How to Find Office Space for a Small Business

Small business office space follows the same basic process as a larger deal, with a few realities of its own. A landlord may see a small lease as carrying more credit risk, and a smaller company may have less history to show. That can lead to a request for a personal guarantee or a larger deposit. Smaller spaces may also come with less custom build-out, more use of existing offices, and a form lease that is less often revised than a large tenant’s would be.

None of this means you have no options. A small tenant can often find useful space among suites already built, subleases and landlords who want to fill a smaller unit quickly. It does mean you should focus on the few terms that matter most and keep at least one real alternative alive until you sign.

Tenant Advisory Group represents tenants and buyers, and we work with small tenants as well as larger ones. One practice client, Lincoln Park Psychology, described the outcome of a search that took more than one try:

1. Write down your needs: headcount, how many days people come in, rooms, client visits, parking, access hours, internet and any special equipment.
2. Set a budget for total occupancy cost. Include rent, pass-through charges, utilities, parking, build-out, furniture, technology and moving.
3. Choose an area. Map your commute patterns, your clients and your competitors.
4. Check zoning and permits for your intended use, especially if you see clients or have unusual equipment.
5. Decide which kinds of space to consider: a direct lease, a sublease, a furnished suite or coworking.
6. Consider tenant representation. Ask how the broker is paid and whom the broker represents.
7. Build a short list and tour it. Bring someone who can judge the technical needs, and take notes on what each space would need.
8. Request written proposals from more than one building, then compare them on total cost over the term.
9. Prepare financial information early. Landlords commonly ask about a small company’s finances, so decide what you can share.
10. Negotiate and sign a letter of intent, and be clear with your attorney about which parts are binding.
11. Have a real estate attorney review the lease, and your insurance broker review the insurance section.
12. Sign, then record your dates and plan the move, including your exit from your current space.

Start early. How long this takes depends on your market, the kind of space and whether any construction is needed, and a rushed search tends to cost you options. Our guide on how long leasing takes breaks down the timeline.

The SBA advises that your location determines the taxes, zoning laws and regulations your business will be subject to. It says to make sure a property you buy, rent or build conforms to local zoning requirements, and that zoning ordinances can restrict or ban specific kinds of businesses in an area. Zoning is typically controlled locally, so the SBA suggests checking with your city planning department or a similar office.

Do this before signing, not after. FindLaw says to be sure the area has zoning for your type of business before you sign any lease, and adds a useful warning: an existing business in a building may operate under a variance that ends when a new tenant signs. Do not assume that what the last tenant did is what you can do.

FindLaw’s checklist also suggests looking at hours of access, parking, deliveries, neighboring businesses, public transit and accessibility. For a small office, some of these can decide the search. If clients need parking or staff work early or late, confirm what is available and what it costs.

Ask the landlord for after-hours HVAC rates and building access rules while touring. Small tenants with unusual schedules can end up with a bill they never budgeted for.

For a small business, the type of space can matter as much as the building. These options differ in commitment, cost structure and control.

• Direct lease. You sign with the landlord for your own space and get the most control and security. It usually comes with a longer commitment and more responsibility.
• Sublease. You rent from an existing tenant. It can be quick and may include furniture, but your rights depend on the main lease and the remaining term.
• Pre-built or spec suite. The landlord has already built the space, so you may move in faster with less construction risk.
• Executive suite or coworking. You usually sign a shorter agreement that bundles services. It offers flexibility, but it may not be a lease, and your rights can be narrower. Compare the total cost per person with a direct lease, not just the headline price.

The right answer depends on how certain you are about your size and how long you plan to stay. A growing company that may double may choose a short commitment and accept a higher cost. A stable practice with client-facing needs may be better off with a space it can control and improve.

Maine’s Small Business Development Center advises understanding the rent structure, who pays utilities and maintenance, and the termination clause, and it stresses that a lessee should understand the terms before signing a letter of intent. That is sensible, because leverage is highest before you have told a landlord you have picked its building.

• ✓What will we pay in total each year, including pass-through charges and how they can rise?
• ✓Are scheduled increases, free rent or an allowance on the table?
• ✓Who pays for any work the space needs before we can use it?
• ✓Is there a personal guarantee, and can it be limited or removed?
• ✓What is the deposit, and can it reduce after a period of on-time payment?
• ✓What are our rights if we outgrow the space, shrink or sell the business?
• ✓Do we have a renewal option, and how much notice must we give?
• ✓What happens if the space is not ready on time?
• ✓What must we restore or remove when we leave?
• ✓What does the landlord promise to maintain, and when is the building open?
• ✓Do we have a second space we would truly accept if talks fail?

Free help is available. The SBA points to Small Business Development Centers and other resource partners for counseling. A tenant broker can also help you run the search, compare proposals and handle landlord negotiations, and the Maine SBDC notes that in typical cases the lessee is not responsible for paying the agent. Compensation varies by deal, so ask directly. Our guide on who pays the tenant rep explains how this generally works.