Despite the popularity of remote work many entrepreneurs and small business owners still opt for an office environment. After all, an office is synonymous with hard work and productivity.
Whether because of business growth or simply being tired of navigating coffee shops, this may lead someone to research co-working spaces or enlist Google to search, “how to find office space for small business” and “how to rent office space”.
That said, there are several things to know about commercial real estate before putting your name on the dotted line. In this post, we’ll review some of the pertinent information to keep in mind.
Locating Office Space
Finding an office space can be daunting and exciting at the same time for entrepreneurs and small business owners.
Before looking for small office space, there are a few things to keep in mind. Firstly, assess your situation, as office space is not cheap. Ask yourself, “Do I really need office space?” Perhaps a co-working space is more suitable. If you come to realize that all you need is a few days away from your home office or the coffee shop, your local library could be an alternative.
The point – be sure you’re ready to rent office space.
Other factors to be mindful of are the amount of space you’ll need, amenities you’ll need or want, and the geographical locations you’re considering, which are just a few things that will impact your budget.
If you determine renting office space is right for your business, there are several ways to search for and find potential locations, including those specific to states/zip codes:
- Google search phrases such as “office space rental in (name your area)” or “office space for rent”
- Visit well-known real estate sites like Coldwell Banker; Re/Max; and Keller Williams Realty
- Utilize real estate portals including TotalCommercial.com; CommercialCafe.com; OfficeSpace.com; Loopnet.com
- Use alternative online resources – Craigslist; local community threads; forums; and newsletters
- Other methods: word of mouth; local newspapers, mailers, and guides; visible “for lease” signs in areas of interest
- Enlist a trusted commercial real estate broker like Thomas Mensendiek, offering years of knowledge and experience
One of the most pertinent things to know about commercial real estate is the average commercial rental rates or price per sq. ft. in your desired area. Aside from other added expenses/fees, knowing how to calculate office space rent is a must.
Commercial Rental Formula
As you’re researching how to rent office space, you may come across monthly and yearly price quotes. Below you’ll find a scenario and formulas to help you calculate both. Please keep in mind, the calculations below will only result in base rent.
Several factors will determine your true monthly costs (location, length of lease, amenities, utilities).
Asking rental rate per sq. ft. – $24.37
Office space – 2113 sq. ft.
Office space X Asking rental rate = Yearly rental amount or base rent per year
2133 X $24.37 = $51,981 base rent per year
Office space X Asking rental rate = base rent per year/12 months
2133 X $24.37 = $51,981 base rent per year/12 = $4332 monthly base rent
Once you calculate the base rent and factor in estimated operating costs, you will have an idea of your monthly cost, along with gaging the amount you’re willing to pay for office space.
If you need further assistance deciding what you should be paying or leasing rates in specific areas, the best advice is to consult a brokerage such as SF Office Spaces.
Renting & How To Set Up a Small Office Space
After researching, determining your budget and calculating a monthly estimate, and finding the perfect location for your business, it’s time to negotiate; depending on your comfortability, you can do this or you can hire a brokerage to ensure you get the best deal.
In any case, be sure that you fully understand every clause and term before signing. Also, be mindful of the various types of leases; “As-Is clauses”; transfer/subletting limitations; termination without cause clauses; the condition of the location; and construction build-out provisions.
After signing on the dotted line, the setup begins. The key is to make your office as efficient and welcoming as possible. Below is a list of standard items nearly every new office needs:
- Copier/printer/office phone
- File cabinets and storage
- Fast internet/phone service
- Office furniture
- Office supplies (pens, copy paper)
Other considerations for designing an office space include:
- Answering service
- The type of floor plan (cubicles, workstations)
- Lighting and colors used throughout the space
- Dining supplies (microwave, coffee machine)
Leasing and setting up an office space is at minimum laborious. The more planning and research you do upfront, the easier the process. Although the aforementioned is not a conclusive composite regarding things to know about commercial real estate, it’s a great place to start, especially if you’re just beginning your office space journey.