Virtual Office vs Physical Office: Which Is Right For Your Business?

By Rad Aswani

Virtual Offices and Physical Offices

Today, more than ever before, the future of work is about how we work and not where we work. A virtual office is an office that isn’t located in one physical location. Instead, it’s a collection of employees who conduct business from their homes or anywhere with Internet access. A virtual office offers businesses the amenities and services of a traditional office without the costs and maintenance of one. Does your business need a virtual office vs a physical office? Both have their pros and cons but it depends on what you need from your business space. Here’s everything you need to know about virtual offices and physical offices so you can make the right decision for your company.

What is a Virtual Office?

A virtual office, also known as a virtual workspace, is a location-independent business that does not have a physical office space. If you use a virtual office, you can work from wherever you want. You can work from home offices, coffee shops, coworking spaces, hotels, airports, or just about anywhere. Virtual office software lets you use online collaboration tools, engage in burst conversation, brainstorm with colleagues, and much more. 

A virtual office mailing address lets you have the physical place to receive mail, which is the high cost of having a physical office. Some places that offer virtual business addresses, also offer pay-per-use conference rooms, phone number routing, and a receptionist or co-concierge that can assist with setting up appointments, buying business cards, and administrative tasks.


What is a Physical Office?

A physical office is a central business location where employees go to work. . Physical offices can have a formal address for your business and have many business amenities such as receptionists and phone systems to name a few. Some companies will choose for their office to be located in a coworking space. These companies subdivide larger office spaces into flexibly sized smaller offices. Having a physical office provides a central work environment for employees and external people to physically meet. Companies often locate their physical offices in high-traffic areas with access to transportation and amenities such as cafes and restaurants.


Which Is Better: Virtual Office or Physical Office?

The decision to use a physical office vs a virtual office depends on your business goals and needs. Typically the first question a company’s leadership asks is what kind of organizational strategy we want to employ: 100% in-office, fully remote, hybrid, or remote-first. If the organization chooses in-office or hybrid, then a physical office will be required.

Physical office spaces allow all your employees to be in one central location. They offer an environment that provides face-to-face communication and they can also be a great way to show off your brand with a custom address or building sign. 

If your organization chooses to adopt a hybrid, 100% remote, or remote-first workplace strategy then, the company should invest in a virtual office. They are a great option if some, all or just part of the time team members will be working from anywhere. These organizational structures allow employees to work from home offices, coffee shops, parks, airplanes, hotels, and anywhere else with Internet access. It’s a great option if you have employees who work from home or are located in different parts of the world. It’s also a good choice if you want to avoid the high costs of owning or renting office space.

Benefits of Virtual Offices

With virtual office software, businesses can provide their employees with the ability to access company resources and collaborate with colleagues from anywhere. This flexibility can be a major advantage for businesses, as it can help to reduce overhead costs and increase employee productivity. In addition, virtual offices can also help businesses to attract and retain top talent, as more and more workers are looking for flexible work arrangements., a business journal run by powerhouse venture capital firm Andreessen Horowitz, predicts that companies who employ remote workplace strategies “Will win the war for top talent.” 

When considering virtual office vs physical office, it is important to weigh the pros and cons of each option in order to decide what is best for your business. However, there are many benefits of a virtual office that make it an appealing option for businesses of all sizes.

Cost. Virtual offices cost a lot less than physical offices, typically around 1-5% of the equivalent physical office The biggest cost savings are from real estate, utilities, and furniture. You can also avoid paying for things like cleaning and property management. 

Flexibility. Virtual offices are easy to set up and never need to be relocated. Your virtual office is wherever you are in the world, even if that place changes.

Convenience & Flexibility. Virtual offices are more convenient to use than traditional offices. They give companies greater flexibility since changing office space due to headcount change is cheaper and happens instantly. Virtual offices are easy to set up and many virtual office software providers offer monthly plans.

Employee Satisfaction. Virtual offices positively impact employee satisfaction. This is because many hybrid and remote employees can feel like they have limited social interaction, lack a sense of belonging to something larger, and feel like they aren’t being “kept in the know.” 

