For many, the next big step to scale and level up is their very own physical office space. This is no small commitment, and in this guide we’ll walk you through some of the things you need to consider as you make this pivotal move to find your first office space.
Know Your Budget Well
As you begin your search, it’s crucial that you ground yourself in what you can realistically afford at this phase of your business’s growth. A mistake that some business owners make is convincing themselves that this new office space will increase profits and make them more money. And while that might be true, it’s absolutely not something you should bank on.
As you enter into the world of being a commercial tenant, a rule of thumb when understanding your budget is this: you should be able to spend around 5%-10% of your gross sales (per square foot) on your rent. The way you figure this out is by taking your monthly or annual gross sales, and then divide the location’s total square footage. This will give you the sales per square foot for the month or the year.
Here is a specific example: Let’s say your business makes an average of $250,000 a year in gross sales, and you’re looking at a location that is 1,000 square feet of office space. You’d be making $250 per square foot in sales.
So when looking at your budget, as yourself: Is the space’s asking price more than 5%-10% of your gross sales per square foot? If so, this might not be the ideal office space for you.
It’s also critical that you remember that rent is only one expense. Don’t make the mistake of cutting it so close on what you’re paying for rent that you forget about things like property insurance, utilities, and other fees.
Don’t be afraid to ask the landlord questions. Be sure you find out if there are any maintenance fees for common areas or any other expenses that you’ll be responsible for in addition to your rent.
You know your business’s monthly and annual profit than anyone else, so use that figure as the honest benchmark for what you can comfortably afford per month/year.
Choose the Right Location
When you’re looking at office space for rent you want to be sure that you find the ideal location. The way to do that is by striking a balance among many different factors.
The price per square foot in commercial real estate is most often most heavily influenced by the location of the office space you’re looking at, and it varies greatly from city to city and state to state.
For example, office space in Columbus, Ohio can be as low as $61 per square foot, whereas similar types of office spaces can be as high as $595 per square foot in Washington, DC depending on the time of year and other economic factors. Costs can vary greatly in the same state as well. The cost per square foot for office space in Sacramento, California could be $23, whereas it could easily be nearly double that in Los Angeles.
Your exact location is going to play a large part in how much you’ll have to pay, and here are some things to keep in mind as you choose the location that works best for you.
- Staff: Do you have employees that are going to have to come to this new location? You may want to consider how central it is to your team if they’ll be expected to commute each day. (Also consider any employees who would use public transit or bike to work.)
- Clients: If clients come to your place of business, give strong consideration to how the location would work for them. When considering this, think of where most of your clients are coming from, and ask yourself the honest question: “If the tables were turned, would I drive that distance to see them?”
- Traffic: What are the roadways that lead to your new location, and how much traffic can you expect? A quick tip to figure this out is to put the location’s address into Google Maps and see how long it would take to get there from your home address (be sure you do it during the times you would be commuting for an accurate sampling).
- Parking: Depending on the size of your team and the location, this can be challenging if it isn’t considered. Will there be onsite parking? Will it cost you or your employees? This seems like it might not be important, but bear in mind you’ll be dealing with it daily (sometimes more than once if you have to leave the office and return).
- City Office Space: Spaces in the city are typically central to other businesses, offer dining options, have public transportation connectivity, and have access to local gyms and stores. The downside is that they are often far denser in terms of population and vehicle traffic (this can be a boon for retail spaces due to the foot traffic).
- Rural Office Space: Rural spaces are the converse of the city spaces in many ways, offering less in terms of other locations and amenities, but they tend to be more affordable and offer plenty of parking and privacy. Additionally, what they may lack in terms of quantity, they sometimes make up for in boutique quality. You may find one-of-a-kind restaurants, stores, parks, and more.
Other Considerations and Tips
This is a big step, and sometimes it can be easy to settle. When you don’t have office space at all, any office space can feel like a step in the right direction… but be warned. When the newness fades, and the month’s pass, you want to be sure you chose the right location for the length of your lease commitment.
Here are some more important things to consider when choosing the right office space for rent.
- Always Go In Person: Don’t just look at the photos and drawings of the floor plan, you want to see the current condition, meet your neighbors, and get the feel of the space in person.
- Can You Make Changes? It might seem insignificant, but what if you need to paint a wall, or need to make some minor alterations to the location to create a new workspace? What are you allowed to change?
- Is There a Kitchen? This may not be a make or break for some, but for many, a kitchen allows for employees to prepare and eat food onsite without having to go out for lunch daily, and provides a place to eat and converse.
- Talk to Other Tenants: Don’t be shy. Find some other business owners (in person, or by phone) and be candid. Tell them you’re looking to rent nearby and want their honest opinion. Most people won’t hold back, which can be invaluable as you make your decision.
Let Us Help You Find an Office Space For Rent
Here at Coral Breeze Executive Offices, we specialize in helping people in their search for finding the right office. Whether you’re looking at real estate listings yourself, or happen to be a realtor looking for the perfect space, we might be a fit.
Let’s talk today.