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July 15, 2024
Joe Averill
10 minutes
A common challenge for startup and scaling businesses is to select a workspace which is going to fit your growth plans as you increase headcount. Meaning a typical new office space checklist doesn’t always help.
I get it….
🚀 You’re growing rapidly
🚀 You’ve just invested your heart and soul into your Series A round
🚀 Now you need to lead your business on a growth trajectory and before you know it, up comes your Series B round, which will fuel more growth…
So, how do you match your workspace strategy to your firm’s scaleup/hiring plans, when you’ll be at:
So I’ve put together a new office space checklist for startup and scaling businesses. It’s the very same criteria I run through with firms just like yours, day-in-day-out.
Here's what the blog covers:
We often see enterprise hubs as the go-to location for start-ups and scale-ups. But they’re not the only place that can provide that much-needed community to learn, contribute and grow.
There are several landlords and flexible workspace operators who are really getting it right at the moment. They’re providing a notion of ‘more than workspace’. It’s clear to see in their ethos they care about the businesses within their portfolio.
➡️ Could they be potential customers or partners?
➡️ Or would they be unwelcome competition, e.g. for talent attraction/retention, etc?
➡️ Who will you be rubbing shoulders with? Who can you learn from or help?
➡️ What community events take place nearby or in the building?
What introductions can they offer? Consider:
➡️ relevant funding
➡️ mentorship
➡️ business partnership contacts do they have?
➡️ What are the landlord’s values?
Do they align with your business on key issues, e.g. sustainability or diversity & inclusion?
➡️ Is the landlord personable?
➡️ What is the landlord’s track record with customers?
(Yes, there’s a lot to consider! If you want a quick chat about which buildings and landlords are the best for your fast-growth company, you can book a quick call with me here.)
The businesses we work with want a place that will excite their employees, clients and partners. They understand their workspace can be an asset that can drive their growth, so they want to ensure they’ve scouted the entire market.
➡️ What are your competitors doing with their workspaces?
➡️ What are the latest workspace trends?
➡️ How much can you expect to pay for average or top-of-the-range offices?
➡️ Are new buildings coming to the market that could offer better space, amenities or pricing?
Tenants will often find a suitable place first, before informing their landlord.
➡️ Are any tenants planning to leave their space shortly?
➡️ Do these work better for your business e.g. fully fitted/similar customisation requirements? If so, is it worth waiting a little longer?
If you’re a fast-growth firm, the last thing you want to do is select a workspace that could frustrate your future growth plans - and the boost in people that brings. Traditional workplace occupancy rates of 70-80% no longer apply because of hybrid working e.g. hot-desking. And for fast-growth start-ups, it’s even less applicable.
➡️ What’s the current occupancy rate of the building? Is there a chance to expand or grow into unoccupied space?
➡️ What building amenities can you access if you’re past 100% occupancy on a given day?
➡️ What plan and commercial deal can you structure with the landlord to accommodate future growth?
➡️ What’s the landlord’s track record of partnering with fast-growth tenants?
Selecting the right type of office and landlord can help ensure that you have an office fit for your needs and in the future, but you still need to plan ahead. Here are some space issues that are an essential part of any new office space checklist:
➡️ How many people are you looking for? Determine how many employees you need to accommodate and plan for future growth.
➡️ What different space functions you will need for different activities?
- Will you need additional meeting rooms, event space, social space, or a gym/well-being space?
- Which of these do you want in your own office and which are you happy to share with other businesses?
➡️ How much square footage will you need for this? (In an open-plan layout, it will often be more.)
➡️ Have you considered your utilisation and space ratios? Try to log usage over at least a few weeks.
- Employee: desk ratio. Aim for 1.5:1 or 2:1. This will depend on how often your employees are in the office.
- Total space capacity. Look at the max capacity of meeting rooms vs how often you expect you will use them e.g. meeting rooms, phone booth usage, quiet zones.
➡️ Meeting room utilisation: In a traditional office set-up, aim for about 40-60%.
Many of the businesses we work with have a vision of how their office will look. It’s not superficial, either, as it impacts the image and feeling people get when they walk through the building - and even productivity!
➡️ Is natural light important?
Most businesses prioritise natural light as it can do wonders for employee productivity and well-being.
➡️ Corporate, character or ultra-modern space?
This has a big impact on your brand. What are the current trends? Do they align with your brand?
Whichever series of investments you’re going through, (especially in the early days) it’s important to keep cash in the business and invest in your people, tech, operations and growth - NOT an expensive fit-out. Especially when you’re going to outgrow the space quickly.
➡️ Do you want a fully customised office space?
➡️ Or do you want to “plug and go”?
There are plenty of fitted offices out there, including off-market opportunities.
➡️ How important is branding?
Even serviced offices offer some branding opportunities, but it’s not as much as you can do in leased offices.)
➡️ How will this impact your cost?
➡️ Can you negotiate absorbing fit-out costs with the landlord?
i.e. reclaim the costs over the duration of your tenure to keep the cash flow going? (Many will, if you know which landlords to look for.)
I’m seeing lots more value-led businesses that are highly conscious of how their workspace reflects their own values. Here are a few of the most common ones and what you should consider when selecting a new office.
Sustainability is at the forefront of workspace decisions for many businesses. ESG isn’t going anywhere - it’s quite the opposite and growing in importance.
➡️ What is the building’s policy on issues such as recycling, plastics usage, etc?
➡️ How energy efficient are they?
➡️ Does the building hold a BREEAM (Building Research Establishment Environmental Assessment Method) Certification? If so, how does it score?
This establishes which buildings are eco-friendly.
