Furnished, Move-In-Ready Space or Build Your Own?

The phrase covers several different arrangements, and they are not interchangeable. What they share is that most of the construction, and sometimes the furniture and wiring, exists before you arrive.

• Furnished sublease. An existing tenant leaves and offers its space, often with desks, chairs, conference tables and cabling in place.
• Landlord-furnished suite. A landlord builds and furnishes a suite to lease directly, sometimes described as plug-and-play. This is a spec suite taken one step further.
• Second-generation space. Space built for a previous tenant that has since left. The walls, ceilings, lighting, kitchen and mechanical distribution remain, with or without furniture. You lease it directly from the landlord and reuse most of what is there.
• Managed or serviced office. An operator provides a private, furnished office along with services under a single fee, typically on a shorter agreement than a conventional lease.

This guide concentrates on the first three, with particular attention to second-generation space, because it is the option founders most often overlook. A suite that a well-funded company built a few years ago and then vacated can offer a quality of build-out that a new tenant could not justify paying for.

The advantages are practical and immediate.

• Time. Design, permitting and construction are largely done. Occupancy depends on the lease negotiation and your own setup, not on a contractor's schedule.
• Cash. You avoid funding construction above a landlord allowance, and furniture already in place removes one of the larger purchases in a new office.
• Certainty. You can walk the finished space, sit in the meeting rooms and test the acoustics before committing. With a new build-out you are choosing from drawings.
• Management attention. A build-out requires many decisions from people who have other jobs. Existing space asks for far fewer.
• Term flexibility. Because the landlord is investing little new capital, it may accept a shorter term than it would require for a custom build-out.

There is also a negotiating advantage in second-generation space. A landlord that does not have to pay for construction has room to offer other concessions, such as free rent or a modest refresh allowance. Ask for them.

Existing space was designed for someone else, and the differences between their company and yours determine how much you are compromising.

• Layout. The mix of open area, offices and meeting rooms reflects another team's size and habits. A plan built for a sales organization fits an engineering team poorly, and the reverse.
• Density. The space may hold fewer or more people than you need, and furniture systems are not always easy to reconfigure.
• Infrastructure. Power distribution, cooling zones and the IT room were sized for the prior occupant. Equipment beyond ordinary office use may need upgrades that reintroduce cost and delay.
• Security. Access control, camera coverage and any separately secured rooms may not match your requirements, and existing systems may be tied to a vendor contract that ended with the last tenant.
• Identity. Finishes, colors and a reception area designed around another brand can be changed, but each change chips away at the savings.
• Remaining life. Carpet, paint, appliances, lighting and mechanical equipment are partway through their useful lives. So is used furniture.

The practical test is to list the changes you would require to work well in the space, then price and schedule them. A short list confirms the choice. A long one means you are doing a build-out after all, without the benefit of designing it properly.

With existing space, diligence replaces design. The items below are where surprises tend to come from.

• ✓Who owns the furniture, and is it conveyed to us, lent for the term, or still owned by a prior tenant or leasing company?
• ✓Who must remove the furniture at the end of our term, and at whose cost?
• ✓Is the existing cabling documented, tested and suited to our network, or will we recable?
• ✓Do the heating and cooling zones match the current room layout, and has the equipment been maintained?
• ✓Is there supplemental cooling in the IT room, who owns and maintains it, and does it work?
• ✓Are access control, audiovisual and security systems included, functional and transferable to us?
• ✓Are we responsible at lease end for removing improvements or cabling the previous tenant installed?
• ✓Does the space comply with current code and accessibility requirements, or will our occupancy trigger upgrades?
• ✓What will the landlord repair, replace or refresh before we move in, and is that written into the lease?

The restoration question deserves emphasis. Ask the landlord to confirm in the lease that you are not required to remove alterations that existed before your term began. Otherwise you could be asked to pay to remove another company's work when you leave. Have your attorney review that language.

Bring whoever manages your IT and, for any space with unusual power or cooling, an engineer. An hour of testing before signing is worth more than a warranty you have to enforce afterward.

A new build-out earns its cost and time when the space itself affects how well the company performs, and when you will be there long enough to benefit.

• Your requirements are specific: labs, secure rooms, demo areas, heavy meeting-room use or equipment with real power and cooling needs.
• You are committing for a long term, so the investment is spread over many years and the landlord will fund more of it.
• Recruiting and client impressions depend on the office, and a borrowed identity would work against you.
• Nothing on the market in your target location is close to what you need.
• You have the lead time, and a person available to manage the project.

Between the two extremes sits the light renovation: take second-generation space, keep the expensive elements such as the mechanical systems, ceilings, kitchen and most walls, and change the few things that matter, perhaps by adding rooms, replacing flooring and paint, and installing your own technology. For many growing teams this captures most of the fit at a fraction of the effort.

1. Write down what the team needs, separating must-haves from preferences.
2. Tour move-in-ready options and unbuilt space in the same search, so you can see the trade directly.
3. For each existing space, list required changes and get rough pricing and timing for them.
4. Compare total cost over the term, including furniture, technology, any refresh, and end-of-term removal obligations.
5. Weigh the schedule for each against your actual deadline.
6. Negotiate concessions on existing space as firmly as you would on new space.

Tenant Advisory Group includes second-generation and furnished options in market surveys alongside unbuilt space, because the right answer often depends on what happens to be available when a client is looking.