If you’re shopping around for NYC office space, you may have noticed something: it’s even harder than finding an apartment. How are you supposed to know which size is the right size for your company? Who are you supposed to contact to inquire about available office space? The landlord? Would a broker be more efficient? And why are there no pictures of office space interiors for you to browse before deciding which places to visit?
Finding Office Space Made Simpler
Here we’ll reveal a few secrets to navigating the tricky world of commercial real estate. They combine the light use of tools, technology and expertise that are all at your fingertips… if you know where to look.
1. Figure Out How Much Space You Need Now, and in the Future.
Office space is measured in—and priced by—square footage cost per year. So $50/SQFT for a 2,000 square foot office costs $100,000 to rent for the year, or $8,333 per month.
Do not be embarrassed if you don’t know how much square footage you need. The general rule of thumb is to budget 150 square feet per employee, but you can adjust that number depending on your desired office layout. You can walk through this process with our Office Space Calculator. All you really need to know is how many employees will use the office, desired type of office space, and how many employees you plan to add over the next few years.
2. Decide on a Neighborhood
It’s only natural to start thinking about the neighborhoods you personally like as the future home of your office. Nothing wrong with that. Just be aware that the price and size of available spaces will have majority say in the matter. That, and at least one other critical consideration.
The commute for your team will play a big role in whether they’re happy with your new office (and employee happiness is kind of a big deal). You can find out pretty easily where they live and which trains are convenient for them with a quick survey or company-wide email. You can then use this information to further narrow your consideration of neighborhoods, alongside other factors like where your clients are located.
3. Seeing is Believing
If you’ve already done some light Googling for office space, you may have noticed your search curiously light on pictures of available space, which makes it difficult to narrow your search in any way. How often do you go visit apartments without seeing pictures of them first? Probably not often.
Unfortunately, many property owners simply do not keep past or current pictures of office space interiors, and if they did, they wouldn’t be pretty: just long shots of raw, barren office space left from the prior commercial tenant. Furthermore, landlords prefer not to influence a prospective tenant’s impression of available space with a prior’s tenants modifications/designs.
The good news is, just about any commercial space can be renovated and designed to your exact specifications. And quite often the landlord will help cover the cost.
4. Use a Commercial Tenant Broker
Technically you could find a new office yourself, but as you may have already surmised, that can be a pretty daunting task. Enter commercial tenant brokers.
Most commercial tenant brokers are free to work with (they typically split commissions with the property’s listing agent) and are highly knowledgeable about the market and how to unearth hidden savings. A new trend of salaried brokers who don’t pursue commissions is also on the rise, further reducing the risk to working with a broker to just about zero. From finding spaces more efficiently to negotiating your lease, a commercial tenant broker will only make your life easier.
5. Make an Offer
If you visit a commercial space and think there’s even the slightest chance it could be your future office, make an offer. Making an offer is a non-binding step that simply lets the landlord know you’re interested in a space and that you’re not afraid to move on it. In return, the landlord will take you more seriously as a prospective tenant.
Worst case scenario, you can always drop out of contention for the space and continue the search.
The Letter of Intent
While it’s non-binding, the Letter of Intent can act as a rough first draft of the eventual lease and a framework for negotiations. The amount of rent you’ll pay, the term of the lease, whether renovations are allowed and who is on the hook for the cost of renovations can all be covered (and negotiated) at the Letter of Intent.
6. Negotiate “Free” Rent and Other Favorable Lease Terms
Whichever space you end up settling on, it will almost certainly require renovations (aka a “build-out”) to suit your vision. You can negotiate how those renovations are covered during the leasing process through something called a Tenant Improvement Allownance (TIA).
A Tenant Improvement Allowance is the monetary sum your landlord agrees to contribute to the build-out. In a turnkey build-out, the landlord will pay for and project-manage the construction of all agreed-to modifications. If the landlord is in the driver’s seat, though, he also determines the cost and quality of the materials and contractor. As you might expect, some landlords have no qualms about cutting corners, but overall, a turnkey build-out can be a great hassle-free option.
Landlords who don’t offer turnkey build-outs will usually offer a Tenant Improvement Allowance in the form of free rent (expressed in $/sqft.) to help offset the costs of renovations.
Financially, this might actually make the most sense for your business. You get free rent up front and are able to use that money to modify the space how you see fit to better manage costs and capture savings. You can select your own contractor, architects, alter construction to better fit your budget, upgrade or downgrade materials when desired… you get the picture. The drawback is of course the amount of time you’ll spend project-managing the renovation, but if the end result is an office you’re proud of, it’s worth it.
Planning a move? Talk with an expert today.