Most business owners would agree that one of their largest expenses is office rent. It is not uncommon for net office rental rates in quality office towers in downtown Vancouver to exceed $35 per square foot. In addition to net rent, a business owner must pay a share of operating expenses and property taxes and that can be as much as $20 per square foot. Assuming a 1,000 square foot office, rent would be over $4,500 per month, before taxes. For a small to mid-sized business, that can be a large part of their cash flow.
So what options do you have if you need a downtown address, but need to watch your pennies?
· Consider renting from a company that provides packaged office solutions. In Vancouver, companies like Regus and New Look Business Centre are ideal for smaller companies who need a downtown address, but want the flexibility to expand and contract as needed. These business centres offer modern offices, full IT support, shared boardrooms and a multitude of other services.
· Ask your real estate broker about sub-lease space. This is office space that is currently under contract by another tenant, but is not needed for their business, most likely due to downsizing or relocation. Since the head tenant is looking to offset some of its costs, the rent is often more reasonable and the term length is generally negotiable.
· Share space with another similar company and benefit from economies of scale. Not only can you share the boardroom, reception and copier room, it may reduce your payroll, IT and office equipment costs.
· Relocate your passive business and client records, excess furniture and other seldom-used items to a modern self storage facility so that you can select a smaller office space. The cost of using self storage is less than half the cost of office space and you will have peace of mind knowing that sensitive information is under lock and key.
· Investigate using modular office solutions in order to use your office space effectively. By using workstations and minimizing traditional offices, work areas can be adjusted as needed to reflect changing demands. Companies like Heritage Office Furniture will not only visit your office, but will help you find the best configuration for your needs.
So, with a little creativity, it is possible to have that desired downtown address without breaking the bank.
Tracy McEvoy has been managing commercial real estate for over 25 years and has held senior management positions with several of Canada’s largest real estate companies. She has managed high-end office towers in Vancouver’s financial district and has worked with many prominent tenants over the years. Presently, she runs Maple Leaf Self Storage Inc. in Canada and has over 14,000 tenants.
How much money could your business save by using your expensive office space more effectively?