How to get a great deal on an office space in the down market.
by Kirill Zubovsky
Down market is a perfect opportunity to lock in a great deal on an office space, but how? Simply saying that you want to pay less is not going to get you anywhere, in most cases. Landlords are not renting space as a charity, but they are understanding. What you need to do is offer a way in which you get a discount, and landlords get a deal. When it comes to coworking spaces, the best win-win is to offer a long-term commitment.
Managing tenants that leave every few months incurs cleaning and sales costs, among other headaches. Knowing that someone wants to stay with you for six months, a year, or even longer, is a sure way to save money. It will make me happy having you here long term, and it will give you a break.
How much of a discount should you ask for? If you go to WeWork and ask for a price cut on a 12 months lease, they might not care. The salary of the person you talk to at a big commercial space is probably not hinged on the leases they sign, at least not directly. Maybe you get a bone if you catch them on a good day, but there are no guarantees.
Meanwhile, a smaller player, a mom-and-pop business, we have a constant pulse on our finances, and if you offer to rent an empty space today at a discount, we understand that is a much better deal than to wait around and see who might pay a full price tomorrow. Let’s say a small 3-people office space costs $1665 a month, that’s almost $20k a year. If the office sits empty for the next 3 months, I stand to lose $5k. Theoretically, if you sign a 12 month commitment, I can give you a discount somewhere between zero and 5k. We will probably meet somewhere in the middle.
If the above does not work, or you can’t find a suitable coworking space in your area, I would suggest getting creative and looking for other underutilized spaces.
Coffee shops, for example, sometimes have community meeting rooms. Those spaces sit unused for 6 days a week. If you offer them money, they will take it, but just like above, you have to find the right person to talk to. If you propose a deal to the barista, they might not have the right frame of understanding to see what you are trying to achieve. Find the manager, meet the owner, and then when you know you’re pitching to the decision maker, make your move.
Lastly, if all fails, see if you can recruit some friends. While a small team can only afford a small space, as you get more friends together, you could be looking at a much bigger space that will cost you less, and especially right now. With the return to office not happening as expected, and on top of that with companies doing layoffs, large commercial spaces will end up sitting empty. It might cost you $20k/ year for an office that will fit 3, and $200k / year for an office that fits 100. In that case, do a little bit of research, and find yourself more people.
All things considered, now is a great time to find your new office. The economy is slowing down, there's a lot of uncertainty, many offices are sitting empty, and you have the power to find your new space. Don’t miss the opportunity, it won’t last forever. Business owners understand that life is not all black and white, but it is on you to start a conversation. Start now.
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