Either when you are having an established business or you are just starting up, finding the right office for your team is one of the most important things you will need to undertake as a business leader or decision-maker.
However, finding the ideal office space for your business is certainly no easy task. It can take up a person or even a whole team plenty of time and resources,
With more than 6 years of industry experience, we have helped numerous businesses in leasing their offices within their parameters and budget. As challenging and fulfilling it may be, we have also come across many businesses approaching us when they encountered several mistakes in leasing their offices, especially for new businesses.
What are the common mistakes made in searching for the right office space?
1. Not doing enough research
It is really critical to take the time to do some in-depth research, or at least dedicate a member of your team to this task. Some of the factors that are important to consider are your budget, how much space you exactly need, the office location. For certain businesses such as logistics, transport, additional research may be required on the locations, as certain locations will probably serve the specified businesses better. We would always recommend drawing up a list of shortlisted offices that meet your criteria, even before physically inspecting them. Budget is also a critical factor. A business will have to know if they have what it takes to last them in their new office space for the next few years or even longer.
Certain factors like layout , expansion options, technology, infrastructure, facilities , amenities and suitability for long term growth , will be critical in determining whether the final choice of workspace will be the right office for you and your team.
2. Choosing an office with the wrong size
As mentioned in our previous blog post, most businesses often miscalculate the actual space required. More often, they lease an office that’s probably way too big when there is large unwanted space. Hence a lot of money and resources are wasted. In the event of getting a space too small, you may need to lease additional space or even relocate, resulting in loss of money and time again.
Some factors affecting the size of your office space will be
- Projected growth
- Significant changes that your business will undergo.
- Projected number of staff you are going to hire in the near future.
- Contingency plans in the event of drastic changes in your business landscape.
- Disaster management
3. Mis-judging your requirements
We met many businesses moving from traditional offices to Serviced and Flexible offices. In the course of moving or even before embarking on the search, they often feel that the same requirements they used to have will also apply in their new office. Most often, this is not the case and many costs and requirements may not be necessary after all. Things such a dedicated receptionist and meeting room are very good examples. Facilities such as receptionist, office front desk, pantry, and meeting rooms are provided as common facilities and payable on an ad hoc basis, unlike in traditional offices where you will need to create and pay yourself, hence resulting in massive costs savings.
Grave underestimation of your requirements could even be more pronounced when a business move from a flexible workspace to their own long term dedicated office. Some of the factors affecting this are as below
- Size required.
- Facilities required
- Costs involved, such as security deposit and outfitting etc.
- Time required for given transition.
- Ancillary staff requirements.
4. Signing up for an office that’s too fanciful.
We are currently in the midst of an era where many co-working and flexible offices are opening in huge numbers in various Asia Pacific cities. In an extremely competitive environment, many offices have offered attractive and fanciful perks such as plush interiors, custom-made furnishings and many different fanciful themes such as luxurious hospitality , loud & outspoken themes, some offering free beer and ping pong games. While it’s generally a good thing to differentiate among the competition by offering something special to entice prospective tenants. However, tenants made the mistake by signing up for such offices that offer such perks and fanciful designs, and thereafter only realizing that many of such features are not necessary for their business operations and having to made to pay extra for all of these.
5. Signing up for a lease that’s too short or too long
This is another prominent and yet very common shortfall. Some businesses during their startup phase, sign an office lease for a period that’s way too short. The downside is, upon the expiry of the lease, they will be expected to pay a higher rental for extension or renewal. Typically 6 or 12 months should be a better option if businesses are unsure of their business growth. On the other hand, many businesses commit the biggest mistake by signing leases that’s way too long. Either the businesses outgrow their needs or their cutting down of costs and manpower, resulting in excess space in the office they first signed up for.
Some ways to circumvent it, is there a possibility to look at below options ?
- Creating an early release clause in your lease.
- Negotiate a cap rental for the first few years.
6. Not choosing a well qualified broker for your search
With the availability of online search sites for office spaces, many businesses have chose to search for their new premises on their own. By not engaging a broker , they may think that they can save a bit of costs on their side. The truth is Tenants or occupiers rarely have to pay their brokers. Their commission are paid by landlords and building owners. Even if this could constitute a very minor percentage of the costs involved in signing the final office lease, the benefits from engaging a broker far outweigh this minor one off costs.
Your qualified broker is able to gather a short list of office space locations according to your specifications and preferences. He or she will also be able to point out to you what are the advantages or disadvantages of each specific location that an owner will definitely not give you a non biased reflection of their properties. This is a danger itself when one sign up at a location before even when its exposed to different options.
7. Lack of know how to negotiate with your Landlord
Without any knowledge and experience in negotiating with your Landlord , the tenant will be left at a great disadvantage. First , they may not know or not familiar with the standard market practice, the jargon and complexities of terms on lease agreement. This bring us to the previous point of engaging a well qualified and experienced broker. A savvy broker will be able to point out to you and hand hold you through out the entire process , right from sourcing, shortlisting and negotiation and right up to getting your keys and out fitting the premises. Without all of the above, there’s a likely possibility that costly mistakes will be made , incurring huge losses.
Looking for a new office soon? Unsure of how to do it?