What I've learned about leasing office space

I thought I’d wait a couple months after moving into new office space before writing much about the process. It’s the second time I’ve leased office space, and while all the work involved still ranks high on the list of things I don’t like doing, I’m starting to gather a handful of tips.

It should go without saying that everyone needs to look for something different based on the type of business and size of budget. Everything below came out of my needs as owner of a small software company with a bootstrapper’s budget.

Size Appropriately

I knew there’d be two of us working out of the space for the foreseeable future, and wanted enough room to fit a couple more in if necessary. The space I settled on was ~550 sq ft, which is relatively small, but more than enough for a few desks, a small conference table and kitchen area without feeling too cramped. Figuring out the right size is tricky — too small and it’s not a great environment, too big and you’re throwing away money that could go to better use. The best thing I did to come at a size estimate was measure around the house and try to picture what the ideal space would look like.

Look at Usable Space

More important than absolute square footage is the amount of usable space. One of my top requirements was finding a good layout that didn’t waste too much square footage on hallways or barely usable rooms. You get charged the same amount for desk space and hallway, so you might as well get your money’s worth. The space I leased a few years ago looked nice, but we only really occupied about 1/2 of it because of the layout. It included a large conference room (that we used mostly to entertain people who were trying to sell us something), a spacious entry way, a private bathroom, and decent kitchen area. That was all nice to have, but it wasn’t worth the extra money it cost.

Find a Flexible Landlord

The danger of leasing space that “just fits” is that if we need to grow more quickly, we’re not going to have much fun sitting shoulder-to-shoulder. I ended up getting a suite in a large-ish office park because there will likely always be plenty of spaces that we can move into down the road, and we’d be able to do so without paying a penalty for breaking a lease. A landlord’s going to work hard to make sure you stay around as long as possible, even if that means moving you into a smaller space. If we’re lucky and time it right so that we move into one of the many empty suites down the hall, we won’t even have to change our address — just grab the sign on the door as we wheel our chairs over.

Location * 3

If you’re like me and working in a business that needs zero foot traffic, then location doesn’t matter as much to the bottom line as it would to someone opening a coffee shop. However, location is still obviously a factor in determining your commute time. It’s also great to have space that’s close to restaurants and shops so that lunch meetings and errands don’t become a hassle. It’s a lot cheaper to get space in the middle of nowhere, but extra commute time costs money too. If your commute is an extra 15 minutes per day, that’s about 125 hour of extra drive time per year. If you value your time at any reasonable rate, it’s well worth an extra $1-3/sq.ft. to get a closer space, all things being equal.

Get a Short Term Lease

At my last company I was unfortunate to be one of the ones holding a lease with two years left on the term right as we were closing the business. It worked out OK in the end, but it taught me the lesson that I wouldn’t enter another office lease unless I was confident that the business was doing great financially and that everyone loved the space. I ended up getting an 18 month lease on this space (and probably could have negotiated 12 months if I tried hard), which is right about the sweet spot between not feeling like we have to pack up as soon as we got settled in and not getting stuck with a huge monthly bill in case something came along that caused us to have to move.

Expect to Stretch the Budget

I haven’t yet nailed an estimate for the true cost of moving into new space. On top of the lease payments I also had to pay for new furniture, decorations, new network equipment, kitchen appliances, business insurance, phone and Internet connection setup charges, someone to wire the suite for phone & data lines, legal fees, updated business cards, and a handful of other things that I’ve forgotten in the dozens of trips to Staples and Fry’s.

Get a Lawyer

I’ve read few things more confusing to me than my 25 page lease agreement. I hate paying lawyer’s fees as much as anybody, but it felt like it was well worth the additional expense to have someone read through it on my behalf, point out what things I should be concerned about, and help negotiate any necessary changes. We asked for a small change to the terms, and the request was granted without difficulty. It was worth a few hundred dollars to pay my lawyer now so that I don’t have to pay him a lot more later if things go sour with the landlord.

I know I have a lot to learn in this area — does anybody have any extra tips to share, or disagree with anything I’ve said above?

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