This can easily be changed if managers look at their employees like people rather than machines. Although working hard and getting the job done is important, it’s equally important to make sure your team members have downtime to interact with each other apart from “work talk”. 

Virtual office software help bridge this gap by allowing employees to run into one another on the way to meetings or hang out in the common area for lunch. Overall, this helps build company culture and productivity, which plays are key to running a successful company. 

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Disadvantages of Virtual Offices

Virtual offices are becoming increasingly popular. The rise in popularity is due to there many advantages. But like with anything there are also disadvantages to consider. 

Need Good Internet. Virtual offices are dependent on having a good and reliable internet connection. Just like a physical office, a virtual office needs a strong internet connection to show up and get work done. Thankfully, the internet is all you need to access your virtual office, which gives employees the flexibility to work from anywhere.

Adoption Curve. Working remotely can negatively impact communication. Employees who work from home tend to rely heavily on asynchronous communication.  The reason for investing in a virtual office is to solve this problem, and move distributed team member communication from asynchronous to synchronous, and ideally burst communication. 

But like anything, people are always resistant to adopting new things or changing how they currently do something. Therefore the onboarding of employees to a virtual office needs to be planned and effectively communicated to employees in order to be successful. This does create a higher barrier to adoption which can be viewed as a disadvantage. 

Benefits of Physical Offices

Just like virtual offices, physical offices have benefits to consider as well. For one thing, working from home can be isolating. Many of the problems that a virtual office is able to solve, poor company culture, departmental silos, and communication issues are also fixed by a physical office. Ultimately, the decision of whether to have a physical office or not depends on your organization's needs and preferences. Physical offices are best for companies looking to employ a hybrid or in-office workplace strategy.

Brand Presence. Physical offices offer brand presence. They show customers and clients that your business is legitimate. How your physical office looks is a sign of the company's success. 

Communication. Physical offices can positively impact communication. It's very easy for coworkers to collaborate and communicate with one another. 

Limited Distraction. A physical office gives employees a sterile environment that is free from distractions. Many employees appreciate the clear boundary between work and home life, allowing them to focus on the work-related matter while in the office. 


Disadvantages of Physical Offices

There are a number of disadvantages to having a physical office, especially when compared to alternatives like a virtual office.

Cost. Physical offices cost a lot of money. They require large upfront investments outside monthly carrying costs. These include building out the and furnishing the office space. Renting or owning a physical office also has a lot of ongoing costs. including utilities, maintenance, furniture upkeep,  and office supplies to just name a few

Not Flexible. If you need to downsize or move to a new location, it can be difficult. Many commercial leases are signed in 5 or 10-year increments. While coworking companies offer flexibility, that comes with additional costs as these companies charge a hefty premium of the flexibility.

Attracting Talent. In this day and age, the top employees are increasingly demanding to work remotely or have a more flexible work environment. You can see this with the ongoing failure of companies like JP Morgan Chase, America’s largest bank, and global tech giants Google and Apple to get their employees to give up their work-from-home benefits after the pandemic. 

The business that utilize physical offices face two specific changes. 1) it limits their ability to attract talent to specific geography. And 2) it limits their applicant pool to lower-quality candidates who lack the leverage to demand a remote working environment. 

Common Comparisons of a Virtual office vs Coworking Space vs Home Office

Since virtual offices are still fairly new, it is easy to get it confused virtual offices with working from home and coworking spaces. All though these teams are similar and may be used complementarily to describe an organizational structure, they do not mean the same thing. Here are some clear definitions. 


Virtual Office vs Coworking Space

Virtual offices are offices that exist virtually on the internet. Sometimes, people refer to this as a metaverse. While coworking space is a shared physical office where people in the same and different companies come together to work.

Coworking spaces offer a physical office without a long-term commitment. An added benefit of coworking is that if you are at a small company there are other non-company professionals to interact with.

