Picking an office space to rent — whether it’s the first lease for a startup or an established firm that has outgrown its current location — is a major step for any company. This is still true despite the fact that working from home is still the norm almost a year into the COVID-19 pandemic, as more than half of Americans don’t see remote work as an end-all-be-all solution.
In fact, many real estate experts are expecting that the office will maintain its status as a central spot for most companies. Consequently, whether a full return to the office is eventually possible or the office space becomes a sort of hub in combination with flexible, work-from-home schedules, companies will likely continue competing for office space in Manhattan and in all other commercial real estate markets in the U.S.
As such — just as it was before the pandemic — selecting the right office space to fit your company is an essential step. So, to help you check every box, we put together a list of things to consider when choosing an office space to lease.
Know Your Company
Unless you have the funds to design and build your own headquarters like Apple, there’s no such thing as a tailor-made office space. However, by knowing the ins and outs of your company and its needs, it’s possible to get pretty close to the ideal office space.
For instance, everything from the square footage to amenities and location will vary based on your company’s unique situation. And, while established firms will have a better idea of what their needs are, startups or smaller companies will need to make informed decisions. At any rate, knowing your organization inside and out is the first step to finding the perfect office for your operations.
Start with the Layout
If you don’t know where to start, begin by thinking about the office layout that would suit your company the best.
Prior to COVID-19, open office plans were all the rage, thanks to their collaboration advantages and the innovative atmosphere they foster. And, although open space offices are still a possibility in a post-pandemic world, you’ll probably have to sacrifice at least one of its advantages — the smaller square footage per desk — to ensure a safe and healthy environment for employees.
Alternatively, you might consider office layouts that offer more privacy and separation between coworkers, such as cubicles or private offices. That’s because, despite being less efficient in terms of space and hampering collaboration to some extent, they’re also a go-to for privacy and security.
Meanwhile, weigh your options and choose the ideal office layout based on your industry and the type of employee interaction that it entails. For example, large real estate companies vs small ones will have different needs when it comes to choosing an office space. Just keep in mind that, while some landlords offer flexibility in terms of desk layouts, that isn’t necessarily true in all cases.
Continue with the Basics
After you’ve decided on a layout, continue pinpointing the basic characteristics of your future office space, specifically the actual square footage you need. For instance, knowing your number of employees and office layout should give you an approximate range of square footage necessary for your future office space. Remember, this figure should allow you to give everyone enough room to be safe and productive.
In addition to adequate desk space for all employees, ensure that the common areas and restrooms also allow for social distancing. And, when considering the number of meeting rooms you need, keep in mind that a work model that alternates office time with telecommuting will likely require more space for calls and conferences in order to keep everyone connected.
Discuss it with Employees
Before making any major decision — such as moving offices or leasing another space — talk with your employees to learn about their needs and requests. Besides reassuring them that your company cares for their wellbeing, this could also uncover new perspectives on the needs of your organization. After all, career development during the pandemic is not easy by any means, and cooperation between all levels of the company is essential.
You may also have to consider the impact a vaccine will have on the housing market, once it’s widely available and administered. The real estate market is likely to boom, creating more demand for residential and commercial real estate, and consequently causing prices to rise exponentially. If you’re thinking about choosing an office, keep this in mind.
In particular, genuinely listen and find out what most concerns are centered around. For example, if most employees are worried about safety precautions, look for office spaces with ample outdoor areas, opportunities for social distancing and great hygiene standards. Or, if the majority are dissatisfied with commute times and would prefer to stay out of crowded urban centers, consider looking for suburban office spaces. If your business requires you to be in a big city, make sure it’s one that has a great public transportation system in place.
Location, Location, Location
While we’re on the topic of office space location, we all know the mantra that location is everything. As such, you need to decide whether you prefer the advantages of urban areas and central business districts — including proximity to other companies and institutions or a prestigious address — over lower-density areas, which can be advantageous for commuting by car.
To that end, consider your company’s culture and the characteristics of your metro area. Specifically, if you want to promote green commuting and your city has great commuting options while also being walkable and bikeable, a centrally located office may be a good choice. At the same time, many innovative tech companies are choosing suburban areas for their state-of-the-art office hubs.
Lease Rates — What You Need to Know
As is the case with any investment, start by setting a budget based on your estimated office space needs, your preference for location and any other characteristics that you require, such as amenities. You can then filter potential office spaces based on an estimated monthly or yearly lease rate.
However, keep in mind that not all lease rates are the same. Generally, they fall into one of three categories: gross leases, triple net (NNN) leases and modified gross leases:
- Gross leases — sometimes called fixed leases — are when you pay exactly the same lease rate each month and the owner covers any other operating expenses.
- In the case of triple net leases, in addition to the lease rate, you also cover your portion of the building’s operating expenses, maintenance and property taxes, which are based on the percentage of the building that you have under lease.
- With modified gross leases, you pay your lease and some specific operating expenses among those mentioned in triple net leases, according to the lease agreement you negotiated.
Clearly, each lease type has its advantages and disadvantages. While a fixed lease allows you to plan your budget ahead of time with a much smaller margin of error, paying for additional expenses may also give you additional freedom in managing and even designing your office space. However, this may also mean that you’ll have additional responsibilities related to co-managing your space. Therefore, think extensively about which type of lease would suit your company best.
Know Your Landlord & Fellow Tenants
It’s essential to develop a relationship with your landlord before signing the lease agreement. Keeping in touch and collaborating early on will build a strong foundation for working together down the road. Plus, establishing rapport is even more important if you plan to sublease an office space from another company, as they could give you useful pointers about the property and its landlord.
Finally, doing a bit of tenant research before signing a lease can also help you get a better idea of what to expect once you move in. For instance, you might learn which areas could need investment in the future and even connect with a few contacts if you’re just starting out.
Don’t Forget the Details
Besides the obvious points like rentable square footage, location and lease rate, there are plenty of other details and small characteristics of an office space that could make all the difference in the world once you move in.
For example, the availability of natural light and interior colors are an underrated factor in productivity and employee satisfaction, so make sure you’re not stuck with an ideal office space that only features artificial lighting. Likewise, research the available furniture, internet speed and the quality of the HVAC system. Your previous discussions with employees could prove to be very useful at this point, as they could prevent you from overlooking any detail that ruins an otherwise perfect office space for you.
Pay Attention to the Lease Agreement
If you’ve completed all of these steps and found an office space to your liking, the final step is to pay attention to the lease agreement itself. Specifically, confirm that you’re perfectly clear on all of the various points and obligations, while also ensuring that all of your needs are represented. This could include the possibility of a lease extension at the end of your agreement or other considerations, such as rent deferral clauses. And, because this is such an important step, consulting with a real estate agent is strongly advised.
It’s not yet clear how much time we’ll be spending in a physical office in the future. However, moving into a new office space is a significant step in turning any innovative idea into a profitable reality. So, put together a clear-cut plan and follow these steps to ensure you start off on the right foot.