The challenge of creating cost-effective office space that is pleasant to work in and that inspires productivity continues to bedevil businesses. Balancing the pros and cons of various designs can leave executives confused and frustrated.
What's an employer to do? How about outsourcing your real estate needs?
There are an increasing number of companies that will handle every aspect from leasing to designing to managing work areas for corporate clients.
Businesses such as WeWork and Knotel provide companies with move-in-ready spaces carrying shorter lease terms than the five to 10 years usually required by corporate landlords. Last year, Los Angeles-based real estate giant CBRE Group Inc. launched Hana, a service that's slated to start leasing space to organizations in the second or third quarter of this year.
These providers of flexible real estate solutions are an outgrowth of the co-working spaces that have blanketed major cities in recent years, providing freelancers and small companies with a professional place to conduct business. Co-working spaces typically come with a combination of necessities and amenities, including desks, phones, coffee stations, conference rooms and support staff.
In fact, WeWork started as a co-working space and began branching out to court bigger companies in 2016, realizing its model could be upsized to accommodate larger groups. Knotel, for its part, can provide businesses with space to house up to 5,000 employees.
Companies including Microsoft, Facebook, Adidas, Starbucks and The Body Shop have signed leases with ready-to-move-in space providers.
Before inking a deal with one of these firms, here are some factors to consider:
- It will cost more per square foot to lease space from these companies than leasing directly from a landlord. However, executives at the flexible office solutions companies say the overall price can be up to 30 percent lower. That's because the service pays for everything to outfit the space, including designers, electricians and carpenters, as well as necessities such as furniture and phones.
- Shorter lease terms can benefit companies working on special projects or new initiatives with an uncertain future. Expending time and money to equip a space, only to leave it behind or go through the hassle of subleasing if it's no longer needed, is a nightmare for many employers.
- There are a growing number of flexible real estate solution companies in big cities. Shop around and negotiate the best deal.
- A transient space may or may not be a good fit for your company's culture.
- Real estate is an enormous expense. Think about whether you want to cede control of it to a third party. Also, large companies that occupy a significant amount of real estate can often leverage their size to garner favorable terms from landlords.
To read more on this topic, see Fine-Tuning the Open Office from SHRM's All Things Work newsletter.