Renting Office Space for Small Business in 2023: a Complete Guide
The outlook is bright for small businesses in the United States: plans to increase employment, expand, increase inventories, and higher earnings are all projected with confidence by business owners. Part of that growth is directly tied to physical expansion, and renting an office space is one of the first strategic moves made by small businesses.
There are several things to consider when renting an office space for your small business. If you fit any of these descriptors, you’ve come to the right place:
- You are a small business owner considering renting an office space for the first time.
- You are a small business owner or operator considering relocating your office or retail space.
This article will guide you through the process of successfully renting an office space that fits your business needs, work style, and budget. It can be overwhelming doing this for the first time, or doing it all over again, so read on to learn all of the important steps, along with expert tips to make the process easier.
Covered in this article:
- Why Renting an Office Space is Important for Small Businesses
- 5 Steps to Renting an Office Space
- How to Choose the Right Type of Office Space to Rent
- How to Identify the Amount of Office Space You Need
- How to Know Your Ideal Office Location
- How to Find an Office Space to Rent
- How to Negotiate Your Office Space Lease
- Final Tips on Renting Office Space
Why Renting an Office Space is Important for Small Businesses
Renting office space is an integral part of operating a successful small business. Even with the prevalence of remote employees, most workplace operations cannot be replaced by virtual work arrangements. There are several reasons renting an office space is important for your small business, including:
- A professional office space makes it clear to clients, customers, and the community that you are a legitimate business with plans to grow.
- The sole purpose of an office space is to conduct business, which creates a distraction-free environment, especially compared to shared spaces or working from home. When it comes to working from home versus the office, it isn’t always a net positive exchange, and some types of employees are more productive when they have to come into work.
- Offices encourage connection and collaboration. For instance, businesses located in Houston’s Innovation Corridor work alongside other businesses in similar industries, building on innovation and leveraging the synergy of shared efforts. This is a valuable byproduct of leasing office space in a commercial building.
Since the beginning of 2023, it is recorded that about 90% of employees have been required to fully return to the office. For small businesses that often have lean staff and operate as a tight-knit group, face-to-face interaction is vital to getting work done.
5 Steps to Renting an Office Space
Renting an office space is an important decision, and a big one. It’s important to exercise careful planning, research properties, and engage in the right preparational measures. While it may take a little more time at the beginning, taking the right steps saves time, money, and mitigates the risk of signing a lease for an office space you’re not thrilled to operate in or worse, can’t afford. Ideally, you’ll connect with a commercial leasing agent you can trust, then progress through these five steps.
Step 1: Choose the Right Type of Office Space to Rent
Small business owners come in many forms, they may be in a multigenerational business or starting a new entrepreneurial endeavor. So, the type of office space to rent for the small business will depend on numerous factors. Most commonly, you will choose from one of two categories: a coworking space vs. a traditional office space. Coworking spaces are trendy, and will work for teams that have hybrid arrangements, or for individuals who don’t mind shared spaces or want optimal flexibility. Traditional office spaces offer predictable privacy and amenities that small business owners may prefer. It can be helpful to have your own space, a dedicated desk, control and security, and fewer distractions. If these features are a high priority, a traditional office space or an executive suite option may be the right choice.
As you assess the type of office space to rent for your small business, download a pre-leasing checklist. This will arm you with the right questions to ask, enabling you to find a space that meets all of your criteria.
Step 2: Decide How Much Office Space You Need
It is vitally important to know your office space requirements. These will vary based on the kind of small business you run. You need to factor in both what you need now and what you need to accommodate growth plans for the future.
Generally, office spaces should allocate about 70 square feet per person. Additional factors to consider include the following:
- How much desk space does each employee need? Do they have additional furnishings or equipment that requires accommodation?
- How much collaboration do we have in the workplace, and how often do we need a separate space for it?
- What is the flow of a typical day: do all employees work the same hours at the same time? What are break schedules and meetings like?
- What type of office layout is most conducive of the business?
Some companies often encounter clients who are seeking a new office space because they’ve outgrown their current office. That’s a great problem to have, but also one that you shouldn’t repeat. Think through what you need the space to do for you, both today and as you achieve your growth goals.
An office space calculator is a valuable tool that can help you land on the right numbers, taking into account everything you need.
As you make these all-important calculations, you’ll want to understand the estimated rates per square foot for office spaces in your area. This will help you understand both what you need and how much it is likely to cost.
Step 3: Know Your Ideal Office Location
Few things are as important in real estate as location, and finding an office space is no different. For small businesses, you can take a lot of factors into consideration:
- Where do most of your employees live, and what kind of commute will they want/need?
- Which areas are growing residentially, and where would it be most strategic to locate for the convenience of future employees?
- Which areas are currently growing and would offer you the right kind of foot traffic or visibility?
- What types of businesses would it be strategic to be located near? This may be an important point for a retail location, for example, as surrounding businesses directly impact revenue potential.
- What major roads or companies would you like to be near?
- Would you like to be located in a more urban or suburban area?
As you assess where you want to be, you will also narrow down your options for buildings and amenities, enabling you and your team to choose a small business location in an ideal spot.
Step 4: Find an Office Space to Rent
All of the preliminary steps of choosing the right type of space to rent, calculating office space needs, then narrowing down your location will lead to a first key action: finding an office space to rent. Businesses that want to rent an office space can use commercial real estate listing websites or contact a professional commercial leasing agent. The first option will give you plenty of options with moderately accurate information. The second option provides you with a partner and consultant, as well as someone to vet properties in advance. Commercial leasing agents are uniquely equipped with insider knowledge of your market, going rates for offices, and what small businesses need to succeed in your area.
Once you have a shortlist of properties that meet your criteria, go check them out. When touring an office building, there are things that small business owners and operators should look for:
- What are the building’s features and amenities?
- How well is the property being managed?
- What are the current tenant reviews?
No two tenants are alike, and small business owners have unique needs to excel in the marketplace. A consultative approach ensures you never miss the right opportunity and are never left second-guessing.
This guidance is invaluable. For instance, did you know that Class B properties can still offer Class A amenities, but are more affordable?
Step 5: Negotiate Your Office Space Lease
Once you’ve found the right small business office space, it will be time to navigate the paperwork. Here, too, a commercial real estate professional can be an immense help. There are a few steps to negotiating a commercial lease transaction:
- Review the lease with legal counsel
- Draft and submit counter terms
- Negotiate until you reach a point of agreement
It will be important before going into negotiations to decide in advance what is a deal killer and what is a preference. This will help you understand how staunch to be in your requests.
Final Tips on Renting Office Space
Renting office space for your small business, especially for the first time, can be a daunting exercise. Choosing to work with professional commercial leasing agents can alleviate the stress and simplify the process of renting an office. This is a vital step toward growing your small business, and enlisting a seasoned professional can make all of the difference.
*This blog was updated in January of 2023.