Understanding Office Space Rental Costs
Are you planning to start a business and trying to figure out your office space budget? For most companies, office rent is one of their biggest regular expenses. Let’s explore what you can expect to pay for office space.
Small business owners (those with under 500 workers, according to the Small Business Administration) make up nearly all businesses in the US – 99.9% to be exact. Many of these businesses need office space to operate.
The cost of renting an office varies based on three main things: where it’s located, how big it is, and what type of office you want. Extra features can also change the price you’ll pay each month.
Let’s look at what you should expect to pay and how to find the right office space for your needs.
Average Office Space Costs Per Square Foot
In the US, you’ll typically pay between $8-$23 per square foot for office space. When planning your budget, start by thinking about how many people work for you and where you need the office to be.
Bigger cities with limited space usually have higher rental costs. After picking your location, think about how many workers need desk space. Most property owners use square footage to set their prices.
Office Space Costs in Different Cities
Not surprisingly, some cities are much more expensive than others for office space. Here’s what you can expect to pay in different locations:
- New York is the priciest, costing about $14,800 yearly per employee (around $6.16 per square foot monthly)
- Some say 75 square feet per employee
- Others recommend 100 square feet
- Some suggest up to 200 square feet
- Basic office space: Starts at $300 monthly
- Office suites: Begin at $3,000
- Co-working spaces: As low as $99 monthly
- Less space to set up
- Need to manage noise levels
- Might have trouble booking meeting rooms
- You have room to grow
- You control the noise level
- You have dedicated meeting spaces
- You don’t share with other companies
- Private kitchen
- 24-hour access
- Lounge area
- Elevator access
- Meeting rooms
- Video call equipment
- Vending machines
- Business lounge
- Parking spots
- Cleaning services
- Small office (100-500 square feet): $500-$2,500 per month
- Medium office (500-1,000 square feet): $1,000-$5,000 per month
- Large office (1,000-5,000 square feet): $2,500-$10,000 per month
- Before you start looking for office space, carefully assess your space requirements. Consider factors like employee count, business operations type, and special needs such as conference rooms or specialized work areas.
- Once you know what you need, begin comparing different office spaces. Look at rental rates, building conditions, and locations. Don’t hesitate to negotiate with property owners to secure the best possible deal.
- Location choice matters for many reasons, including how easy it is for employees and customers to reach you, parking availability, and proximity to other businesses and services.
- Before signing any agreement, thoroughly review all terms and conditions. Pay special attention to details about lease length, rent increases, and early termination penalties.
- 5. If you’re unfamiliar with commercial real estate, consider working with a professional agent. An experienced agent can help locate suitable spaces, negotiate favorable terms, and ensure proper documentation handling.
- San Francisco follows close behind at $5.43 per square foot monthly (about $13,032 yearly per employee)
- Atlanta offers the best deal, with yearly costs of around $4,194 per employee
While most big cities have plenty of office spaces available, you might need to travel further if you’re in a smaller town or rural area.
Figuring Out How Much Space You Need
Do you just need one room with desk dividers, or do you want a full office suite? Your space needs mainly depend on your team size and the type of work you do.
To calculate monthly costs, multiply your needed square footage by the cost per square foot. This helps you figure out yearly expenses, but remember that extra services will increase the total.
Different companies suggest different space amounts per person:
Bigger spaces are more comfortable, but you might want to go smaller if you’re watching your budget. Finding the right balance between space and cost takes time, so compare different options.
Cost Per Person for Office Space
Here’s what you can expect to pay per person:
Most office buildings can fit anywhere from 4 to 100+ people.
Monthly vs. Yearly Rental Agreements
Some property owners only offer one type of lease, while others are more flexible.
Think about how long you’ll need the space. If it’s just for a few months, look for monthly rates. For longer-term needs, yearly leases usually make more sense.
Remember that your options might be limited by what’s available in your area.
Choosing Between Regular Offices and Co-working Spaces
Many small business owners and entrepreneurs choose co-working spaces because they’re usually cheaper and offer more flexible terms.
But remember: in co-working spaces, you share the area with others. This means:
Regular offices work better for small to medium businesses because:
Extra Features That Affect Cost
Office spaces often come with additional features that can increase the price. While every office should have basic internet and desk space, some offer extra amenities:
These extras might cost more, so ask about pricing. Some shared spaces might not include cleaning services, meaning workers must clean up themselves.
Think about what your business needs before choosing a space. If your property owner agrees, you might be able to add some features yourself (like coffee service).
Renting Business Office Space: Costs and Tips
Whether launching a new business or expanding an existing one, you might be considering renting office space. While this represents a significant business expense, it provides a professional, centralized location for your operations. Let’s explore the costs of renting business office space and share some valuable tips to help you make the best choice for your company.
Understanding Rental Costs
The price of renting business office space can vary significantly based on several aspects, including the location, size of the space, and building quality. As you might expect, rental rates in major cities typically exceed those in smaller towns. Additionally, newer, premium buildings usually command higher rental rates than older or basic buildings.
Here’s what you might expect to pay for business office space:
Remember that these figures are normal estimates, and your actual rental costs will depend on various factors, including location, building quality, and the specific terms of your rental agreement.
Essential Tips for Office Space Rental
Your Next Steps
While renting business office space is a major expense, it offers a professional home for your company’s operations. As you search for office space, consider your space requirements, look at different price points and building standards, carefully consider the location, and thoroughly review the rental terms. Following these guidelines will assist you in choosing the ideal office space for your business while avoiding unexpected issues and costs.
How Much Does Rent Office Space Near You Cost? Get a Quote
What should you budget for office space? It all comes down to three main factors: where your city is located, how much space you require, and what kind of office setup you’re looking for. Remember this simple rule: you’ll pay more for offices with extra amenities and private spaces, while shared arrangements typically cost less.
Start by determining the square footage needed for your team, then search for available rentals in your preferred location.
Want to explore your options? Look at our Buyer’s Guide, which will help you sort through choices and identify the best fit for your requirements and financial plan.
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