Three quotes land on your desk. A coworking operator prices seats per month. A managed office operator offers a whole floor, also per seat, on a two-year term. A broker offers a bare shell at a rent per sq ft per month on a five-year lease. Three different units, three different scopes — and none of the three headline numbers is what you will actually spend.
This guide gives you the model that makes them comparable, for a CFO, finance manager or ops head deciding for a team of roughly 10 to 150 people: the variables, the formulas, a worked example, the break-even logic and the questions to send every provider. There are no prices in it, deliberately — prices move by city, micro-market, building grade and month, so a number printed here would be wrong for you. What does not move is the structure of the calculation.
Everything below is as of September 2026. Deposit months, lock-in lengths and escalation clauses are common market practice, not law; legal points are marked where they apply.
Why the headline number in every quote misleads
The headline is the number the seller controls. Everything else sits in an annexure, is charged later, or is not the seller’s problem. Three distortions do most of the damage.
- Different units. Per seat per month, per sq ft per month and per sq ft per annum are all in use. Until you convert to one unit you are not comparing anything.
- Different scope. A coworking seat includes electricity, internet, housekeeping, security, furniture and meeting-room credits. A lease rent includes none of them, so a rent that looks half the price may not be cheaper at all.
- Different timing. Coworking is almost all operating cost, paid monthly. A lease front-loads capital — deposit, fit-out, brokerage, stamp duty — before anyone sits down, and back-loads an exit cost nobody thinks about for years.
The fix is one number: total cost of occupancy per seat per month over your planning horizon. Compute it for each option on the same seats, months and assumptions.
Set the horizon before you read any quote. The biggest single driver of the answer is M, the months you are planning for: a lease that is expensive over 24 months can be the cheapest over 72. Decide M with your board, then let the arithmetic pick the product.
The three products in one line each
The commercial difference is not decor. It is who holds possession, who spends the capital, and how easily you can leave.
| Product | What it is | Typical term | Who spends the capital |
|---|---|---|---|
| Coworking | Seats, cabins or credits inside a shared floor the operator runs for many companies. A service, not a property. | Month to month up to 12 months | The operator, entirely |
| Managed office | A whole floor built and operated for you alone — your reception, cabins and access control — still on a service agreement, not a lease. | Commonly 12 to 36 months | The operator, amortised into the fee |
| Conventional lease | A bare or warm shell from the landlord, which you build, run and staff yourself. | Commonly 5 or 9 years, 3-year lock-in | You, up front |
Legally the first two are usually licences — permission to use premises that stay in the operator’s possession, in the sense of Section 52 of the Indian Easements Act 1882 — while a lease under Section 105 of the Transfer of Property Act 1882 transfers a right to enjoy the property itself. That drives your exit rights: see the leave and licence guide and the companion piece on what a coworking space actually is. This guide stays on cost.
The cost components, and who pays them when
Build your model from this table. Every line exists in all three options; what changes is who pays, and when.
| Component | Coworking | Managed office | Conventional lease |
|---|---|---|---|
| Rent or licence fee | Per seat per month | Per seat or per sq ft per month | Per sq ft per month on chargeable area |
| Security deposit | Typically 1–3 months of fee | Typically 3–6 months | Commonly 6–12 months of rent |
| Fit-out capex | None | Operator’s, built into the fee; you fund only extras you ask for | Yours, one time, before day one |
| CAM / maintenance | Included | Included | Separate per sq ft per month, usually escalating |
| Electricity, DG, utilities | Included; after-hours air-conditioning often extra | Included or metered at actuals | Yours, metered |
| Insurance and property tax | Operator’s, but for your own contents | Same | Yours; property tax is often passed through |
| Internet and IT, housekeeping, security, pantry, furniture | Included | Included | Yours — contracts, capex and headcount |
| Brokerage, stamp duty, registration | Little or none | On the agreement | On the lease deed; state-specific and often significant |
| Escalation | At renewal, if any | Commonly at each anniversary | Contractual — commonly 5% a year or 15% every three years |
| Exit cost | Notice period only | Notice, plus lock-in balance if you leave early | Make-good or restoration, plus lock-in balance |
Read it by column to see what you are buying, and by row to see where a quote is silent — a silent row on a lease quote is a cost you are about to carry unbudgeted. Seven of these rows are simply absent from a broker’s rent-per-sq-ft number.
