How to Think about Your Square Footage Needs

Last Updated December 26, 2016

Should you think big as you start your office search? Or is thinking small the better choice?

It’s actually a crucial question: Will the needs of your business be better served by a smaller office? Or are you confident enough in the potential growth of your company that moving into a larger office space makes sense?

To answer these questions you’ll need to take a close look at the pros and cons of both large and small office spaces. You’ll also need to make an honest assessment of your business to determine whether thinking big or thinking small makes more financial sense.

Going small

Many small business owners, especially those with relatively new businesses, like to start small when it comes to leasing office space. Not only do they want a small space for their business, they always want a shorter-term office lease.

The benefits to this are fairly obvious. Smaller offices cost less. If owners find that they have to shut down their businesses, they won’t be out quite as much money as they would have been if they had invested in a larger, more costly, office space.

Newer businesses tend to have smaller staffs and less equipment. If this is the case, a smaller office space makes more sense.

At the same time, many newer small business owners choose a shorter-term office lease, maybe one that lasts one or two years before renewal time.

The main benefit of this approach? It gives business owners the maximum amount of flexibility. Owners can more quickly move to another office if their business should succeed and grow.

Of course, the small approach does come with its own potential pitfalls. Your business might grow so rapidly that it becomes cramped in its small space. And taking out a short-term office lease can be costly; many landlords charge higher rents-per-square-foot when issuing out short-term office leases. It’s a way to cover the time and costs of finding a new tenant after just a one- or two-year period.

Going big

Searching for larger office space comes with its own set of pros and cons.

On the plus side, larger office space gives your small business the opportunity to grow. If your business succeeds, you can simply use more of your existing office space. You won’t have to search for a new office to call home.

A larger office space also allows you to more easily add new equipment without crowding your staff members. It also gives you flexibility to add meeting rooms, more comfortable waiting areas and other amenities that might not fit in a smaller office space.

And what if you think big in another way, by taking out a long-term rather than a short-term office lease? Again, there is a significant benefit by going this route. You’ll have more stability. You know that your business has found a long-term home, and that you won’t need to waste time searching for a new office space just one or two years in the future.

At the same time, your rent per square foot might actually be cheaper if you take out a long-term lease. It’s the opposite of what happens when you take out a short-term lease: Landlords will charge you lower rents-per-square-foot because they won’t have to spend time searching for a new tenant after just one year.

As with leasing a small office on a short-term basis, there are also negatives associated with going big. If you rent a large office, you’ll have to spend more. There is simply more square footage to pay for.

And if you take out a long-term lease, you’ll lose the flexibility that comes with shorter leases. Maybe after two years, you’ll want to move to a new neighborhood, one that’s more attractive to your clients. Doing that can be costly if you still have five years left on your existing long-term lease.

Analyzing your business

Finally, before making any decisions on small or large office space – or short-term or long-term leases – take a careful look at your business.

How much do you believe that your business will grow in the next year? How much will it grow in the next five years? Do you meet regularly with clients at your office, or does most of your client interaction take place over the phone or through e-mail? Will you need a larger number of staffers in the coming years?

The answers to these questions can help you determine whether thinking big or thinking small makes more sense for your business. Don’t skip this analysis. It’s the only way you’ll know for sure that you’ve made the right leasing choice.