The decision to rent office space is an exciting but consequential choice that will help shape your company’s growth and success. Are you tired of working from home and need a separate space to get work done? Or have you outgrown coworking and need your own dedicated office? Not 100% sure whether to sign a lease? Don’t want to get stuck with a long lease? This guide will walk you through the process of renting office space, from determining your needs to exploring different options.
Step 1: Assess Your Office Space Requirements
Estimate the Size of Office Space You Need
Just as companies come in all shapes and sizes, so do office spaces. A range of 125 square feet to 225 square feet per employee is relatively standard, so the minimum rule of thumb is to account for at least 125 square feet per employee. For a 10-person team, that’s an office space of at least 1,250 square feet. To put this in perspective, coworking spaces typically offer less than half of that for their private offices, so expect a meaningful step up in breathing room.
Consider Location
Office rents can vary widely depending on the neighborhood where you seek to work. For example, New York City office rents are currently at around $57 per square foot per year, yet in NYC’s Plaza District, office rents are hovering at $91 per square foot–a 60% markup. Websites like LoopNet serve as a great tool to browse current office space listings in any city across the U.S. and Canada. Getting exposure to current listings and their asking rent prices will help you narrow down the scope of your search.
Beyond pricing, consider what type of neighborhood you want to work from. In San Francisco, for example, there are dozens of neighborhoods with different architectural styles, work cultures, and restaurants available. Make sure to consider all these factors, plus obvious elements like commute time, to find your perfect spot.
Consider Amenities
Office rents can also vary widely depending on the amenities a building provides. Older buildings may offer nothing but office space and an empty lobby, while newer buildings could offer a fitness center, bike storage areas, lounge areas, event spaces, etc. Overall, your search will be much easier if you have a clearer understanding of your criteria–if you only want secure parking, make a note of that.
Step 2: Set Your Budget
Calculating Rent Costs
Office spaces are typically listed at a price per square foot (“PSF”) per year. In our example, we used the current NYC office market rent price of $57 PSF/year. At 1,250 square feet for a 10-person company, that’s $71,250/year or $5,938/month in rent costs.
That math is: (Price per square foot) * (square feet) / 12 = monthly rent cost.
Additional Costs
Certain markets or office buildings will tack on monthly Common Area Maintenance (“CAM”) charges, which could amount to an additional $10+ PSF, or $1,250+ each month for a 1,250 square-foot space. Beyond that, there are plenty of additional costs that you may not even be thinking about: snacks, office supplies, janitorial, wifi, office management labor. These can quickly add thousands to tens of thousands of dollars per month in added cost, depending on the size of your business. When considering potential office spaces, make sure that you’re on the same page about the true total cost of any office space you’re considering.
Term Length
Typically, landlords prefer longer leases (more security) and tenants prefer shorter leases (more flexibility). While it may be possible to find a landlord willing to sign a 1-year lease, 5-year leases are most common, with 3-year leases becoming increasingly popular in these uncertain times where hybrid work has become the new norm.
You know your business best, and you definitely don’t want to be sweating over a multi-year lease. If you’re confident about the stability of your business, you can secure more landlord concessions by expressing a willingness to sign a longer-term lease, such as 7 or 10 years. Landlord concessions come in the form of either free rent (like “6 months free”) or Tenant Improvement Allowance (such as $50,000 for renovating your space). If you’re negotiating a multi-year lease, your broker should be helping you understand everything in play.
Step 3: Consider Alternate Models of Signing Office Space
Alternatives to Signing a Lease
If you believe your company is ready to sign a multi-year lease, congratulations! You’ll want to hire a tenant-rep broker to help you with your search: a real estate professional that is your dedicated side kick in finding an office space with a traditional lease. Choosing the right broker is your first critical decision during this process, and having someone you trust on your team can make or break this mission. While they are great assets to your team, you should align with your broker on their fee structure. Most get 2-6% of a lease’s value paid by the landlord, but others may require other payment as well.
If you don’t think your company is ready to sign a multi-year lease, then you have other options. Either way, even if you’re set on signing a lease but need space in the meantime, you can explore coworking, subleasing, or Tandem.
Coworking
Quick note if you are new to coworking: yes, there are coworking companies other than the infamous WeWork. Just type “coworking in X area” and plenty of ads will pop up.
As Covid revolutionized the way we work and remote work has surged, more and more people have flocked to coworking spaces to get out of the house. Coworking offers a truly flexible option for individuals to pay for desk space on a monthly or even hourly basis.
Originally created for individuals looking to bounce between a few locations–like a monthly gym membership–coworking is naturally best suited for individuals. In a typical coworking office, you don’t have a dedicated space that you or your team can reliably return to. Plus if your team has equipment to store, overall costs can rise quickly.
Coworking is definitely the best option for individuals who can pack up their bags each day and work in a professional environment outside of the house. Yet if your team needs dedicated office space that you can call home, consider:
Subleasing
Like subleasing an apartment, you can sublease office space. However, similar to the apartment sublease process, there isn’t a simple, centralized database for all active office subleases. Again, LoopNet is your best bet, and you can filter by sublease space in the office category.
Something to note: subleases offer you, as the prospective tenant, much less control and fewer options than the traditional market. While you can possibly score a six-month fully-furnished sublease, typically companies that are subleasing office space are looking for tenants to take over the entire lease–leases that could even run for another 5+ years.
So if you are exploring the sublease route, keep in mind that pickings are much slimmer, and there may only exist a couple of options in your city that meet your criteria. If you do see a sublease space that catches your eye, we again recommend bringing in a broker to speed up the process and get to signing. Unfortunately, it is more likely than not that you will quickly exhaust this option. So if your team has outgrown coworking and can’t find a suitable sublease space, but you still seek a flexible solution, we recommend that you…
Step 5: Consider Tandem
If you’re looking for office space in San Francisco, New York, or Los Angeles (with more cities to come) and you don’t want to sign a traditional lease, we encourage you to consider Tandem. We’re the new flexible office space solution that matches you with existing office tenants looking to shed extra space, and here is what sets us apart:
Flexible Lease Terms & Fast Move-In
Unlike a traditional lease or sublease, we offer month-to-month flexibility, allowing you to move out anytime. Additionally, while it can take months to years to finally move into your office under a traditional lease, we can move you in within days.
More Options than Coworking
Coworking companies often own their spaces, so they only have a handful of office spaces to offer in each major city. And as we mentioned earlier with subleasing, options are often slim. Right now, Tandem has 200+ active office spaces in San Francisco, New York, and Los Angeles. With more to choose from, you have a much higher chance of finding the perfect match for your needs.
Rent Savings
Tandem is not only a more flexible option than traditional leasing, but a cheaper one. On average, Tandem users save 20%+ on monthly rent. Businesses need offices, and we hope to provide affordable spaces so that you can reinvest in your business instead of drowning in rent costs.
Energizing Office Environment
We help match you with companies that are ready to welcome more people in their environment. Think of it as office roommates, but you still get your own dedicated space. With more people in the office, Tandem offices are lively and inviting. It’s not uncommon for companies that met through Tandem to host office parties together. Now that’s building an office culture.
Dedicated Space
Like a traditional office lease, your team will have a dedicated space where you can reliably store equipment and return to. And unlike coworking, where you deal with booking credits or may confront hourly restrictions on meeting rooms, your Tandem office space is simply a space that is yours–with no limitations. If you want to explore active shared-space listings, check out our map here.
Curious? Explore active spaces on our site to get started today. If you know someone with extra office space, send them here.
Questions? Contact us directly at info@tandem.space. Our team responds to every email we get.