Define the variables before you compare anything
Open a spreadsheet and create these cells; every formula below reads from them.
| Variable | What it is | Where you get it |
|---|---|---|
| N | Peak headcount over the horizon, not today’s | Your hiring plan |
| A | Square feet per seat, all-in (desks, meeting rooms, pantry, reception, circulation) | 35–60 sq ft; the office space calculator |
| M | Horizon in months | Board decision, before quotes |
| F | Fee per seat per month, pre-GST (coworking, managed) | The quote |
| R | Rent per sq ft per month on chargeable area, pre-GST (lease) | The quote |
| C | CAM per sq ft per month (lease) | Ask separately — it is never inside the rent |
| U | Running cost per sq ft per month on a lease: electricity, DG, internet, IT, housekeeping, security, insurance | Facilities estimate |
| D | Deposit, in months of the monthly outgo | The quote |
| i | Your annual cost of capital | Borrowing rate if you borrow, hurdle rate if you are funded |
| K | Fit-out per sq ft, one time (lease): civil, electrical, HVAC, flooring, furniture, AV | A design-and-build quote |
| e | Escalation as an annual percentage | The escalation clause in the draft |
| S | Entry costs: stamp duty, registration, brokerage, legal | State stamp act plus quotes |
| T | Exit cost: make-good, dilapidation, moving out | The exit clause plus a contractor |
Two deserve a warning. A quietly decides the comparison: a lease priced per sq ft gets dearer as A rises, while a coworking seat does not. And K is where lease budgets die — get a real design-and-build quote, not a thumb rule, before you sign anything.
Carpet area is not chargeable area. Lease rent is charged on chargeable or super built-up area, which includes a share of lobbies, lifts and services; your team sits on carpet area. Ask for both numbers and the loading factor in writing, then run the cost model on chargeable area and the seating plan on carpet area.
The model: three formulas you can put in a spreadsheet
Everything reduces to one output: TCO per seat per month = total cost over M months ÷ (N × M). Compute the numerator three ways, from three building blocks.
Deposit opportunity cost = D × monthly outgo × i × (M ÷ 12). The deposit is not an expense — you expect it back — so it never enters the total. What enters is the cost of the money being locked up, plus a risk line for the part that may not return.
Escalated fee = Σ monthly amount × (1 + e) raised to the number of completed anniversaries. In a spreadsheet this is a column of months and a lookup, not algebra; for 15% every three years, step it at months 37 and 73.
Amortised one-time cost per seat per month = one-time cost ÷ (N × M). This is the line that decides lease against everything else, and it is purely a function of your horizon.
Formula 1 — coworking
TCO(coworking) = Σ[F × N, escalated] + (D × F × N × i × M ÷ 12) + variable extras.
Variable extras are meeting-room overage, printing, guest passes, parking and after-hours air-conditioning. Ask a reference client what they spend beyond the fee, or add a labelled contingency.
Formula 2 — managed office
TCO(managed) = Σ[F × N, escalated] + (D × F × N × i × M ÷ 12) + your customisation capex + agreement stamp duty + early-exit exposure.
Customisation capex is anything above the operator’s standard specification that they ask you to fund. Early-exit exposure is the lock-in balance — a risk rather than a cost, but know the number.
Formula 3 — conventional lease
TCO(lease) = Σ[(R + C + U) × N × A, escalated] + (K × N × A) + S + T + (D × R × N × A × i × M ÷ 12).
