Office Space

How to find office space, neither too big nor too small

When a business is ready to graduate from the home office or coffee shop, finding a right-sized office space can be a journey into the unknown. Making the wrong choice might put a promising venture on a collision course with failure.

After working in real estate for more than 20 years, I’ve seen firsthand how office space decisions can set the tone for a company’s success trajectory.

Consider that startup businesses can pay between five and 10 percent of annual revenue on rent, without even accounting for furnishings, technology investment and other infrastructure costs.

Factor in build-out costs of $50 per square foot or more and it’s easy to see how an office space misstep can end up complicating even the smoothest business journeys.

Here are six common mistakes that small businesses and startups should avoid when putting their name on the door for the first time:


        1. Making long-term commitments. 
           Fortunes can change rapidly in business, and the most adaptable companies are well suited to weather any storm. That’s why getting            locked into a long-term lease for office space can be a considerable drain on finances as well as growth.

        2. Don’t get shackled 

Perhaps business is booming and you need more space, but your current lease doesn’t have any options for expansion. Or, if you                 need to trim expenses, a too-rich lease can be the perfect place to start unless your lease agreement won’t allow for renegotiation. Make sure your office has the proper lighting as well. Fluorescent light covers are a great upgrade.

When making decisions about office space, make sure your landlord understands your needs and plans for growth before you get                 shackled to an unfavorable lease agreement that won’t evolve and grow with your business.

        3. Waiting too long to leave the home office

Many startup businesses take years to make the transition to a “real” office from the home office and ad hoc workspaces like                          coffee shops. Most owners are daunted by the costs and hold off on taking the plunge until it’s absolutely necessary.

But as businesses exercise caution, potential customers may become similarly cautious and question the credibility of a home-                      based business, particularly when compared unfavorably against bigger, more established competitors.

Also, the longer business owners wait, the less likely they may be to find the ideal space, forcing them to settle for an imperfect                       solution that may be too big, too small or otherwise unsuitable for their needs.

         4. Choosing a space too far from the action

Collaboration is a popular business buzzword, but it’s an essential spark of inspiration and energy for startups and small                               businesses. That’s why new trends in real estate and urban planning tend to favor industry-specific “districts,” where entire blocks,                 buildings and floors are populated with similarly sized businesses working in the same or complementary markets.

These business communities serve as incubators for ideas, sources for new customer opportunities and referrals and “quality of life”                drivers for employees who want to stay connected.

          5. Deciding solely on price

Finances are always a concern for small-business owners, but when it comes to office space the lowest-priced option isn’t often the               best choice. Deciding on office space with price as the sole motivator can have disastrous consequences.

  A remote location can inhibit customer visits and hamper employee recruitment, while a low-cost space in a high-demand                               neighborhood could have some undesirable qualities, such as aging infrastructure.

Essentially, you get what you pay for with office space, and while owners should always consider cost as part of the equation, it                     shouldn’t be the primary driver; instead, they should assess their wants and needs, determine their “must-haves” and find the most                 economical way to achieve the perfect balance between amenities and costs.

          6. Coming to the table uninformed.

Just as businesses must know their own markets, those seeking office spaces should have a clear understanding of the commercial              real estate landscape in the cities where they operate. They also need to be reasonably well versed in the process of leasing space,              understanding potential pitfalls, and knowing how to negotiate favorable lease agreements.

There are often hundreds (if not thousands) of options ranging from a small footprint in a Class A office building to new shared office             spaces that look, feel and operate like private offices, but with the benefits of a co-working environment.

Once they’re familiar with the process, business owners can then sit down with a broker or landlord and feel confident in their ability               to find precisely the right space for their companies and budgets.

Determining the right office space for a startup company – or an established small business seeking to hang its first shingle – isn’t a simple transaction. It has a lasting impact on growth and profitability, so it pays to take the time and understand the process, market and options available.


Contact: Phil Domenico is co-founder of Assemble, a shared office provider with spaces in Chicago and Minneapolis: 312.388.9590; phil@assemblesharedoffice.com; www.assemblesharedoffice.com.

Phil Domenico