As your business grows, you will need more space. Simple as that, right? Well, maybe not. 

It can be difficult to know when it’s time for a new office- especially now. In recent years, commercial real estate has been flipped on its head and finding the most efficient solution for your CRE can feel impossible.  

If your company is growing, you might be able to get by for a while by moving some employees to remote working arrangements, but there will come a time when you need more office space. Therefore, before you sign your office lease, you must understand how much space you will need and your options before moving into a new property. 

Moving can be an excellent way to better suit your company’s evolving needs. But before you sign your office lease, you should know a few things. 

1. How much space you need
2. What your expansion options are
3. How much an expansion will cost
4. What are the risks of an expansion

1. How Much Space do You Need? 

Consider your office’s most efficient space utilization. You will need to factor in the number of employees and the type of work they do. For example, if you have a lot of employees who work remotely, then you may want to base the optimal space utilization on the number of seats you need instead of the employee count.  

Then, you will need to devote each seat to a square footage of space that will be comfortable. Not only should the space allot enough room for employees, but it must be engaging enough that they want to come into the office. 

= =Take for instance, LinkedIn. Rather than plotting an expansion, they arranged their current square footage to become a more contemporary setup accounting for hybrid schedules and human psychology.  

If you need more space, you can also be more creative in constructing productive workflows that will make employees happy to come to the office.  

Consider adding elements like a cafe or a cafeteria. LinkedIn deliberately placed a cafe near the entrance to foster sociability for employees who miss the connection of in-person working environments.  

The important thing is when you relocate, keep in mind that adding certain amenities will make you a more competitive recruiter in the war for talent. Accordingly, you should account for these amenities or features when deciding how much space you need. 

2. What are Your Options? 

Once you know how much space you need, you can start looking at your options. One option is to negotiate a lease extension with your current landlord. This could allow you to add to your existing space or take over an adjacent space. Or, perhaps, you may be able to downsize your office.

Have your Tenant Rep go to the property’s landlord on your behalf. Do they even have more space to offer you? Is there space open in your current building, or would you need to branch out to another one of their properties?  Are they open to cutting space? 

It may be be in your best interest to relocate. You may as well scour the market to find the best possible location for your business.  

However, if your landlord can offer you more space and you are happy to accept, let the negotiations begin. Demand for office space is low- really low. (and your landlord knows this).

Accordingly, they will likely bend over backward to offload any vacant space under their watch. Corporate tenancy is at a premium, so for landlords to remain competitive, they must offer better rates, concessions, and terms to secure that guaranteed cash flow.    

The truth is, that even the landlord doesn’t know how far they will reach to secure a quality tenant when forced to compete.This is especially true as the macroeconomics turn in the tenant’s favor. 

So, if you leverage your tenancy properly, you have the power to secure a budget and terms that work for your interests.  Therefore, don’t  go to negotiations without an informed partner. A Tenant Rep could be the key to securing millions in savings from rent dollars to concessions. 

3. How Much will a New Office Cost? 

A new office price tag will depend on many factors, including: 

• The class of the building  
• The availability of office space in your region  
• How much space you need  
• How much buildout the new space needs  
• What you currently pay in rent 

These factors (and more) are highly tied to negotiation. In fact, the rate you pay will be decided by negotiations. But, if you know how to leverage these factors properly, you will get the best deal. Also, as discussed, credit-worthy tenancy is rare right now, so if you know how to negotiate, there’s no shortage of perks you can receive. 

You must also consider that if you’re adding on space, it may not yet be in workable condition. It will likely require some degree of renovation. Knowing the property condition is critical. This is true no matter if the property is first or second generation.  

For first generations, costs will likely be higher because the property will likely be in shell condition. Shell states vary. First, there is a cold dark shell, which is basically the building’s skeleton. It lacks elements like: 

-Flooring 

-Lighting 

-HVAC 

-Ceilings 

If you don’t come to play in negotiations, your budget can be responsible for these costs. Your landlord may attempt to put the financial burden on you. Remember that if your introduced stay is longer than the usable life of these features, your landlord should cover them. Why? They can service another tenant after you leave. 

Make sure your new work letter starts at a warm vanilla shell. The warm vanilla shell is more livable than the cold dark. The environment is bare but equipped with the features lacked by the cold dark shell. Starting your tenant improvement allowance from a warm vanilla shell will ensure you’re not stuck with the cost of building out the landlord’s space.  

If you enter a second-generation space, the space will still likely need adjustments. However, the level will probably be far less extensive (even if you’re planning an innovative overhaul like LinkedIn). Regardless, second-generation spaces are usually quicker and less expensive options for expansion.  

So consider the cost of build-out when you’re planning an expansion. It could potentially be more expensive than you had predicted. Regardless, you can negotiate a tenant improvement allowance to alleviate these costs. But be prepared for the build-out stage of an office expansion. 

4. What are the Risks of an Office Relocation? 

It’s no secret that commercial real estate has undergone tectonic shifts in recent years. Not only this but how we work is different with the emergence of remote methods.  

So you should be absolutely certain in your decision to plan a relocation before you get stuck paying for more space you may not use efficiently. 

There is a lot of uncertainty regarding the future of CRE. If your needs have recently changed, you may not have enough information to make a long-term decision for your company’s spatial needs right now. You also risk losing time and productivity in a time where these features are absolutely critical. 

So, will the costs of a new office be worth the end result? It’s tough to say. Obviously, the situation will vary by company, and what works for one organization may not benefit another. 

However, if your entire company (or most) is utilizing remote means, it may be better for you to rethink a physical expansion right now. 

Plan Your Relocation with a Tenant Rep 

If you find that an office relocation is in your future, a Tenant Rep could be an invaluable partner. As commercial real estate experts, Tenant Reps can help you find the best new properties or renegotiate with your current landlord.  

They can determine your optimal space utilization and give you the means to achieve it. In the process, you may be able to save millions on your current CRE expenses. As Tenant Reps ourselves, we have a rich history of leading our corporate clients to optimal solutions for their real estate portfolios. Our over three decades of experience prepares us with the market intelligence you need to function your CRE most efficiently. 

So don’t wait any longer. If it’s time for a new office (or just an evaluation of your CRE performance), work with a Tenant Rep to find the best properties, prices, and terms.  

In the mean time, we want you to be fully empowered to find the best office space for your business on your own. So, we created a free, premium course that will walk you through the seven steps you need to know when finding office space.