5 ms·

Why is it so difficult to find an office for my startup?

29 points by tmwatson100 13y ago

jamiesoncj 13y ago
This post really underlines my own experience of trying to find an office space for a startup in London. There are so many sharks out there, and everyone tries to get you to sign a 3 year (or more!) lease. We might not be around in 6 months! But co-working spaces are sometimes just as bad, especially the ones which are basically just feeder funnels for landlords who want you to upgrade to one of their serviced offices / large units (looking at you, ClubWorkspace). I think what Spacious is doing is really cool therefore - and I'll definitely be trying out the service when our current office space expires at the end of March :)
- tmwatson100 13y ago
  Cheers! I'm the co-founder of Spacious. The company itself came out of months of talking to startups and this blog was the result of us finally having the time to articulate it.
- logicallee 13y ago
  "No, no, NO. We can't sign a 1-year lease - you don't get it. We might not be around in 6 months!" lol for honesty.
- Gusfoo_2 13y ago
  > This post really underlines my own experience of trying to find an office space for a startup in London I didn't find it hard. We got a serviced office near Farringdon tube via a broker. (flexi offices) after looking at about 10 places in the arc from there to Old St. Signed a 1-year lease with a 6-month break, just in case things went south.
  - atoosh 13y ago
    Appreciate your response Gusfoo!It's awesome that you found an office quite easily! We have received a lot of feedback from those who have found it difficult, especially to do this online and that's what we're trying to fix.
- roel_v 13y ago
  "We might not be around in 6 months!" What kind of premium were you prepared to pay for this risk to the owner? If your answer is <10%, or even <50% depending on the actual amounts we're talking here, do you find it irrational that you had trouble finding an office?
  - mattmanser 13y ago
    What risk? That they'll have to pay advertising again? Because if you don't move in, it's still empty.
    - mkohlmyr 13y ago
      Assuming no-one else wants the space. If no-one was interested in or willing to sign a 3 year contract they wouldn't be able demand it.
      - tmwatson100 13y ago
        Absolutely agree. There are still plenty of companies out there who have the relevant covenants and ability to sign that 3 year lease. However, as the economy evolves and high growth companies companies become the norm the number of people willing to commit to a 3 year lease will start diminishing. This not just because they are not able to forecast their financials, but they are not able to forecast their staff numbers either. It's an interesting time for commercial property and it'll be intriguing to see how this plays out.
    - tmwatson100 13y ago
      Hi Matt, Completely agree. At the end of the day markets depend upon supply and demand forces. The economic landscape looks much different to what it did 10 years ago. Smaller companies that need contract flexibility are springing up everywhere, and the demand for flexible space is increasing. There's only so long this can be ignored by those operating or owning commercial space.
    - roel_v 13y ago
      This post just shows that you have never let out any real estate. Let me tell you, it's not as simple as this. It's not just the 50$ or whatever to put up one online ad. You need to advertise on several websites plus offline. You need to show around various candidates, and do background checks on the serious ones. You have to transfer utilities, deal with mail, and other assorted tasks when somebody moves in. All of this for (in terms of yield) slim margins. And assuming that nothing is damaged or needs fixing up after somebody moves out. Now, for commercial space it gets worse. When they go out of business, it's highly unlikely that you will recover the owed rent - likely several (2-3) months. Commercial real estate is vacant for longer, and having a tenant 'in between' basically 'resets' the cycle of getting a new tenant. (businesses take a few weeks to months before deciding, residential is usually faster, i.e. faster turnover) Also, businesses usually make changes when they move in, not always for the better (network rewiring, dividing space etc for offices - for storefront it's much worse still). If they go bankrupt, you as the owner are stuck with the cost of repairing. The deposit (a paltry 2 or 3 months rent) is usually not sufficient. Again, all of this is assuming that there are no 'real' troubles - no lawyers involved, no 'real' renovations needed after they move out, ... Just the cost of getting somebody to dispose of an abandoned office full of furniture costs a month rent, because second-hand office furniture isn't worth anything! For me, I don't bother with terms of < 6 months for rentals, not even for a 100% premium (residential that is, I don't do commercial). And 1-year leases I only take as a 'probation' period, if it's clear from the beginning that they have no or little intention on staying longer, I won't accept such a candidate. Financially it just doesn't make any sense, and I'm not even counting the stress and the hassle.
ahtomski 13y ago
So what do you do apart from just list spaces?