The main difference is that virtual office software allows you to work from anywhere, While coworking space is a physical office in a fixed location. It is important to note that many remote workers who use virtual office software have working space memberships.

Virtual Office vs Home Office

When it comes to setting up a home office, you can use virtual office software to stay connected with your coworkers. A home office is just a designated part of your apartment or home where you perform your work. Often the two things are complimentary. 

Although you don’t need to have a virtual office to have a home office, it is recommended. To maximize productivity, many people who work from home build out their home office with additional monitors, desks, and office chairs.

Physical Office vs Coworking Space

In recent years, there has been a rise in the popularity of coworking spaces, which are shared work environments that can be rented by the day, week, or month. Coworking spaces offer a number of advantages over traditional offices, such as greater flexibility, a more collaborative environment, and a sense of community. 

However, there are also some key differences that should be considered when choosing between a physical office and a coworking space. One key difference is cost. Traditional offices typically require a long-term lease, while coworking spaces can be rented on a more flexible basis. This level of flexibility comes with a much higher rental price per square foot. The atmosphere is also very different in both locations. Physical offices tend to have a more formal atmosphere that can be branded to your company, while coworking spaces often have a more relaxed and informal vibe that isn’t branded to your company. Coworking spaces typically offer a wider range of amenities than traditional offices, such as bike storage, and showers. 

Physical offices are a great choice if you have employees nearby. You can hire them and let them work in your office. However, if you don’t have employees nearby, a coworking space is a great choice, that way you can incorporate the use of virtual office software to stay in touch with colleagues while still giving people a physical space to work.

When choosing between a physical office and a coworking space, it is important to consider your needs and preferences. If you value flexibility and community above all else, then a coworking space may be the right choice for you. However, if you prefer a more traditional and branded work environment then a physical office may be the better option.


Physical Office vs Home Office

When it comes to office space, there are two common terms you may already be familiar with: a physical office or a home office. Each has its own advantages and disadvantages, depending on the type of business and the needs of the employees.

A physical office offers the benefits of an in-person environment, including access to meeting rooms, common areas, and support staff. It can also be more expensive, both in terms of rent and utilities. On the other hand, a home office carries no cost to the employer. Additionally, employees tend to value the fact that working from home offers greater flexibility in terms of hours and working arrangements. Many parents will choose to work early before their kids wake up and/or after their kids go to bed to give themselves more family time.

Remote Teams, Hybrid Teams, and Distributed Teams

In a rapidly globalizing business world, more and more companies are adopting remote, hybrid, and distributed team organizational models in order to stay competitive. But what exactly do these terms mean?


Remote Teams

Remote teams are made up of employees who work from different locations. They can work from a coworking space, their home, or anywhere. They use tools like online collaboration tools and virtual office platforms to stay connected and work together.

Hybrid Teams

Hybrid teams are a mix of remote and on-site work. Employees usually spend part of their time working from home or a place of their choosing, and the rest of the business week working from a physical office.  To run a successful, hybrid company having excellent communication tools is key, that's why many of these companies have a virtual workspace platform. 

Distributed Teams

Distributed teams are made up of employees who work from different locations. These companies can also employ a hybrid organizational structure. But teams and offices are spread across different physical locations around the globe. This creates a need for cross-team and organizational communication. Many distributed companies turn to a virtual office applications to fill this need.  

The Bottom Line

Overall, both virtual offices and physical offices have their benefits. It all depends on what you need from your business space. Virtual offices are often cheaper than physical offices. They don’t require a long-term commitment and they offer more flexibility. Physical offices are great for companies with employees in the same geography.. They provide a professional work environment and offer the convenience of being able to work in the same space.

Transform the way your team works from anywhere.

A virtual office in Kumospace lets teams thrive together by doing their best work no matter where they are geographically.

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Rad Aswani

Rad has over 7 years of experience in Marketing. Currently, she is the fun Digital Marketer at Kumospace. She leads initiatives such as influencer marketing, SEO management, and social media to name a few. Outside of work, Rad enjoys traveling, working out, and spending time with her family and friends.

Transform the way your team works.