Rent is only the first of three per-sq-ft lines, the fit-out enters in full, and two one-time costs that do not exist in the other options — entry (S) and exit (T) — sit in the middle. Run all three formulas at M = 24, 36 and 60 and put the nine results in a grid: the crossover in that grid is the decision.
A worked example, with illustrative numbers
The numbers below are placeholders, round and clearly illustrative; substitute your own quotes. The team: N = 40 seats, A = 50 sq ft per seat (so the lease needs 2,000 sq ft of chargeable area), M = 36 months, i = 10% a year. Say your coworking quote is X per seat per month, the managed office quote Y per seat per month, and the lease Z per sq ft per month plus CAM.
Coworking
Fee: 40 × 36 × X = 1,440X. A 2-month deposit of 80X, locked for three years at 10%, carries 24X. No fit-out, no exit cost, no escalation in this illustration. Total: about 1,464X over 1,440 seat-months, or roughly 1.02X per seat per month. Coworking’s headline is close to honest — the quote is very nearly the cost, plus extras. That predictability is what the premium buys.
Managed office
Say the fee is Y, with 5% escalation at each anniversary and a 4-month deposit. Twelve months at Y, twelve at 1.05Y and twelve at 1.1025Y is 37.83Y per seat, or 1,513Y across 40 seats; the 160Y deposit carries another 48Y. Total: about 1,561Y over 1,440 seat-months, or roughly 1.08Y per seat per month. Escalation and a deeper deposit add about 8% to the headline before anything goes wrong. If the lock-in is 24 months and your horizon 36, add a re-pricing risk line for the renewal.
Conventional lease
2,000 sq ft at Z per sq ft, CAM at C, self-run costs at U, a 6-month deposit, fit-out at K, entry costs S and exit cost T. A 15%-every-three-years clause means no escalation step inside 36 months.
- Rent, CAM and running costs: 2,000 × 36 × (Z + C + U). Per seat-month: 50(Z + C + U).
- Deposit carry: 12,000Z locked for three years at 10% = 3,600Z. Per seat-month: 2.5Z.
- Fit-out: 2,000K. Per seat-month: 1.39K.
Two results fall out of that arithmetic, and they are the whole guide in miniature. Every one unit of fit-out cost per sq ft adds about 1.39 units to the cost per seat per month over three years, because 50 sq ft per seat spread over 36 months is 50 ÷ 36. Fit-out is not a footnote; on a three-year view it is often comparable to the rent itself.
Stretch the horizon to 72 months and the same fit-out costs 50 ÷ 72, about 0.69 units per seat per month. It halves; nothing about the building changed, only M. That is why leases suit long, stable occupation and punish short ones. A lease also consumes management time — a fit-out project manager, an ops person on vendor contracts — which is exactly the cost a managed office removes. Put a notional monthly figure on it.
Break-even logic by headcount and horizon
Run your own numbers, but this is where the arithmetic usually lands for teams in Indian metros. Treat it as a hypothesis to test.
| Team size | Under 12 months | 12–36 months | 3–5 years | 5 years or more |
|---|---|---|---|---|
| Under 10 | Coworking desks | Coworking, private cabin | Coworking cabin or a small managed suite | Managed suite; a lease rarely pays back at this size |
| 10–25 | Coworking | Coworking cabins or a small managed office | Managed office | Managed office; lease only if the location is strategic |
| 25–50 | Coworking | Managed office | Managed office; run the model against a lease | Lease, if headcount is genuinely stable |
| 50–100 | Coworking if you can source the seats, else managed | Managed office | Genuinely close — the model decides | Lease |
| 100–150 | Managed office | Managed office | Lease if the capex is affordable; managed if not | Lease |
One test tells you more than the table. Divide fit-out by the horizon in months and compare it with rent: if amortised fit-out is a large fraction of rent, your horizon is too short for a lease, and a managed office exists precisely to convert that capex into a monthly fee.
The hidden lines that decide the answer
These turn a clean comparison into a surprise twelve months in. Ask about each before you shortlist.
