As commercial leases usually range from 3-10 years, it can be very difficult for some businesses to determine what their office needs will be for the duration of the lease. Of course, this all depends on the growth trajectory of a specific business. More stable businesses, such as accountants or lawyers for example, will have a much easier time predicting how their business will look in 5-10 years versus a tech start up that’s future is completely up in the air. Discussed below are a few guidelines to help start your search and what to do if your space doesn’t match your needs. The guidelines are a good starting point, but of course you will need to do the ground work of actually viewing the spaces, measuring them, and ordering test-fits.
The old school general rule is that you should have at least 100sf of “rentable” space (including loss factor) for each employee. This does not include additional amenities such as conference rooms and private offices, which will have to be added to your calculation. This model is best for the long term stable growth tenant. Longer leases are recommended in these scenarios so that a tenant can lock in a favorable rate long term and possibly obtain better concession from the landlord.
However, as office dynamics and designs change, this rule might not apply to all. Tech companies abhorring to the “bench seating” model, like to maximize the amount of employees they can fit into a space. In this model it would be best to view/measure the individual spaces, as layout and loss factor will play a large part of whether an office is viable. With that said, 1.5 employees per 100sf would be a good maximum starting point. It is also important for a tenant expecting growth to look at spaces that are larger than their current needs that allows room for that growth. Shorter leases, 3-5 years, could provide an additional opportunity for flexibility.
As always, if a space doesn’t fit your business needs for the remainder of the lease term, the option to sublet is always there. Also, larger landlords often allow paying tenants to move within their portfolios, if the space is available. In their eyes it is better to keep a tenant happy then possibly face two vacancies.
So when determining how much office space you need for your business, use sf/person estimates, see the spaces and obtain test-fits, and potentially leave room for growth.
David Goldberg – Managing Director