A traditional Office Lease? Really?
If you find yourself at the tipping point in your current office location, whatever this may be – your landlord is raising the rent, the location is no longer convenient, your staff’s commute, or public transportation woes are forcing the move there is a new option for you.
Traditionally in New York City, an office lease commitment must really be at least five years, you may or may not have a broker to pay, lawyers fees, at least three months security, and this is before other “baked in” additional monthly payments such as tax increases, insurance, buying furniture, setting up and paying for WiFi, electricity, printer/scanner/copier and so on.
There is something else to your office lease, you are in your own office with your staff and in a bubble. If you are leasing your own office there is no opportunity to bump into people from different backgrounds, talents, and professions. No variety. Before we continue down this road lets look at some financial costs.
Twelve Person Office
- Office Lease: 5 years (with escalations)
- Rent: $8,000 a month
- Security 4 months $34,000 Set up fee
- Tax Share: $1,000 a month
- Utilities: $1,000 a month
- Broker: $8000 Set up fee
- Lawyer Fee: $3000 Set up fee
- Insurance: $950 a month
- Furniture $700pp $8,400 Set up fee
- Phones $500 a month
- Print/scan/copier $1,500
- Supplies: $350 a month
TOTAL MONTHLY: $13,300
TOTAL SET UP FEE: $53,400
Now for the comparison.
Lets use our space, the CoLab-Factory here in Brooklyn NY for the comparison.
Twelve Person Office
- Office Term: Two Years
- Membership Fee: $8,000 a month
- Security 1 month $8000 Set up fee
- Utilities: included
- Tax Share: included
- Broker: none
- Lawyer Fee: up to you
- Insurance: $500
- Furniture: included
- Phones $60 pp a month (5 phones)
- Application: $100 Set up fee
- Per desk set up fee: $50 per desk $600 Set up fee
TOTAL MONTHLY: $8,800
TOTAL SET UP FEE: $8,700
Speaking to Brokers
I had called area brokers to get their view on office leasing as opposed to office leasing in a coworking environment. There responses were similar – going through a laundry list of reasons why a potential office tenant will not look for space in a coworking environment. Really, it all sounded like bullshit to me. The number one item was lease term, stating that office tenants want to stay in place, and I agree! But here’s another important wrinkle, coworking and shared office operators want their office members to stay and be happy as well! Anyone has the option to stay long term.
Needless to say, the money saved at a coworking space is fantastic! The potential upfront savings here is $44,700! That’s real money, that is cash that could be working for you company, buying supplies, paying for employees, improving your systems, And the monthly savings is by my math $4500 a month! That $54,000 a year, again money that can be deployed wherever you feel it will best serve your bottom line.
At the CoLab-Factory we take care of everything so you can get to work, we wrap most of these extras you encounter at an office lease into our membership fee, not to mention monthly lunches, coffee, tea, maintenance, and office cleaning.
This is a specific choice on how you want to grow your business, who your people are, and what makes for a more dynamic and productive environment, which all leads to your set of goals and objectives, whatever that may be: Making an impact, improving your bottom line, or providing a service. What is the best environment to be happy and productive?
Having your own office inside a coworking environment is an excellent way to generate more action and forward motion from your team. Some of the reasons I say this include:
- Break out sessions that take place outside your office but in the community
- Engagement at member lunches and events where you encounter professionals from outside your work bubble, but who could potentially be collaborators.
- Use of services and amenities that are included with membership
- Exercising the use of various work environments outside your office at work bars, in the cafe, or lounge areas, changing up the physical work environment without leaving the office gives us greater variety and flavor in how work is approached.
If your focus is to focus your team on one task, or lock down the environment – that is doable in a coworking space, but possibly better achieved in your own office. But its worth really exploring in depth what kind of company you are becoming, what environment fosters that, and what are the costs financially and emotionally that come along with it.
Shane Barbanel is the Founder & CEO of the CoLab-Factory one of the finest cowokring and office locations in downtown Brooklyn.