Shared offices are a popular choice for entrepreneurs with an eye toward expansion, offering everything from best-in-class amenities to a built-in professional network that can prove invaluable to growing businesses. But at what point does it make financial sense for a company to leave the shared office environment and transition to a space of its own?
For smaller firms, the answer may be never, especially if they don't plan on employing more than a handful of people. For larger companies, however, the need for additional space can come sooner than expected, sending unprepared businesses into a scramble to find an office capable of housing their growing team.
Shared office users that find themselves weighing whether they should upgrade to a larger collaborative space or lease an office of their own should ask several key questions before finalizing their decision:
- Is the growth temporary or reflective of a long-term need?: Almost every type of business has a busy period - for accountants, it's tax season, while divorce attorneys see a surge in business after the holidays - so it's important for a shared office user to determine whether the additional space still will be needed six months from now. If the answer is "no," a shared office is likely the more economical choice, allowing a business to add space when needed and scale back without being locked into a long-term lease. If the extra square footage is essential for scaling operations, however, it may be time for an upgrade, which brings us to question #2.
- Can I afford a space of my own?: Think about the day-to-day operations in your existing space and how you've used the shared office environment. Does your team utilize the conference rooms on a regular basis? What about lounges and other, more casual workspaces? And if you move to your own office, are you planning to hire a receptionist to answer calls and assist with other administrative functions that were previously handled by the center's support staff?
Businesses that take full advantage of the services and amenities available in a shared office center may be surprised to learn they don't have the resources to replicate that environment in a space of their own. Conventional offices are already more expensive on a price-per-square-foot basis, especially in central business districts where landlords charge a premium for office space, so companies that want conference rooms, lounges and all the other bells and whistles they've grown accustomed to will need to ensure there's enough money in the budget to support them.
- Am I really ready?: Finances aside, a relocation doesn't always make sense for businesses that have not yet outgrown the shared office environment. If companies regularly network with fellow tenants, either through one-on-one interactions or organized social events, they should consider what effect losing that built-in professional network might have on the growth of their company. A relocation could also alienate existing customers if it means moving to a location that is not as accessible to clients. Ultimately, there's no shame in sticking with a shared office long term, especially if there's no real reason to leave.
Some shared office providers offer brokerage services to companies considering a move - and at no additional cost to the tenant. Businesses that have a difficult time answering these questions, or that decide they're ready to search for a space of their own, should consult an experienced real estate professional who can help them make an informed decision about their real estate needs and avoid committing to a lease they end up regretting.
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Frank Chalupa is president and co-founder of Amata Office Solutions, a Chicago-based real estate provider specializing in office solutions for companies requiring up to 10,000 square feet of office space.