How to Optimize your Use of Virtual and Shared Office Services
During this economic cycle you may be considering starting your own firm or you need to graduate from your home office. At the same time, taking on a long-term lease for 1,000 square feet or more sounds a little too risky to you.
There are alternative options – you just need to know where to look for them. An office option growing in popularity is shared office space.
Why shared office space?
There is a certain degree of added professionalism and credibility when you work out of an office instead of the home. It also creates a “business” environment that allows you to interact with other business professionals. This often creates a greater sense of creativity and productivity.
Is a shared environment right for me?
To make the right assessment, check the following:
- Am I more productive working solo or in a group environment
- Is working from a café a reasonable alternative or do I need a professional address?
- If I decide to incorporate, what are the implications for the business address?
- Are there advantages to keeping my business address and home address separate?
- Would it be helpful to have access to a conference room for meetings with prospects and clients?
- Can I afford a minimum of $75/month for access to space?
- Do I know anyone who would like to share space with me?
What shared space options should I consider?
Option 1: shared office spaces or executive suites. These facilities offer full amenities: furnished offices with phone, Internet, conference facilities and shared reception teams. The fastest search is to use a web broker for this type of space. There are a number of operators in most primary and secondary markets in the US. This is a free service to you – the operator pays the web broker. These include: Office Finder, Search Office Space, InstantOffice, OfficeBroker and several more. Note that many of these brokers carry the same “inventory” or listings for the same centers. Choosing just one of these listing services is your best bet. Otherwise, you may receive duplicate emails/contacts from the same location.
Option 2: a “virtual” office. Using the same resources as above, you may want a “part-time” office option. This affords the ability to subscribe to a shared space provider to establish a working address and have occasional use of an office or conference room when you need to meet with a client or you need an office when you are in-between appointments. You may also choose telephone answering services with this type of a plan. The phone would be answered according to instructions you provide, and calls could be forwarded off site or placed into the voice message system & accessed via email.
Option 3: subleasing from another firm. This may be a shared option as well but less structured. Perhaps an attorney has an extra office or two for sublease. This may include the furniture, use of the phone system, access to the Internet, copier, conference room and perhaps some shared reception services. Such listings appear on Craigslist or through your local newspaper.
Option 4: co-working space. This is the newest option in sharing office space. The idea is based on creating a community of like-minded professionals. One or two people may begin looking for a small space from which to work (800 to 1,200 sq ft), and begin to network with friends and colleagues about the concept. Typical community targets would be those who are solo practitioners, such as programmers or telecommuters who may be able to share in the cost of the monthly rent. Members envision growing their businesses through this natural business referral process. The workspace is open plan with a few desks and perhaps a large conference table, offering flexible in/out hours to use the space. It is a members-only concept and may max out at 12 to 15 members. Some are much larger. There are for-profit and non-profit entities. To learn more about this in your city, please go to: http://wiki.coworking.info/
What should I expect in the size and price of the space?
The executive suite/shared office options range in size from an average of just under 100 square feet for one person, and up to 300 or 400 square feet for a group office. If you elect to sign on for an all-inclusive package with amenities that might include furniture, phone, Internet, conference room, etc., anticipate spending anywhere from $900 to $2,000/month. Other service details vary according to each market and each owner.
The cost of the space can go down dramatically if you elect to consider additional options:
Virtual plans – these are essentially executive suites with a “pay as you go” format, setting a specific number of hours you can use the space. It usually includes a mailing address. Expect to pay about $50 to $100/month, but plans can rise to $350/monoth if you require more hours/services.
Sublease – this arrangement will require a signed agreement for the space for a specific period of time, usually at least a year (it is virtually impossible to get a 6-month lease with a landlord on 150 s.f. of space despite the current economy).
If you negotiate a longer term lease, the monthly price will usually be reduced. Expect to pay between $50 and $80/sq.ft. or approximately $750 - $1,200/month for all-inclusive space depending on your market.
Co-working – this is new and your metro area may have widely ranging options on size and price. Recent research indicates that prices range from a bargain $25/month for drop-in/part-time membership; to a $150/mo for a frequent part-timer at an open desk; to a $350/mo for full-time assigned desk. The price rises to about $1,400/mo. for a 24-7 access to a permanent full office. Check with your provider as to their terms. Being a newer concept there are fewer hard pricing facts to find.
How do I negotiate a favorable agreement?
Like buying a car, when you start adding amenities beyond the “standard model,” the price begins to rise. When you begin searching for office space, it’s best to start off with a list of “must haves” and an added plan with a list of “extras” that would be “nice to have.”
The key is ensuring that the space you select is convenient and has the size and services you need. Your leasing team usually has experience working with professionals like you, and can help you make appropriate decisions.
Like any investment, read the agreement carefully. The most frequent complaint from new office tenants is that they are being “nickled and dimed.” Consequently, place a restriction on any “ancillary service charges” that appear on your invoice. Insert language that states “any ancillary service charges exceeding $35/month must be pre-approved in writing by client”. Ask to include 2 hours/month of such services if you think you’ll actually use them. Over that amount must be pre-approved in writing.
How long should the process take?
Take your time and network, network, network. In the current economy, now is a good time to start the search process. Expect to take a month or two to find a good option. Do your homework. Call colleagues to see if they have space in their own current offices. Ask your church or synagogue members if they know of space. Use the online services.
A colleague of mine was subletting space when he received a call from a vendor of his who was downsizing his business and needed an office. My colleague arranged for his vendor to lease an office nearby. When their lease expired, the two found a two-office suite and are currently operating their own businesses out of a space is that twice as large and carries ½ the monthly rent. For more information on property services and property management software, click here to read our buyer's guide.
Wendy Spreenberg is the founder and president of SITE RESolutions, LLC, a Chicago-based commercial real estate firm designed to meet the unique needs of entrepreneurs and small to mid-sized businesses. In this capacity, Ms. Spreenberg is responsible for a comprehensive suite of consulting services including tenant/buyer representation, property leasing, business center management, contract negotiation, and the development of incubator and shared office facilities. SAdditionally, Ms. Spreenberg is the co-founder of The Executive Suite Institute, a training and certification program established in 2006 for owners and operators within the serviced offices industry.