Of course we're in SoCal and use an economical coworking space. Are there no such things in the Bay or do they cost way more?
How much are you paying your engineers? 3% of burn sounds pretty low, but it's not completely out of the range of what I just penciled in here. (I was prepared to disagree... but the numbers aren't crazy on either side.)
Our #1 expense by a massive margin is employees and associated benefits. #2 is probably the combined cost of hosting and SaaS services we use (AWS/OVH/DO/Vultr, Gusto, Xero, Slack, Zendesk, etc.). #3 is probably a tie between travel and other incidentals like accounting and computer hardware, and our coworking space. The rest is change.
I guess some people just splurge on office space. I don't know what kind of office you'd have to be getting for it to even approach labor cost for a startup. Personally if I were an investor I'd do everything I could to veto that since it's insane and wasteful.
Does it help with recruitment? Maybe, but personally I'd rather work for a hip company in a garage than a boring company in a posh office. Maybe that's the problem.