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Graduating From Co-Working to Your First Office: The Options and Costs

Setting the right office for your startup is an important factor in your team's motivation and company culture. However, you may have noticed there're many options out there. In this guide, we will dig into each of these and compare them.

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It's always exciting and a little nerve-wracking to move from your co-working space to your first office. However, the following guide can help you make a smooth transition to your new office.

Key Things To Consider When Moving Into Your First Office

There are a few things to consider before you make the transition from your co-work space to your first office.

1. Your Budget

The first thing you need to consider is your budget. Do you have enough money in your budget to move to a new office? Would a short-term lease be better for your budget, or does your budget allow you to lease a more permanent location? Your budget should also include any professionals you may need to hire for your transition to your new office.

2. Square Footage

Of course, you should always consider the square footage before moving into a new office and have a square foot per person in mind. It's important to get an expected headcount for the possible duration of your lease and it's also best to look into a rectangular office rather than a corner office, as this offers a more efficient space. The recommended square foot per person can differ by city but you’ll want at least 100 square feet per person and up to 200 depending on your workplace strategy.

3. Options Available

Finally, you want to consider your options for your first office. Your main options include leasing commercial space or using a flexible space service. There pro’s and con’s to each for example if you decide to lease a commercial space it will usually be a lot cheaper but you’ll need to hire professionals such as a broker, architect and interior designer to help you find and create your dream office. You're going to learn more about your options in the following guide.

What Are The Options Available To Startups?

There are several options for moving into your first office. You may want to rent a flexible space from a professional workspace platform like WeWork or Knotel or then again, you may want to hire a broker to help you find an office space, as well as an interior designer/ and/or an architect to help you create the office design you have in mind. With multiple options, you can find and create an office that works for your brand.

For all options you should find a commercial broker, also known as a tenant representation broker, who is a real estate broker hired to find a suitable office for your business - you’ll also be able to brainstorm with them on the cost/benefits of flexible workspaces. Your broker is responsible for finding space options that match your budget, desired location and duration requirement. They discuss the office and lease with you to keep you in the loop, but they also assist with contracts, legal documents and negotiations.

Office Architects

You need to be careful and aware that some spaces will require help from an architect to achieve the structural requirements you have such as floor plan layout, knocking down walls, adding electrical units and so on. This all comes at extra cost so your broker needs to be transparent with all of these factors when showing you around.

When it's time to hire an architect firm, there are many variations but typically the size and complexity of your space dictates the type of architecture firm you’ll need. Unlikely required for startups, but big architect firms like Perkins Will are experts in commercial spaces, but for most startups, you’ll need a smaller firm that specializes in commercial spaces.

Architect firms offer a variety of services, such as planning, architecture and office interior design. Their goal is to design a space that's beautiful, meaningful and functional, from your color scheme to the decor to the layout.

The challenge with architect firms is that they specialize in the technical and structural aspects of your office space like floor plans and outlets and whilst they may say they can offer interior design services they are unlikely to be specialists in creating a beautiful office design and it is always better to consult with an office interior designer first. 

Interior Designers

The interior designer is responsible for focusing on leveraging the office's fixed attributes like floor plan, outlets and walls to design a layout of the furniture for your office, from the color scheme and decor and arrangement - this is ultimately what your team will see, experience and feel every day they go to work. There are two main options when hiring an office interior designer:

Freelance Interior Designer:

A freelance interior designer is an individual contractor who specializes in interior design services but is not linked to a specific firm. Freelance designers typically just do the designing of the space rather than get involved in the purchasing of furniture, assembly and set up. Houzz is a good example of a platform where you can source freelance interior designers across the US.

Office Design Firm:

An office design firm are specialists in everything related to office design and typically has a team behind them dedicated to your project including project managers, designers and management that help execute projects fast and seamlessly and take a lot of stress off your plate. A great example of an office design firm that specializes in Startups is Uneebo who has affordable design packages to help Startups get up and running fast.

Flexible Office Services

A flexible space is a temporary or short-term contract where you are subletting from a tenant (such as Knotel or WeWork). They can offer some longer-term leases but it's usually a lot more expensive in comparison to finding your own space, which is why they focus on shorter-term leases. In most cases, the office already includes furniture, accessories and other amenities. With flexible office services, you pay a flat monthly fee for your office and typically a deposit upfront.

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So… What Are The Pros and Cons of Each Option?

It's always a good idea to weigh the pros and cons of each option, so you can narrow your search to startup offices, professionals and companies that work for your brand.

Spaces Which Require An Architect 

Getting a space which requires a lot of architectural need is going to get expensive very fast given how many hours the architect is going to need to work for you and the other complexities that will come with it including hiring contractors for the work. However, there might be reasons why this makes sense such as the lease being very cheap and worth the cost. Your tenant representation broker through a company like Truss or Squarefoot should find you an office that fits your needs but they are ultimately trying to close a deal as quickly as possible, so be cautious. 

Hiring an architect upfront for a couple of hours to review options the broker has provided is a very good idea so you get a clearer picture on how much extra costs could be involved in choosing a space that requires architectural help. Most tenants overlook this and the costs get out of hand. Also, remember how much slower your moving office project will be if there are lengthy delays with structural components like walls being removed or built.


