Ways to Know It's Time for New Office Space

Office space moves pose real challenges. Changing your location can involve moving expenses, tenant improvement expenses to configure your space, interruptions in your business as you deal with a new address, and other consequences. On the other hand, staying in the wrong space can be even worse for your business and your workforce. If any of these four trends are impacting your business, it's time to look at new office space.

The Rent is Too Darn High

The first 20 or so years of the 21st Century have been an interesting time for the office market. Between the dot-com boom, the dot-com crash, the 2000's boom, the Great Recession, the post-recession recovery and the COVID crisis, it's either been a great time to sign an office lease, or an awful one. If you signed your lease during a time when tenants were in control, you probably have relatively favorable terms. However, if you're a company that signed an office space lease during a hot time, you could find that it's time to go back out and see what landlords are willing to do for your business now.

Too Much Space

When your space fits your company, calculating your occupancy cost on a per-unit basis is pretty simple -- you add up all of your expenses and divide them by your total square footage. If you have an office that is too large for your needs, though, the math changes a bit. While the rent you pay might be the same, the reality is that every square foot that you have and use gets further encumbered by the unnecessary space that comes along with it. So if you have a 6,000 square foot space but you only use 4,000 square feet of it, you should really look at your occupancy cost on the basis of the space that you use. In the example of a space where you only use two-thirds of it, it means that your rent per "actually used" square foot is 50 percent higher than it seems. In other words, it's cheaper to rent a 4,000 square foot space that fits your needs at $40 per foot rent than to rent a too-large 6,000 square foot space at $30 per foot. When your office space is too big, it gets easy to save money by moving.

Too Little Office Space

Fill in the blank: If we had more office space, we could ________. If you don't know how to fill the blank, you probably have enough space. However, many companies would fill in answers like:

Grow our marketing department for better branding and market penetration
Add engineers to develop new products
Increase the size of the inside sales team to generate more leads
Bolt-on another company to work with our existing team
Have enough space for our team to work collaboratively

If your answers are like these, the money that you're saving on rent by having a too-small office space is probably having a much larger impact on your top line by reducing your potential revenue.

Square Pegs and Round Holes

Just because your office space is perfectly sized doesn't mean that it's a perfect fit. You might have built an open floor plan and come to realize that your workers need more privacy. Perhaps your company chose a traditional glass and steel high rise building when a loft building would be more attractive to the talent you're trying to recruit. Or you realized that a building with lavish amenities isn't enough because you want to have your amenities en suite. In any case, it's entirely possible that the space you chose isn't a fit for the company you are today, and the best solution will probably be to work with your tenant representative to find a new one.