Industry jargon. Commercial real estate is chock-full of it. Whether you have negotiated a commercial lease before or it’s your first time, chances are you will run into some potentially... Read More
The office space you choose has a profound impact on company culture, employee well-being, and overall productivity. Whether your law firm has outgrown its space or you’re just looking for an upgrade, moving isn’t a decision to take lightly. Before you start touring potential office spaces, make sure you know your budget, how much space you need, what type of space you’re looking for, and what locations you’re interested in. And, of course, you need a broker. Here at SquareFoot, we’ve helped many law firms find the perfect space for their specific requirements. Check out the following tips to get you started.
Step 1: Examine your budget
Before you sign a lease or even look at potential office spaces, sit down and take a look at your budget. While some landlords are willing to negotiate prices, you don’t want to waste your time touring spaces that are way out of your price range. Most landlords want tenants to sign a lease for three to five years, so projecting your firm’s gross income over that period of time will go a long way in helping you decide. In general, you should try to keep your rental costs at or below 10% of your gross income.
Of course, rental payment isn’t the only cost associated with renting office space. “You really have to research all the costs to operate a space,” said BDC Major Accounts Manager Brett Prikker. “Many businesses wind up over budget because they didn’t review all the lease costs and end up hurting their profitability.” That’s why you need to make you sure you take into account “hidden” costs like utilities, property tax, insurance, maintenance, repairs, landscaping, potentially increasing rent costs, moving costs, and renovations.
Step 2: Decide how much space you need
When choosing office space for your law firm, you’ll want to select a space with enough room—and the right type of room—for your employees to work best. To get started, try using our Office Space Calculator. When considering space needs, typically you should keep three basic factors in mind.
- First, how many employees do you have? Law firms generally need 200 square feet per employee because of the need for private offices, reception areas, and support rooms (such as kitchens or file rooms).
- Second, what are your business layout needs? Every law firm is different, so think about what kind of office spaces would be most helpful to your employees. For example, attorneys typically spend a lot of time discussing confidential matters, so you might want to consider a space that features lots of private meeting places where employees can meet with each other or with clients. Other useful spaces you may want to consider are open workstations, lunch rooms, and conference rooms.
- Third, how might your firm grow in the near future? Remember that most leases last at least three to five years. A company can grow a lot in that time; what you if your company hires 10 more employees in the next year, and you have no offices for them? This is why planning ahead is so crucial. You can’t predict everything, but you will want to at least try to choose an office space that will accommodate your law firm’s projected trajectory.
Step 3: Consider the different types of office space
Once you’ve outlined a budget and decided roughly how much office space you need, it’s time to decide what type of space you want. Budget, length of the lease, and specific space requirements all influence this choice. Here are just are few of the many options for types of office space:
Subleasing. Especially if you’re a small law firm looking to rent Class A space for a more affordable price or if you just want more flexible lease terms, a sublease might be a good option for you. Opting to sublease usually means accepting the space mostly as-is, so if you have really specific space requirements or are planning on doing a lot of renovations, this might not be the right choice. Subleases rarely allow for renovations, so be prepared to move into the space as-is.
Executive suites. Executive suites offer smaller firms the opportunity to rent only the space they need and still present a professional atmosphere for visiting clients. Visitors can say hello to the building’s shared administrative assistant, who can bring coffee then call you to let you know your client is here. Then you can move into a conference room you reserved to have your meeting. Again, this option usually comes with a fixed set-up and even furniture you’re not allowed to exchange, so this probably isn’t a good idea for firms that have a lot of build-out expectations.
Coworking. Some solo lawyers and small firms are choosing coworking spaces, which offer dedicated desks and shared areas to all kinds of freelancers, entrepreneurs, and small business owners to work together. Typically, these spaces offer coffee, Wi-Fi, printers, fax machines, shared utilities, and other amenities. This kind of setup provides opportunities for networking, friendship, and collaboration. Lawyers and firms that often work with small businesses might find new clients working in this setup. Two downsides are the potentially busy environment and lack of privacy.
Pre-built spaces. Maybe your law firm is big and lucrative enough to lease its own space for branding and environment purposes, but you don’t want to spend too much money on renovations and space updates. Your tenant broker might be able to locate a pre-built space that’s move-in ready. Typically, these spaces come with private offices, meeting rooms, a reception area, a kitchen, flooring, and wood or steel finishes. You probably just need to provide your own furniture.
Build-out. If your firm is larger and requires more specific office layout requirements, you might want to rent your own space and opt for a leasing situation that allows you to make all the renovations you want. Construction projects can be expensive, so be sure to discuss the specifics with your potential landlord and tenant broker before signing anything. Your broker may be able to negotiate a tenant improvement allowance (TIA) from your landlord to fund your office renovations. The process of touring, signing a lease, and renovating a space typically takes four to six months.
Step 4: Choose a neighborhood
Location, location, location! The office size and amenities are important, but so is—you guessed it—location. First, consider your employees. In most cases, they will take public transit or drive to the office every day, so think about how long it will take them to get there. You can try out our commute calculator to help predict how any given location would impact your employees’ routines. Also, you may want to think about proximity to things like restaurants, parks, hotels, residential areas, and anything else your employees might like to be close to. Finally, location sometimes affects sales. If you’re outside of your central business district, clients will have a more difficult time getting to your office. Setting up shop in the busiest part of the city isn’t ideal for every law firm, either; just explore different locations before making a decision.
Step 5: Minimize the headache by working with a tenant broker
Once you have some idea of your budget, how much space you need, what type of space you need, and where you want your office to be located, it’s time to start working with a tenant broker. Much like a real estate agent assists with the purchase of a home, a tenant broker makes the office space rental process much easier. He or she will help narrow down your search based on your budget and specific requests then set up tours of spaces matching these requirements. Also, a tenant broker will assist in negotiating lease details, including lease term, move-in date, rent, construction costs, TIA, and other expenses. Best of all, tenant brokers receive commission from landlords, and are entirely free to you.
When you’re prepared to start searching for the perfect space for your law firm, fill out our short office space questionnaire, and we’ll connect you with an experienced broker right away.