How to Evaluate Your Office Leasing Strategy
With many regions of the country currently facing a surplus of office space, it is a favorable market for those considering new office space. If you're thinking about making a move, it could be beneficial to think broad: consider alternative spaces and effective workplace design in imaging a space that would be ideal for your business. Doing so early in the process, can open up a dialogue with your current landlord within the context of a very competitive real estate market.
Cost considerations might be the main factor in considering a new office space, but keep in mind there are other factors to consider when determining whether to stay in your current office space or relocate. The issue of price isn't as simple as comparing dollars per square foot – your space should support your business needs and goals.
Leasing an Office Space: Assess Your Present and Future Needs
Before touring new office spaces or calculating lease costs, it is crucial to evaluate the needs of your company from a space perspective.
What are your square footage needs? Space needs have changed dramatically in recent years:
- Technology has enabled individual workspaces to get smaller
- There is greater collaboration in accomplishing work
- More employees are working virtually from outside a traditional office
You may currently have too much space, but are unsure your future growth needs over the next few years. If that's the case, you'll need to consider how much space to allot for growth, and whether your current space can adapt to fit future needs.
- Do you have the correct type of space? Does it support your business goals? Perhaps your staff has evolved over the years from a more hierarchical structure to a more collaborative company. How are you currently working? How do you want your staff to work in the years ahead? The answer to those questions may translate into various space needs, such as more work space, meeting space, and change in size of offices and work stations.
- What are your environmental needs? If your staff has complained about heating/cooling issues or access to natural light, now is the time to address these concerns.
- Is your location the best one? Proximity to clients, vendors, and even good lunch spots can be important to a company. Perhaps you don't need a downtown location that is near your lawyer and your banker, but you would like to be near other companies in your industry. Location can be very important in supporting your capacity to collaborate and deliver service to your clients.
- What do your employees think? Taking this opportunity to evaluate employee concerns could keep you from inadvertently making a decision that isn't the right one for your organization.
Understanding the answers to these questions will help ensure that you have a better framework for evaluating your current and new options for office space. In addition, it can help you see opportunities to improve your business by changing the location, layout, and functionality of your office.
Leasing an Office Space: Consider all the Costs
Commercial real estate brokers will provide a prospective tenant with 'comparables,' one-page overviews of space that broadly fits your needs that includes data about the location, amenities and price per square foot. While your inclination may be to do the math based on price per square foot alone, there are other details to be included when calculating cost.
- What type of build out is included? As part of a lease agreement, many building owners will offer an improvement allowance that can be applied to finish and construction upgrades, including painting, carpet and other small space improvements. However, if the space you are considering will require substantial reconfiguration to incorporate more natural light, collaborative work spaces or executive offices, such changes may be paid for by your company. What adjustments can be made economically to customize the space to fit your unique business needs?
- Where is the building located? If the office location is dramatically different from your current location, it may carry additional costs in terms of parking, transportation, and the time it takes to travel to and from client sites. Some of these costs won't immediately be evident, but could impact productivity, and the bottom line over time.
- Is the space flexible? Although some lease negotiations are for a short term, most are typically ten to 15 years. During such a timeframe, your business model might grow and change in ways you don't expect. It is cost effective to create and invest in space that has the flexibility to accommodate change. Systems that include movable walls, furniture, file systems and plug-and-play technologies all contribute to greater diversity of arrangement and ultimately greater effectiveness over time.
- What are the opportunity costs? If you are considering staying in your current space, undertaking major renovations becomes more complicated and costly. The work will typically need to be done in phases so as not to impact day-to-day activity and office productivity. However, if your current office configuration isn't effectively supporting your needs but all other aspects of the space (location, price, size) make sense, the disruption may ultimately be worth it.
Certain intangibles should also be considered when calculating the cost of a move (which can include everything from new stationary to computer wiring). Fresh space boosts morale and if your business is setting on a new course or path, a new location can help embody that change.
Leasing an Office Space: Leverage Space to Strengthen Your Company's Culture
Companies have begun to recognize that the right type of office space can reinforce your culture and improve productivity. After cost, the most critical point to consider is if your existing space supports productive workplace dynamics, what can be done to that space to further improve those dynamics, and whether there is more benefit in starting fresh in a newly designed location that better fits your needs now and into the future.
Of primary importance is ensuring your office is a place where everyone is comfortable working, has the tools needed to get the job done, and the capacity to work collaboratively or independently as needed. Far too many office spaces are still working in the traditional mode of a ring of perimeter offices along the window wall with high-paneled workstations in the center, and little opportunity for collaboration and flexibility. Smart businesses move beyond traditional models and think differently about their operations and the spaces that support them.
You can both minimize the square footage you need and maximize collaboration by thinking more creatively about your space – designing areas that are multi-purpose in function and comfortable gathering places for employees to brainstorm and problem solve. The new lunchroom can be a place that is equally comfortable for eating and socializing, as well as being a daylong gathering place that is well equipped for getting work done. Employees who frequently work from home can take advantage of hoteling (using unassigned offices designed for on-site employees who need a quiet place to work or offsite employees who occasionally work in the office); spaces should not be designed with specific individuals or even job titles in mind, but be flexible for future use as the company evolves.
Leasing an Office Space: Closing Thoughts for Before you Sign the Lease
Before finalizing your lease, consider whether the space supports the functions and activity of your business (both today and in the future), engages your employees and helps them be productive, allows you to maximize the use of technology in operating your business, prioritizes comfort (heating/cooling systems and access to natural light), and operates efficiently in terms of energy usage.
Combined with a cost that fits your budget, space that addresses these areas is certain to allow you to run a more productive business.
Lois Goodell is the principal and interior design director at CBT Architects.
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