5 Questions To Ask Before You Rent An Office

corner officeChoosing the right space for your company is about more than just finding a place to hang your hat and do business.

Recruiting firms that are doing it right — whether large or small, national or local — not only lock in efficient space at economic terms that work for their business, but also create work environments that reflect their culture, ethos, and values. As a result, they can work more productively and retain workers more effectively.

While every case is different, here are five key questions to ask yourself before you commit to a move.

1.  Do I really need to move?

Often companies jump to a relocation before giving adequate thought as to whether they can stay in their existing space (not unlike employees who change jobs before they fully understand either what the new job offers or why they are leaving their current job).

A relocation often costs more (and is more disruptive) to an organization than a simple upgrade or downgrade of existing space, so I always like to push clients to first fully assess what renovations can be done to the existing space.

Remember, living through a renovation can be difficult on your ongoing operations, so make sure you factor this into your decision making.

2.  Am I spending more money on space than is necessary?

Some people mistakenly think that a growing rent bill is the sign of a growing company. I know from experience that many growing companies actually need less space (and expense) rather than more space, taking into consideration the newest trends in occupying space.

Consider for a moment the situation of one of our clients, the U.S. member firm of global accounting and consulting network, BDO. For BDO USA, business is booming through expansions into new markets and adding new clients and engagements. In the second and third quarters of 2013, BDO took the top spot in  Accounting Today’s league tables for large-firm gains of SEC audit clients.

Even so, our goal for BDO is actually to shrink their office footprint per person substantially over the next five years. For example, in a recent lease in San Francisco, we reduced their per person footprint by over 30%, allowing them to fit significantly more people in less space while adding additional collaboration and support space.

In another existing location, we were able to increase density by 23% by implementing new “smart officing” standards. For a company that helps other companies measure their bottom line, BDO is being wise about its own by using a flexible work strategy that improves employees’ work-life balance, while reducing real estate costs.

3.  Am I hedging the potential risk?

Because of the volatility of our economy, any company signing a new office lease should seek to hedge three potential types of risk:

  • Building Risk:  The risk that a change to the building’s ownership or infrastructure impacts your occupancy. For example, can the technology capabilities of the building change over time or will they become obsolete? Is the new ownership not as “tenant friendly” or less interested in making changes to the building over time that will maintain it in a first class manner?
  • Market Risk:  This is risk related to events in the global market place which trickle through to real estate and have an impact on the rent tenants pay. Sources of market risk include recessions, political turmoil, changes in interest rates, natural disasters, or terrorist attacks.
  • Business Risk: The inherent risks within your own business that impact profitability. Will a recession result in a slow down of hiring or, as in the last recession, will you need to layoff recruiters?

To mitigate these risks in your new office lease, you must clearly understand your ability (or lack thereof) to increase or contract your space over the course of that lease or, in extreme cases, even terminate it. This is especially important if you’re considering a five or even 10 year lease term.

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In lease negotiation, push to have as much lease flexibility as you can — with layers of options to expand, contract, and terminate. This is very important and, I believe, worth paying a premium for

4.  Does the location support our employees?

Seek an office location that is convenient for your employees — and not just convenient for the company’s owners and top executives.

Remember, too, that convenience is about more than just commute times. For instance, if work-life balance is important, then you could choose a location where there are amenities and services nearby (such as fitness centers, restaurants, yoga classes, and doggie day care) that support this.

5. Does your space reflect your culture and brand?

The commercial real estate industry has been redefined as a result of technology, lifestyle and work habit changes. Companies need to embrace these changes and recognize the importance of having space that reflects their brand, values and culture. You cannot only value a square foot, but instead need to look at the greater holistic value of the environment and how it effects your business strategy.

Remember that organizational value and staff motivation is encapsulated in one place – your space. Space isn’t just a building, carpets or cubicles, it’s a place where collaboration occurs and best practices are identified. I often advise my clients that their space should frame their people and always frame their values.

Remember, along with decisions about whom to hire, decisions about where to locate your office is usually the second largest expense. As a result, it should be top of mind for any forward-thinking recruiting firm.

No, it’s not rocket science; but it does require some forethought, strategy, planning, and timely execution. That is why I always recommend finding an experienced commercial real estate broker who doesn’t have the typical conflicts of interest commonly found in the industry. You can determine this by asking him or her if their company also represents the building landlord in this or other transactions.

Like the recruiting game, the office game is yours to win. Know the rules and get advice from someone who plays it well.

Howard Ecker founded Howard Ecker + Company in 1975 as the first real estate company in Chicago devoted exclusively to representing tenants. Notable projects include successfully negotiating a built-to-suit space for the Shure Brothers corporate headquarters, securing 200,000 square feet in two leases for his client BDO in Midtown Manhattan, and founding Ecker Green, a company that uses a behavioral-change model to help businesses embrace energy efficient operations. Howard started his career at Cushman & Wakefield and at Arthur Rubloff & Company.

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