There is good news for growing businesses looking for office space—most markets have a wide supply of properties and reasonable rates. Roughly 16 percent of all office space in the United States will lack tenants in 2013, according to the National Association of Realtors (NAR). This is encouraging for small business owners, as the industry considers anything above 13 percent vacancy to be a “tenant-favorable” market.
When it comes to pricing, the national average asking rate in the second quarter of 2013 was $28.80 per square foot per year, says George Ratiu, director of quantitative and commercial research for the Washington-based NAR. Much depends on the market, as suburban rates, for instance, were much softer than downtown prices. But, generally, these are good times for businesses seeking office space.
Businesses of all types are saving money on office space by the simple trick of using less space per worker. Instead of individual offices or cubicles created from movable partitions, offices are now more likely to have rows of desks lined up in open rooms. Desks and workstations themselves are likely to be 3 feet by 4 feet, smaller than in the past. And some offices are seating workers side-by-side at long tables, facing one another over low dividers in the center.
Less leased space equals less money spent on rent. That frees up resources to spend on outfitting office spaces with the latest in technology and furnishings, including additional speakerphones, conference tables, whiteboards and other accoutrements of collaborative work.
Today’s office workers are likely to do more work away from their desks as well. That means all offices need to be outfitted with robust wireless computer networks that reach lounges, kitchens, and other spaces not usually associated with productivity. “Employees are mobile and there are a lot of recreational areas where employees are allowed to work,” says Jack Cohen, co-founder of Skylight Leasing, a tenant representative in New York City.
Increasingly, companies are opting for temporary workspaces, offering employees the option to move around and share workstations rather than be anchored to one permanent desk. This “hoteling” of office space is an extension of business’s effort to make investments in offices more efficient, and could be a good solution for growing businesses looking to keep office space costs to a minimum.
“Forty percent of workspace is often unoccupied at any given point in the day,” according to Bob Chodos, principal in the Chicago office of real estate service firm Colliers International. “People are with clients or doing sales pitches or traveling, and companies are looking at that built-in vacancy in their real estate and trying to find ways to utilize that better.”
Another way to more effectively use office space is to get it from a virtual office provider, such as Regus, that leases executive suite-type space on flexible terms. These virtual office rentals can provide spaces large or small for varying lengths of times, so businesses don't have to commit to long-term leases for space that may not be needed.
Virtual offices are often well-suited to smaller companies up to about 10 employees, Cohen says. Many growing companies find workers feed off the energy and collaboration found in virtual offices where other young and innovative firms are quartered. But most find that as they grow past a dozen or so workers it makes sense to secure their own space and furnish it themselves.
In 2014, the total amount of office space is expected to grow, as investors attracted by positive returns pour money into constructing new properties, Ratiu says. This means plenty of options for businesses looking to expand–including both newly built spaces and existing locations that could soon be vacated as other businesses relocate to new construction.
Still, while there is currently a good selection of properties, Ratiu says we should also see stronger occupancy figures next year as demand outstrips supply. So one important tip for finding and outfitting new office space today is to do it sooner rather than later.
This article is part of a series in partnership with American Express OPEN. For more tips about growing your business, head to OPEN Forum. As a member, you'll be a part of an advice-sharing community where business owners come together to exchange experiences and insights, inspiring and supporting each other to succeed.