Searching for Office Space as a Startup
For many startup companies, searching for office space can be a challenge:
Where to Start:
When searching for new office space, it’s important to understand the growth you foresee over the next 12 -36 months. This will help determine your plan of attack when searching for space. Most commercial office space leases require a minimum term of 36 to 60 months. If your new space needs modifications, the landlord may give a tenant improvement (TI) allowance, for these modifications. The amount given is usually based on credit worthiness and term. Being a new business, having great credit established is slim; therefore, the alternative is giving more term for TI dollars.
How to Navigate:
There are ways to navigate these situations and take the adequate amount of space when needed. First find a qualified Commercial Real Estate Broker in your market who has experience working with startup companies. A knowledgeable CRE Broker will also be able to help identify the amount of space you will need.
When working with startup companies in high growth industries, below are a few points to consider:
- Have your CRE Broker search for sublease options. Subleases are cheaper than direct space and have shorter term leases and may come with furniture.
- If there are not any sublease options that fit your needs or desired area and you have to look at direct space options, you can protect yourself by having your broker negotiate expansion options within your lease. Expansion options help as they enable you to take the adequate amount of space needed now with an option to grow into bigger space when needed.
- For companies with 1-4 people who do not need individual offices, co-working space can be a great option. They usually run on month-to-month leases giving great flexibility. They also lend well to companies looking to connect with other startups as they are a haven for entrepreneurs and people looking to connect.