The rise of co-working spaces within the commercial market has been widely documented. The attractiveness of flexible spaces to suit changing working environments is likely to drive this sector forward in the short term. From our own experience providing construction cost consultancy for co-working projects, there are a number of issues to take into consideration.
Key considerations for co-working cost and design
1. Knowing the existing building
Sounds simple, but not all buildings will be suited to co-working environments. The building needs to be spacious enough to provide co-working spaces as well associated ancillary spaces.
2. Avoiding abortive works
There has been a continuing frustration within the commercial market at the wastefulness of adaptions to (or stripping out of) Category ‘A’ works to install the tenants Category ‘B’ works. Co-working spaces can be heavily cellularised and therefore a standard Category ‘A’ installation is likely to be completely redundant.
3. Understanding occupancies
Co-working spaces tend to be more heavily occupied than conventional offices. Increased densities will put more strain on the existing building or in some cases will make co-working unachievable. In particular, the following will need to be checked;
- Impact on fire safety – The building will restrict the number of people who can occupy the building. Fire lobbies, fire curtains and fire glazing can often be added to meet the new layout requirements.
- Impact on services – Typically, co-working spaces will need more plant (AHUs etc) to facilitate the air requirements. The on floor and riser ductwork may need to be resized and additional on floor kit may be required.
- WC calculations – Understandably where building occupancy increases the demand for toilets increases which can lead to a significant cost increase and loss of net internal area.
- Showers / bike spaces / lockers – This can be less of an issue with many newer developments often ‘overproviding’ in these areas. Where the base provision is low the problem is often finding space for new facilities rather than the construction costs themselves.
4. Power requirements
This should be one of the first checks before undertaking a co-working project. It is critical to ensure that the existing substation/ transformer can meet the changed power demand (or that any free capacity is ‘available’).
5. Adapting to flexible leases
The nature of co-working spaces is that they attract tenants on a short-term basis. Leases can be short to allow tenants to grow or contract as required. Building flexibility into design is not always easy when budgets are constrained and often there are costs for the developer when a tenant wants to leave or adapt their space. Some buildings may be more flexible than others, such as those that have an underfloor fantile displacement system in lieu of a VRF system. Other options may be demountable partitioning which can be reused if the space needs to be replanned.
6. Differentiation / design quality
There are a growing number of providers of co-working spaces. Many try to differentiate themselves in order to attract tenants. It is a balance of value versus cost, but in certain cases traditional desk spaces are being given over to alternative uses such as gyms, libraries, presentation spaces and gaming rooms. These areas typically add to the construction costs but are seen to add value to the project overall.
7. Procurement and design responsibility
Time is money in the co-working market. The design team will need to look at the most efficient way to deliver the scheme to market at the earliest point of time. Decisions need to be made as to what level of design should be taken to prior to tender (if any). If a ‘pure’ Design & Build route is to be followed, care needs to be taken to ensure the employer’s requirements are understood in the absence of drawn information. Similarly, consideration needs to be made towards sign off and approval of the contractor’s proposals prior to entering into contract.
8. Types of contractor required
There are many contractors operating successfully in this market. Many have inhouse architectural, structural and services designers who are used to working in this fast pace environment. It is important to choose a contractor that appreciates the timescales for client approvals, planning approvals and landlord approvals. Beyond this, a developer may choose to employ a consultant design monitoring team to review design proposals.
9. Net internal area vs desk numbers
Co-working moves away from the traditional net internal area measurement of rental values. Co-working spaces tend to work on the basis of desk numbers and overall occupancy levels. Impacts of this are felt more in terms of cost reporting and benchmarking than in construction costs.
If co-working is a potential option on a project there are a few ways to mitigate typical problems and increases in construction costs;
For the developer
- Consider if co-working is a potential option during the base build design and consider making any base build adaptions at the outset. This will reduce the construction programme and the costs of the fit out, both of which make the building more attractive for co-workers.
For the co-working company
- Assemble a design team which is able to assess a building’s viability quickly due to experience of co-working projects. This will involve specialists in utilities and fire engineering.
- If possible, try to engage with a developer at an earlier stage so that the base Category ‘A’ works can be designed accordingly.
The following are typical cost ranges on the co-working projects we have been involved in.
The strip out and Category ‘A’ costs are those which may be mitigated through early engagement with the basebuild developer or through selection of a building which requires minimal alterations.
The Category ‘B’ and direct costs are easier to benchmark as they are determined by the fit out specification. It is worth noting that additional shell and core works may be required on a project by project basis. This may involve mechanical plant, additional WCs, structural alterations and works to common parts areas.
Co-working cost and design – 9 key considerations is an extract from exigere’s 2019 Market Forecast and Co-working study.
Peter is an exigere partner with a keen interest in specialist sector benchmarking and research, applying this information to help drive the design, increase efficiency and add value.