An integral part of growing a business’ operation is the necessity of expanding its office space size. Construction workers often say, “Measure twice, cut once,” to save resources and not spend unnecessarily on supplies. This sentiment rings true for organizations in need of expanding their current work environment. Let’s look further into how companies on the rise can expand their office space with efficiency and the pivotal expansion options that often accompany office leases.
Determine Exactly How Much Office Space Is Needed
Hiring more employees, buying new equipment, and upgrading computer storage systems all require extra space. If a sizable organization is likely to upsize further in the coming years, it’s a good idea to anticipate that growth by leasing enough space rather than spending oodles of hard-earned money on space that isn’t adequate enough to house all of their current employees. It’s always better to spend more time planning now than having troubles with fitting equipment and human capital into small spaces like jamming sardines into cans.
Tally up additional functions, equipment, and employees that will be added. Different things take up varying amounts of floor space, so this step shouldn’t be ignored.
Calculate how much space is needed per equipment or business function. If it’s not possible to be certain of these values, estimate as accurately as possible. Aim for liberal estimations, helping reduce the risk of purchasing too little building space. After performing these necessary calculations, measure the current facilities’ floor space. Wouldn’t it stink to improperly estimate how much room is needed? Well, taking these necessary precautions will reduce this risk.
The Basics of Expansion Options
Any company that has a large office space must deal with lease contracts, unless they have enough capital to purchase facilities outright. Even if they have the ability to outright purchase buildings, they usually lease because of less business risk, and they get to save a few — more like thousands upon thousands — dollars. Here are a few basic expansion options you’ll want to review with your landlord:
Right of First Offer
Let’s say the landlord of office space (A) decides to place it on the market. If business (B) holds a Right of First offer (ROFO) clause against that space, owner (A) must offer the office to business (B) before offering it to anybody else.
Right of First Refusal
Let’s say landlord (A) remits a lease or purchase offer to an independent party (B) for that building. If another individual or business (C) holds a Right of First Refusal (ROFR) against that building, Party (C) has the right to purchase or lease that building, facility, or office space at the same terms it was offered to that independent party (B).
Party (C) is usually the current leaseholder with an office, or had leased it sometime in the past. This matters because businesses must spend lots of money and effort towards securing new facilities, especially those with large office spaces.
Both of these rights are common in commercial real estate, and businesses that hold these clauses have significant benefits with them.
Decide on What Property Class and Office Space Type is Necessary
A building’s classification is generally used to help tenants, brokers, and building owners categorize properties by their age, aesthetics, technological advancements, amenities, infrastructure, and location.
- Class A office buildings are usually less than ten years old and crafted with unmatched quality. It’s usually the most expensive, too.
- Class B office buildings are often a bit older (between five and thirty years of age), and features reasonable accommodations with above average building finishes.
- Class C properties have limited amount of amenities available to tenants. However, Class C buildings are undoubtedly the most affordable.
If your business serves the fanciest of clients, consider investing in Class A office space. Class B office spaces are usually the best bet if your business needs sufficient floor space without breaking the bank. Also, make sure to adhere to local and state government laws if your business needs to be housed in particular office spaces.
The type of office space must also be considered when exploring expansion options. There are mainly three different types of office spaces utilized by businesses today:
- Executive Suites are great for small businesses and individuals. These types of spaces give tenants access to shared common areas and amenities.
- Traditional Office Spaces are self contained units that offers privacy and control.
- Flex Spaces provides an office and a warehouse in one location, perfect for import/export or eCommerce businesses.
Many large businesses will have opportunities to expand at some point during their lifetimes. These tips will help every corporate business owner expand their office space with efficiency.