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12 money-saving tips for finding an affordable office

Saving money when leasing commercial spaceWhen it comes to leasing office space, it's a jungle out there. Vacancy rates are down, rents are up and caught in middle are small businesses. Here are ways to find an affordable home for your company:

1. Plan before your move.
The key to finding cost-effective space is to nail down all the details before you start looking at space, says Marcus Rayner, president of Weatherall Green & Smith, a real estate firm in New York City. Figure out how much space you need now and what your expansion needs may be over the next five to 10 years.
Ask yourself questions such as: "What makes more sense -- moving into ready-made office space -- more expensive, but you'll spend less on improvements -- or taking the business equivalent of a "fixer-upper" and modifying the space?" (Costs less per square foot, but you'll be paying for construction to make the site suitable.)

Since your lease will probably be one of, if not your biggest, expense, it pays to plan. Finally, while you can change a lot of things with your business, leases tend to last for five or more years, so you need to be sure you can live with your real estate for a long time.

2. Get connected.
Small businesses don't have a lot of money or clout to hire a good real-estate agent, someone that will help them find a deal and will point out the lemons from the cherries. Use a business partner's leverage to get a good broker. For example, if you've received venture capital, your VC may have connections that can help you. "The Realtor will want to do good by you in order to stay in good with the venture capitalist," says Mark Winters, senior director with the Boston office of national commercial Realtor Cushman & Wakefield.

3. Haste makes for expensive office space.
Don't expect to find suitable space in a hurry, Rayner says. He estimates it can take anywhere from 90 to 180 days to find and move into the right office space. Giving yourself adequate time will give you more room to negotiate and more time to find scarcer affordable space.

4. Keep your business in the home.
If your company is in startup mode, nothing could be finer than setting aside a spare bedroom or garage space for your fledgling venture. The stigma once associated with at-home offices has faded. Your clients may actually be intrigued that you can work from home and you'll be saving money as well.

5. Join an incubator.
If you're just beginning a business, an incubator (nowadays often called a business accelerator) can offer you low-cost, but shared office space. In addition you'll receive startup advice and other support.
The downside: It's difficult to establish an identity when working from a "group home" for startups, Winters says.
For more information, see our package of stories about incubators. To find an incubator in your area, see the SmallBiz Finance link library's section on incubators or contact the National Business Incubation Association.

6. Move into an office service space
In addition to lower rents, tenants save money by sharing office equipment, conference rooms and other office amenities. Your company can end up with plusher office space than it would be able to afford on its own. Business centers share the same identity crisis problem as incubators: It's the office service firm's name that's on the door, not yours.

7. Carefully scrutinize leases.
Hire legal counsel to help get the best contract. For one thing, you'll want as flexible a lease as possible, Rayner says.

8. Look for space in the fringes.
With rents soaring in downtown San Francisco and other metropolitan areas, it can make sense to find office space that's nearby, rather than in the most expensive area. For example, Boston's Cambridge is too expensive for most small companies. However, these businesses may be able to afford nearby Charlestown, Winters says. "And they'll still be able to draw employees to offices in those areas," he adds.

9. Search for municipal or regional incentives.
Cities trying to revive a sagging downtown may be willing to give you incentives to move there. Be cautious about accepting such deals, though, Winters says. You may get low-cost office space, but if it's in an area where no one wants to work, the cons outweigh the pros.

10. Move to the boonies.
If your business doesn't depend on a specific location, considering moving to a rural area. Rents will be lower -- so may labor costs -- and local municipalities will be eager to encourage you to make the move. Just be sure that any rural location is still accessible: Is there a good airport nearby? What about business infrastructure needs such as high-speed connections to the Internet?

11. Sublet space from a company with excess space.
Companies often rent a larger space than they need, just in case they need to expand. Renting to your company can be a tidy solution for both companies.

12. Work from your clients' offices or have satellite offices at your customers.
Your clients will be pleased to have your company's workers immediately at their disposal while your company gets a break on rent.

Follow these tips and you'll find a place out of the cold for your company.

Jenny C. McCune is a contributing editor based in Montana
If you'd like to make a comment on this story,
e-mail bankrate editors.

-- Posted: Aug. 18, 2000

 

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