- Lock-in versus notice. Lock-in is the period you cannot leave at all; notice is the warning you must give afterwards. A “12-month agreement with 3-month notice” may mean 15 months of commitment. Ask for both, in writing.
- Escalation. 5% a year and 15% every three years are both common, and are not the same — annual escalation compounds harder over a long term.
- CAM and pass-throughs. A separate escalating per-sq-ft charge, sometimes “at actuals” with no cap. Ask for two years of actual CAM for that building, and whether property-tax rises reach your invoice.
- After-hours air-conditioning. Central HVAC runs to a schedule; teams that work late or at weekends are billed for extended hours. Ask the standard hours and the hourly rate.
- Parking. Almost never in the headline. Ask for bays included per N seats, the rate for extra bays, and whether two-wheelers count separately.
- Meeting-room credits and printing. A sales-heavy team can burn a month’s credits in a fortnight. Ask what a client your size spends on overage.
- Make-good. The lease clause requiring you to strip the fit-out and restore the premises. Negotiate a cap, or a right to leave the fit-out in place, and budget it at signing.
- Stamp duty and registration. A lease from year to year, or for a term exceeding one year, must be registered under Section 17(1)(d) of the Registration Act 1908 and presented within four months under Section 23 — which is why eleven-month agreements are common. Rates come from each state’s stamp act and differ widely.
- Whether the address can carry your registrations. If the workspace is also your GST or MCA address you need the agreement in your entity’s name, the owner’s NOC and a recent utility bill. Many operators charge extra or refuse. Ask before signing.
The clause that most often breaks the model. A lock-in with no shrink right turns a headcount plan that goes wrong into a liability you cannot manage. Ask whether you can hand back 10 or 20% of seats at each anniversary — on a managed office that is negotiable, and usually worth more than a small discount on the rate.
GST and input credit on each option
Renting or licensing commercial premises is a supply of service and attracts GST at 18% on all three options. If your entity is registered in that state and uses the space for business, that 18% is normally available as input tax credit, so your real cost is the pre-GST figure. Build the model on pre-GST numbers and treat GST as a working-capital timing item, not a cost.
| Item | GST position | Effect on the model |
|---|---|---|
| Coworking fee, managed office fee, lease rent and CAM | 18%, creditable if you are registered in that state and use the space for business | Compare pre-GST, and make sure CAM is invoiced to your GSTIN too |
| Fit-out and civil works | Section 17(5) of the CGST Act blocks credit on works contract services and on goods and services used for constructing immovable property on your own account, to the extent capitalised, with an exception for plant and machinery | Assume much of the GST on fit-out is a cost, not a credit. Have your tax advisor classify each line |
A refundable security deposit is not consideration for a supply, so it ordinarily carries no GST when paid; if part is later adjusted against fees, GST applies then. Stamp duty and registration are state levies outside GST, so they enter the model at full value. Two operational points: the invoice must carry your GSTIN for that state and the credit must appear in your GSTR-2B, or it is stuck; and the credit only exists if you are registered there at all, so if the new office is your first presence in the state, registration must be in motion before the invoices start.
Blocked credit is the quiet argument for a managed office. When the operator builds the space and recovers the cost through a monthly fee, you buy a service — credit generally available — instead of capitalising a fit-out on which much of the credit is blocked. On a large fit-out that can move the decision by itself.
How much space do you actually need?
Everything per-sq-ft in the model depends on A, and A is the number people guess at. Plan on 35 to 60 sq ft per person, all-in — that band already covers meeting rooms, pantry, reception and circulation, not just the desk. Nearer 35 suits dense open-plan teams with hybrid desk sharing; nearer 60 suits many cabins, large boardrooms, a customer-facing reception, or labs.
Two adjustments matter. If you are hybrid, plan seats on peak-day attendance rather than payroll headcount. And if you are growing, decide whether to take the space you need at month 24 and pay for empty desks now, or move again later — a seat-expansion right usually settles that better than a bigger lease.