Office Design Firm

Using an office design firm that specializes in working with similar projects as yours is a sure-fire way to mitigate any quality or execution risks and ensure your office design is both functional and beautiful. Most office design firms are also workplace strategists who will primarily work with you on your floor plan and space planning strategy, taking into consideration your teams functional needs such as what % of your space needs to be for collaboration areas and break out spaces, or perhaps any acoustical challenges you might have with regards to your sales team. 

On the surface, the number of hours that office design firms quote or the price per hour can seem higher than that of a freelance designer, but you are essentially gaining an entire team in the process who are experts in office space planning, furniture procurement and the delivery and logistics of getting your space set up and ready to go in the shortest time frame possible.


Freelance Interior Designer

Hiring a freelance interior designer through a platform like Houzz can either work out incredibly well or incredibly badly depending on how lucky you are. The reason for this is that most interior designers on platforms like Houzz specialize in residential spaces and are not so familiar with the complexities of commercial office spaces. Most freelancers will convince you that they are capable of office spaces but when it gets into the weeds of purchasing 10’s of thousands of dollars worth of commercial furniture, dealing with the logistics, assembly, waste-removal and often structural and architectural challenges it can get a bit too much - whilst balancing their portfolio of residential projects. 

However, there are still of course experienced, licensed professionals on the platform who have experience in commercial spaces like offices but make sure to request to see their portfolio and project examples so you can be sure you are working with someone competent. This is not a time to save a couple of hundred dollars to risk the quality or timing of getting your entire team setup in your office space. 


Flexible Office Service

Flexible space services with a short-term lease and a flat monthly fee is an amazing revolution for the industry and definitely serves a purpose, but it really depends on your particular needs and the duration you are looking for. If you are looking for pure flexibility in terms of being able to switch locations because you are growing super fast and finding your own space seems too time-consuming and risky because you don’t know how many headcounts you’ll have in a month, flexible spaces like Knotel and WeWork’s are solid options. 

However, if things are a little more stable and for example if your startup has just received funding from a Venture Capitalist and you have a steady runway of capital and know your planned hiring schedule, it might be worth going down the route of finding your own space and getting a professional (Freelancer or Office Design firm) to design your space in order to save you money and extend your runway due to how much more expensive flexible spaces can be (see below our cost breakdown).

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So...What Are The Costs of Each Service

Before you make a decision on your first office, it's best to figure out the costs associated with each option. This way, you can ensure you're looking into locations, professionals and startup offices that fit your budget.

Commercial Brokers

You can negotiate your brokerage fees, which is the commission a broker earns for finding your office but typically most brokers charge 4 percent of your total gross rent, which is the base rent and operating expenses. They receive this payment throughout the term of your lease.

Architects

When you're ready to hire an architect, keep in mind that you're going to be spending about 20 percent of your office renovation budget to pay the architect or architect firm. If you're looking for a price range, this could cost up to $40,000, but this also depends on your office space, budget and the project itself.

Office Design Firm

Like architectural firms, there are firms both big and small to cater for office design with some firms specializing in huge skyscraper size projects and others focusing on smaller projects like individual offices. Specialist design firms like Uneebo that focus purely on Startup’s offices have fewer overheads than big firms and can, therefore, charge lower hourly rates. Uneebo charges $150 per hour which is bundled into hourly design packages with larger firms charging between $250 - 500 per hour.


Freelance Interior Designer

As for a freelance interior designer, the price is going to vary per project and professional, which is why most interior designers need to evaluate the space before they can give you a price. In general, the hourly rates of an office interior designer can range anywhere from $50 to $450 depending on location, with the typical rate being $150 to $200.


Flexible Office Service

In New York City or any other major city, you’re going to be spending about $100 to $125 per square foot, per month with a flexible office service. When you break down the numbers for a 5,000 square foot space in Flatiron, New York suitable for say 30-40 employees  that is approximately $42k per month, which is almost double what you would spend on your own commercial lease (~$50 per square foot). Of course, finding your own space would not include furniture, design fees, amenities and services in the plan - but if you extrapolate those investments over a 3 - 5-year lease you’ll see those come in significantly less than the flexible office cost. 

Overall Summary on Moving Into Your First Office

When you are ready to graduate from your co-working space to your first office, it's important to take your time to find the right commercial space rather than rushing to the first available space you find and then opening a can of worms with extra-curricular charges you never anticipated. If you ultimately do your research, crunch your numbers well and take the time to contact professionals for quotes, you’ll be sure to make the right decision for your team and give them an awesome space.

It may feel overwhelming researching each service option and the total costs of each, but it is very important to stay firm with your budget, add a buffer for unexpected costs and do not breach this - especially given recent economic times and how quickly this can change. You should leverage relationships with peers, clients and friends during your research to evaluate what has and has not worked for them in the past. 

As you can see from this research report there is no one size fits all, but in summary for Startups with short term needs who are willing to pay a higher monthly amount for locational flexibility and all-inclusive services then flexible spaces are a great solution, but if you have a good understanding of your financial runway and know your headcount projections, then partnering with a solid commercial broker, office design firm and/or architect is a great way to go. 

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