Consider how you will cater for issues such as physical disabilities, religion, neurodiversity and working mothers. These are some features to consider:
➡️ Phone booths
➡️ Quiet zones
➡️ Zoom rooms
➡️ Dimmed lighting
➡️ Prayer rooms (or other religious facilities)
➡️ Nursing rooms
➡️ Ergonomic designs that help with chronic musculoskeletal disabilities
As a general rule, the cost per square foot is lowest on a lease compared with a serviced office. However, there are plenty of factors which can effectively increase the total cost over your tenure - meaning that the higher rent cost per month is actually more cost-effective.
➡️ What utilities do you need to pay for, such as electricity, water, and gas?
➡️ Energy prices - are they fixed or variable?
This is important to factor in when comparing buildings as it may make your rent-free period less attractive if it’s offset by higher energy bills!
(On a recent due diligence piece for a LEVEL client, one particular building’s energy rates had increased from 18p per Kw/h to 49p kw/h in the last 9 months alone. Whereas others had a locked in rate of between 21p-25p per kw/h.
To give you some context relative to analysis of Level clients and Manchester firms....For a space of circa 5,000 sq ft (50/60 people with meeting rooms and break out space) firms are typically utilising circa 80,000kw/h per annum (subject to building and business).
In this instance, this uplift in energy prices equates to an additional £24,652 per year in energy bills over the tenure of the agreement - £73,956 over 3 years.)
If you’re more flexible or start looking before your needs become urgent, it can open up more opportunities which may be cheaper, i.e. off-the-market or new building coming to the market.
➡️ Rent/lease costs and cash flow
➡️ Is a higher monthly cost for a serviced office vs a lease offset by the cashflow benefits of monthly/quarterly payment terms?
➡️ Coworking membership options
In coworking spaces, there are usually different membership options - what will be most cost-effective?
➡️ Taxes
What taxes do you need to pay on the space, such as property tax or business rates?
➡️ Maintenance and repair costs
e.g. cleaning, repairs, and renovations
➡️ Furnishings and equipment
e.g. desks, chairs, computers and phones
➡️ Moving costs
e.g. transportation, packaging and storage
Many fast-growth firms are understandably wary of signing up for a restrictive long agreement but this isn’t the only thing to consider. Any new office space checklist should consider these fundamental but sometimes overlooked issues.
➡️ Length
How long will you need the workspace?
Will you outgrow the office within this time period?
Coworking contracts typically range from month-to-month agreements to longer-term leases of 6 months or more. Managed offices generally require 12 months plus and leases typically require a commitment of 3 years.
➡️ Renewal and termination clauses
➡️ Restrictions on alterations
e.g. structural changes, signage, or decoration
➡️ Subletting options
Will you want the option to sublet the space to another tenant, and under what conditions?
➡️ Liability and insurance requirements
e.g. who is responsible for accidents or damage to the property - or public liability claims?
➡️ Coworking membership options
➡️ Access and amenities
This may seem obvious, but you’ll want to ensure you consider these issues when selecting your new office space.
➡️ Which location works best for employees, clients and partners?
Most start-ups choose city centre locations because of ease of access and the amenities on their doorstep.
➡️ Transport links
How close is it to public transport, airports and major roads?
➡️ Car parking
Do you need dedicated or available parking spaces for your employees or customers? Do you really need them on-site or are nearby options suitable?
How digitally well-equipped is the building you’re considering? You’d be surprised at how often I’ve seen businesses in disputes with landlords about the connectivity strength within the building.
Here’s what to look for:
➡️ Digital connectivity
such as high-speed internet, Wi-Fi, data cabling and smart IoT
➡️ IT requirements
such as hardware, software, and support services.
➡️ Digital resilience
How well-equipped the building infrastructure is to deal with crises i.e. maintaining business operations and helping with disaster recovery
➡️ Do they have a WiredScore certificate?
This rates buildings from Platinum through to Bronze on their digital connectivity, infrastructure and resilience, giving you comfort when it comes to business-critical decision-making. It covers:
Last, but not least - you need to consider the legal and regulatory issues that can arise. As regulations change, you ideally want a building that’s ahead, not meeting the bare minimum.
It’s also worth considering how only meeting the minimum requirements reflects on your business values and image.
➡️ Are there any restrictions on what type of business can operate in the area?
➡️ Does it fall within Clean Air Zone/ULEZ zone restrictions? If so, how does that affect your operations or employees?
➡️ Does the building meet or exceed the latest building codes and regulations?
➡️ Do you need any permits for renovations or alterations?
➡️ Does the building comply with environmental regulations e.g. waste disposal and recycling?
➡️ Does the building provide wheelchair access and elevators? Some older properties are exempt but consider the issues that can cause your business.
Some examples to consider include:
➡️ Fire safety
➡️ First-aid
➡️ Emergency procedures
I know, there’s a lot to take in with our new office space checklist, especially if you’re busy focusing on your growth strategy. But get it right and you can create a competitive advantage as, in today’s world, the savviest fast-growth firms recognise that their workspace is an asset.
If you need help devising your new office space strategy or need access to off-market opportunities and the latest market intel, get in touch. I’m always happy to have a quick chat and you’ll quickly see I change most businesses’ perceptions of working with an office broker!
‘I could see he was an honest person. And I thought, “Well, this is a refreshing change compared to everything I've seen up until now. ‘And one of the best decisions in this process of picking an office was working with Joe. ‘The information. The level of care that I got from Joe and how I felt I was looked after was something that I did not expect. Because Joe is just exceptional when it comes to that.’
Segev Hochburg - COO and Co-Founder of Lunio
Want to find your next leased, managed or serviced office space to rent? Book a call with our team today.
