Holy cow, finding office space is a lot of work.
In my other life, I help to run a digital marketing agency. And after several years of working remotely, we finally made the decision to get out there and look for office space. I wanted to share my experience — the good, the bad, and the ugly — so that if you are on the same journey, you may avoid some of the giant potholes that we fell into.
Before we really get into it, let me share some background.
We are a small team right now (about 3.5 people), but plan on growing. We are still a young company, only being in business 4 years, thus budget was something we were very conscious of. We are B2B, so we rely a lot on getting leads from other businesses searching for the services we offer, therefore we wanted to be located in Minneapolis near as many other businesses as possible. We also wanted a space that we were proud of and could confidently bring clients into.
As you might guess, this set of circumstances presented quite the challenge:
- We needed to find something reasonably priced, but with enough room to grow to accommodate any additional staff we bring on in the next few years.
- We also were looking in Minneapolis, where commercial real estate comes at a premium price.
Dang.
Being newbies to commercial office space, here is what we learned the hard way:
- Commercial office space is priced out at x$ per square foot… per year. Upon first glance everything seemed way out of reach, but that was because I was thinking the price was per month. Duh. Embarrassment aside, this made me very happy.
- Advertised rent is not always the real price. Common Area Maintenance, referred to as CAM, is an additional monthly fee that will be added to your gross rent that covers things like taxes, parking lot maintenance, landscaping, snow removal, security, and general common area maintenance.
- We did not come across a single space that would let us do anything less than a 3-year lease. Apparently, if they are going to go through the work of vetting your company, they want you in there for a good chunk of time.
- Before sending us a lease to review, the owners of the property required us to submit our business plan, profit and loss statements for 2 years, balance sheets for 2 years, and our personal financial statement (basically a spreadsheet documenting all of our personal assets and personal liabilities). What? Yup. We will be forced to personally guarantee the lease, which is now the standard after the 2008 real estate collapse. This means that even if our business were to go bankrupt, we will be obligated to personally pay for the lease until they find a new tenant.
- Get tenant representation. We have knowledge in residential real estate so we thought we would be fine going through the process on our own and that we actually might be able to use our lack of real representation as an extra bargaining chip. Nope. It is so worth it to have someone who knows the process by your side and it costs you nothing — the property owners are the ones who pay their fee.
- Even if you are ready to immediately get into a space and you are sold on a particular one, it will take a while. The leasing side always seems to move slower than the tenant side. And due to liability reasons, you will not be able to set foot in your space until the official day your lease starts, which makes it tough to plan out furniture for your space in advance. We ended up getting a CAD (computer-aided design) file of the space to give to the place where we were getting our office furniture — they were able to load it into a computer program and help us map out the space with desks/tables/etc.
Here are some other takeaways that I got out of the experience:
- It was incredibly fun.
- I have dreaded the expense of office space as long as we have been in business. But as soon as we started seeing some really neat locations, I could suddenly see the future of our company so much more clearly. Also, when you step back and realize that it is a business write-off, it’s not quite as scary. This was a really neat 180 degree shift for me.
- The whole experience was motivating. So often we get into a state of complacency and everything gets mundane. This was a new challenge — and really, it is just the beginning of many new challenges.
- I could feel “certainty” in a variety of different ways. We were now certain we would be doing everything in our power to grow a company, bring on new team members, and impact the community in a positive manner. We, all of a sudden, felt certain that if we did not do those things, that we would cease to exist as a company and that we would be financially burdened (personally) by the lease. And when you only have one direction that you can go, you find a way to make it happen. It is, after all, human nature to survive.
I encourage anyone out there with comments to email us. We will publish any beneficial updates to this article as we receive them.
Read this article on the success of one downtown Minneapolis business, Jaime Leigh Aesthetics, next: SPOTLIGHT: Jaime Leigh Aesthetics
