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3 Real Estate Mistakes Every Startup Should Avoid

Startups and commercial real estate lease terms do not always agree. Real estate decisions overwhelm startups time and time again for the same reasons: startups need flexibility, landlords want stability. Next to payroll, real estate is the biggest expense for a startup, so finding the best office solution is critical to the overall health of a new business.

 

If you’re a startup, do everything you can to avoid making these real estate mistakes:

 

Rushing to a Coworking Space

Coworking spaces can provide a great solution for some startups. A space like WeWorks can present a quick solution for a growing startup. However, coworking spaces are not always the answer. A shared office space has a great deal of flexibility- to a certain extent. It can be difficult to customize your space to fit your culture and to foster a community within your company. The standard size for a coworking space is 50 square feet per person. If you are growing quickly, you are going to be out of space in short order. If your business is meeting with and courting clients, a coworking space may not give off the impression you want, depending on your type of business. All in all, coworking spaces are a great option, but it may or may not be your best option as a startup.

 

Being Impatient

For those who are new to the commercial real estate process, it can be daunting. There is so much jargon and many legal terms to learn, there are relationships to foster and a total culture gap between landlords (and brokers) and startups. Not to mention the price tags. As a startup, it is so important to do your homework and learn about the commercial real estate process. It can be tempting to rush into a lease and get your team settled and working, but an uninformed decision could be very costly for your company in the long run. It typically takes three to six months to find the ideal piece of commercial real estate. Be patient and use the time to inform yourself as much as possible.

 

Signing the Wrong Lease

As a startup, you experience fast growth, but it can be hard to determine how fast your headcount will increase. This unpredictability can be stressful when looking for real estate. Make sure you are working with a broker who understands your needs. You will need some type of flexibility in your lease, whether it is a short lease term, the ability to sublease, the ability to grow your space, creative financial solutions etc. Make sure you know everything about your lease terms so that you don’t put your employees and your company’s future at stake.

Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
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