Put your team mix into the office space calculator, use its output as A, then run the comparison again at A plus 10 sq ft. On a lease the answer moves sharply; on coworking it does not move at all, and that difference in sensitivity is itself information.
When to switch from coworking to managed to lease
Most companies do not choose once; they move up the ladder as headcount and certainty grow.
Coworking to managed office
Switch when you are taking enough seats that the operator’s own managed quote for the same floor is lower per seat; when you need your own front door for confidentiality, access control or a branded reception; or when headcount is confident enough to commit to 12 to 36 months.
Managed office to lease
Switch when your horizon reaches five years or more and the amortisation test says fit-out is a small fraction of rent; when headcount is stable enough to size a floor for; when you have the capital and would rather spend it on an office; or when you need something an operator cannot supply, such as a specific floor plate, heavy power or a lab. One requirement is consistently underestimated: you must have, or be able to hire, the facilities capability to run the space.
And the direction nobody plans for
Downwards. If headcount falls, a coworking agreement ends with notice, a managed office at lock-in, and a lease does not end at all — you are into sub-letting, assignment or a negotiated surrender, each needing the landlord’s consent. Read those clauses before you sign.
Compare live options while you model: coworking spaces in Bengaluru and Mumbai, and managed offices in Bengaluru for whole floors run for one company. SimplySetup lists both and can tell you before you visit whether an operator issues the registration kit. If you need a compliant address rather than desks, a virtual office does that for a fraction of these numbers: SimplySetup packages are billed annually at ₹399 a month for a Business Address with mail handling and a name board, ₹799 for GST Registration, which adds the rent agreement, owner NOC and utility-bill kit, and ₹899 for the MCA registered-office kit, plus 18% GST. None of them gives you a desk.
Ten questions to send every provider before you shortlist
Send the same ten questions to every operator and landlord by email. Written answers become annexures to the agreement — and an operator who will not put the after-hours air-conditioning rate in an email will not put it in a contract.
- What is the all-in monthly figure, and what is excluded? Fee or rent, CAM, electricity, internet and housekeeping as separate pre-GST lines.
- What is the lock-in, and the notice period after it? In months, and whether notice runs inside or after the lock-in.
- What is the escalation clause, in exact words? Percentage, frequency and the first date it applies.
- What is the deposit, in months, and how is it returned? Refund timeline in days after handover, and the full list of permitted deductions.
- Which area do I pay on, and what is the loading factor? Carpet area, chargeable area and the factor between them, in writing.
- Who pays for the fit-out, and what specification is included? For a managed office, the specification sheet and the price of every deviation.
- What are the standard building hours, and what does after-hours air-conditioning cost? Including weekend access.
- What is included on parking, meeting rooms and printing, and what does overage cost? Bays per N seats, monthly credits, and the rate beyond them.
- Will you issue the registration kit in my entity’s name? Agreement, owner NOC and a recent utility bill, if the address will carry your GST or MCA registration — and at what charge.
- What does exit look like? For a lease, the make-good clause in full plus assignment and sub-letting rights; for the others, what happens if you shrink by 20% at the next anniversary. And a reference from a client who has exited.
If you run a building or a floor and would rather be on the receiving end of these enquiries, SimplySetup lists spaces through its partner programme.
What to do next
Set the horizon first, with your board, and write it into the brief before you speak to anyone. Fix your seat count and square feet per seat using the calculator, build the three formulas in a spreadsheet, and send the ten questions to every shortlisted provider so the cells fill with written answers rather than assumptions. Run the model at 24, 36 and 60 months and see where the lines cross — that crossover, not any single quote, is the decision. Bring your tax advisor in on the fit-out lines and your auditor in on the draft agreement before you sign. If you would rather have the shortlist built for you, tell us the city, the seat count and the horizon.
Tell us the state, what you sell and where the stock sits. A registration specialist replies with the exact document list and timeline — free.
