While virtualization and working remotely offer distinct cost advantages, startups still prefer physical co-working spaces. These are among the key findings of a survey by Share Your Office, a marketplace startup that allows companies to rent out excess space.

Co-working spaces are excellent for morale and team building, Share Your Office's Stefan Bhagwandin tells us. Happy hour, group dinners and watercooler chats offer a vibrant social experience a team of two or three could not achieve, he says.

As teams grow, startups prefer physical interaction over remote options. Freelancers and sole entrepreneurs preferred shared office space due to social aspects. “Once you start building out a team, it’s really beneficial to be able to slide over to someone you’re working with and say, ‘Hey, can you take a look at this?’” says Glassbreakers founder, head of product and CTO Lauren Mosenthal.

Startups predictably want a few bare essentials when it comes to office necessities, including quiet spaces for meetings and a well-maintained office. "The ability to take tons and tons of calls and not disturb anyone else is really important,” noted DesignLive’s David Head.

They were picky when it came to location. Not only did prime spots offer convenient dining options, startups also wanted safe neighborhoods.

The biggest draw remained the connections that co-working spaces made possible. Lauren says spaces made networking and business development much easier. “Going to events at Galvanize (in Colorado), I got to know a lot of tech people in the community, and then that transferred over to San Francisco. It was so cool to have these relationships span across the country thanks to a co-working space."