Searching for an office can be a daunting task. One key to managing the office space search is breaking down the process into a logical series of steps and measuring the most important features of each option. The other key is to start at the beginning and allowing the process to reach the natural point of decision. It may be tempting to jump to conclusions when you see a space that seems to fit an image you’ve conjured, but skipping a step in the process virtually guarantees either a nasty surprise or will require restarting the process from the beginning. The most common ways for a company to twist its own knickers is to: select a space before evaluating their needs (including growth); plan for improvements before receiving pricing, or focus on one spot without finding viable alternatives.
Believe it or not, taking it from the top is faster than the “ready, fire, aim” approach.
Sorting and comparing your office space options becomes the key part of negotiation and decision making. Every analysis of options should also be viewed from the perspective of objective (quantifiable data) and subjective (intrinsic value or marginal utility).
Before starting any search, you should have some idea of what you’re trying to find. Your search parameters may change over the course of the process, as needs are refined and you see what kind of bang is available for your buck, but the starting point for any real estate search should address these considerations:
- Cost – Rent + Furniture, Fixtures & Equipment (FF&E)
What should you consider for each of these categories? Here’s a quick guide:
Location – Obviously, your search starts with where you’d like to land. There’s a timeless truth to the old adage that the three most important things about real estate are “location, location and location.” Location may be driven by proximity to customers, amenity rich neighborhoods, ease of commuting and ability to recruit employees. Last but not least, the primary driver for many location decisions is often what’s most convenient or desired by the CEO.
Cost – Rent (the product of rental rate and rentable square footage) is first and foremost in the cost equation, but there are a number of other considerations for calculating total occupancy costs. Utilities and building operating expenses may be additional costs. Furniture can be a major capital expense for any organization considering open plan offices. Benching and workstations options can range from $500 to $2,500+ per person, so getting your arms around how you plan to provide workspace for your team can have a significant impact on your budget. Information Technology (IT) including internet, WiFi, phones, wiring need to be included. Equipment costs typically include purchasing or leasing a multi-function copier/printer/scanner, postage meter, etc. Pantry costs should also be added to the mix if you’re considering coworking options or plan to provide a pantry for your employees.
Size – Simply determining the amount of space you need depends upon the type of space you’re planning to consider. Coworking options are typically priced per desk. Shared subleases and executive office operations are priced per office, while standalone suites are typically priced per rentable square foot. The best way to compare disparate methods of determining size is to set the number of workspaces needed for your team and compare options on a per person or total monthly basis.
Quality – While the concept of “quality” is certainly subjective and a function of your own marginal utility, there are a number of quantitive benchmarks for comparing quality of your options. Building age, HVAC systems, interior finishes, common areas (bathrooms, building & elevator lobbies), elevator perfomance, parking garage layout & operation and property management are all good points for comparison.
Timing – How quickly to you need to move or occupy your new space? Typically the earlier you’re able to occupy vacant space, the greater your leverage for negotiating favorable terms. If the space you desire is currently occupied, do you have any flexibility in your move date? Note that Term & Timing go hand in hand. Furniture can add several months of lead time to “move-in ready” spaces. Spaces that require construction of new improvements need a much longer lead time before being ready for occupancy. Significant improvements to a space also requires a longer lease term (for the landlord to recover it’s capital costs).
Term – How long of a lease term should you commit? Moving is a pain, but being forced to move because you’ve run out of space can be very expensive. Carrying extra space to accommodate your team’s planned growth can also be expensive. A good rule of thumb is if you want to keep the length of commitment to 12 months or less, focus on Coworking and shared sublet options. If you’re working with a 3-5 year horizon, focus on turnkey options. If you’re comfortable with a 10 year term and need larger space built to your specifications, consider build-to-suit options.
Amenities – A highly amenitized building can create a ton of value for your organization by greatly reducing the amount of space your team needs to lease and delivering higher marginal utility (value). Buildings offering generous common area collaborative spaces, conference rooms, fitness centers, roof decks, secure bicycle parking & repair rooms allow you to lease smaller, more efficient dedicated space, while boosting the perks available to your team.