Final Gambit 

Even if you have negotiated very successfully and carved out discounts and additional benefits, there is nothing stopping you from rolling the dice a final time to get that little bit extra.

But this is where you have to put your credibility and integrity on the line as collateral.

Every sales person in coworking wants to hear the words “if you can give me X, I will sign tomorrow and pay on X date”. It represents the promise of a new sale and potential bonuses, which is what the game is all about.

But you should never make a promise of this nature, get what you want, then fail to go through with the promise you made.

The serviced office world is fast-moving and there are usually quite a few interested clients looking at space at any point in time. If you make promises and then fail to deliver, you will lose credibility and any added value you have built up until that point could evaporate.

So you should definitely always push for a final extra piece of value, but only when you are absolutely certain that you will be able to pull the trigger and complete the deal in exchange.

The Right Broker 

The importance of having the right person working alongside you to make sure you get all the potential benefits above cannot be understated.

Someone that knows how the market operates, where the right deals are, which sales people need the business, where the most aggressive competitive situations can be found.

Flex space intermediaries should be experts in navigating their chosen field – they should be seen as a massive asset you can use to leverage in getting the best deal structure.

But choosing the right one is also critical, and our unique directory of individual broker profiles helps you choose one using a combination of professional and personal filters.