10 July 2019/ rent_serviced_office_guide

5 tips for start-ups seeking office space

Advice to help you find the right home for your new business.

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Most entrepreneurs, start-ups, or young companies searching for a work space for the first time may not know where to start looking – and have plenty of questions that need answering. What are the rent prices in their market? How important is location? What are the basic needs for an office? Here, David Marino, executive vice-president of commercial real estate firm Hughes Marino, shares his five essential factors when looking for space for your growing business.

1. Focus on location first

While there’s a temptation to keep costs to a minimum by looking at the least expensive options, cheap space is generally found in less central locations, meaning your team will have longer commutes. In the first few years of a company's life, the founders are usually working overtime, and every minute is valuable, so choosing the right location is key. What’s more, the first space that a company leases will likely be smaller than 4,000 square feet, so the cost per square foot between a prime location and an inferior one may not be as much of a concern as it would be for larger organisations. For example, a £20,000 a month premium for 4,000 square feet in London’s uber cool Spitalfields might sound like a lot of money. But, with 20 people in a space of that size, that’s an incremental cost of £6.94 per hour per person, given a 150-hour work month. Compare that with a similar set-up in Slough. The £12,000 a month rent may look good on paper, but, using the same cost per hour per person calculation, it’s only £2.94 cheaper. And which location would you (and your employees) rather work in every day? Don't let rent alone drive your decisions.

2. Think about what you’re investing in

 

Better space and a vibrant location will also have a positive impact on company culture, the ability to recruit and retain talent, and the outcome of work productivity – if your office fosters creativity and inspires people then it follows that they’ll want to work hard for your business. Having a location that has amenities such as an on-site gym or lively café culture nearby will help attract key early employees. It will be worth the extra cost to have a space that’s safe, smart, professional – and is in a well-maintained building with swish bathroom facilities, reliable air conditioning, regularly serviced lifts and a welcoming concierge in reception. While that generally means paying more, most companies see the value in that decision.

3. Measure the right amount of space

Many early stage companies either lease too much space and expect to grow into it, or not enough space to have room for future growth. I recommend initially taking a space to accommodate the first year's worth of growth. Most early stage companies with an open office configuration can plan for 160-170 square feet per person, which includes the break areas, conference rooms, storage, utility areas, reception, bathroom facilities, and more. For example, if a company needs space for 10-20 people, 2,000-4,000 square feet would fit a team of that size nicely.

4. Select shorter lease terms

Never sign a lease longer than your company has been in business. A five-year lease is standard but can be fatal to a company that’s only been in business for two to three years. For smaller spaces below 5,000 square feet, many landlords will consider a shorter-term lease for two years, so it’s always worth negotiating. For young companies with few employees, a co-working option, where you pay for a desk, a private office, or an area within a larger managed space, could be the better option.

5. Find a tenant representative


Most commercial brokers do not work for you as the tenant, but rather for the landlord of the building you’re considering. That’s why it’s essential to get a tenant representative who focuses solely on your needs, rather than being tied to the leaseholder or landlord. Find a broker who’s going to be on your side, complete in their sourcing of spaces, including subleases, and who’ll be an advocate for your company's needs.

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About the Author: David Marino
David Marino is executive vice president and co-founder of Hughes Marino, a commercial real estate firm committed to only representing tenants in their lease and purchase transactions of commercial space. David has been exclusively representing tenants since 1991.