- atoosh 13y ago
  Hey there ahtomski! I'm Tushar, co-founder of Spacious (tushar@spaciousapp.com). Our vision is to make renting an office easy by pulling together a fragmented market and presenting the company searching with all the options available for their specific criteria. Once you know where you want to move to, we help you arrange your entire move, storage, furniture, utilities etc. If you are renting out excess space, we manage the entire headache of taking rental payments and licencing agreement for your space. Do let me know if you have any more questions!
- deleted 13y ago
  [deleted]
bowlofpetunias 13y ago
This may not apply anywhere else (though I suspect it does), but in the Netherlands the office space market is deliberately kept obscure due to the much higher supply than demand. Many thousands of square meters of office space are currently vacant, and real estate investors are terrified of the paper value of that office space collapsing. As a result, cost and availability are deliberately kept obscure. Cheap small office space is abundant, but usually not offered publicly. You have to ask, and then you get things like "sure, we can split this huge space into smaller units", or "we'll throw in x-months free rent" (so they can officially keep the rent, and therefor the value, high).
- tmwatson100 13y ago
  Hi Bowlofpetunias, Absolutely, this is the norm rather than the exception. However, asymmetric information only works as long as most parties in the market are acting in this way. As soon as people start being more open, this changed the landscape very quickly, which is what we are seeing in London. If the market does indeed stay that way, rather than wasting time talking to individual spaces we are working on technology that should be able to inform all those with space (even if they keep the price hidden) of search and budget requirements of a potential. This should at least open dialogue.
n0 13y ago
Why is it so difficult to read that font?
- atoosh 13y ago
  Apologies n0! We just started blogging and are yet to optimise our post page for design. I agree with you - it needs to be easier on the eyes!
  - Heavy 13y ago
    You need to stop hotlinking all your images too: www.washingtonparent.com, creativeteachersupport.files.wordpress.com, www.nicoletschampel.com, etc...
    - tmwatson100 13y ago
      All valid - thanks for the feedback!
apunic 13y ago
Linkbait
- atoosh 13y ago
  Hey apunic Thanks for the feedback! We were initially hesitant in posting this on HN because of this exact reason. However, this was actually posted on our blog and people actually found the content useful. This included not only those who were searching for space, but also serviced office operators and some of the largest commercial agents in London. We decided to post it on here this week to see if people had the same problems in London, but also in other cities. The market is very opaque, so it took us a while to figure out and articulate these issues.
leonroy 13y ago
The post seems slightly melodramatic and certainly doesn't mirror my experience finding an office for our company in the same area. I'll agree that trying to find an office in London online is pretty futile - the best thing to do is leave the desk and take a walk. Allocate an afternoon or two to pound pavement and start calling all the letting agencies with signs on the outside of buildings. In one afternoon I managed to get two viewings sorted for the same day and several for the following days. Most of the agents would email us a daily summary of new properties they'd get in which met our requirements (1500sq ft, Old Street area etc.) We had our new office sorted within two to three weeks. 6 month rolling lease. Only fly in the ointment is that I'm still getting emails!
- atoosh 13y ago
  Hi Leonroy I'm Tushar, co-founder of Spacious (tushar@spaciousapp.com) I'm glad that you found the process easy once you called up the relevant agents. The problem we are trying to fix is finding the space online. A lot of people don't want to commit the time to pounding the pavements and physically calling numbers. They would rather be able to browse space online, see all the relevant information and be able to make an informed decision about what they would like to view. In an age where we can browse most things from the comfort of our home, why should commercial property be different? This is especially the case for those who don't live near the area they would like to move into. Again, everyone's different and I do very much appreciate the feedback! I agree there are some agents out there who are excellent, and we maintain a very good relationship with them over here in London.
  - leonroy 13y ago
    Hi Tushar, you raise a fair point and you're right spaciousapp does solve a problem that could do with being a little easier for us couch surfers :) Site looks pretty good. Like the app, and I think once our lease is up (sometime this year) we might just be using it!
nikanj 13y ago
It's easy to see how this benefits startups, but what's the upside for the landlords?
- tmwatson100 13y ago
  Hi Nikanj, We think this is of enormous benefit to landlords: 1. Fill vacant space for which you are business rates (UK specific) 2. Be more visible in search for when companies are looking for space 3. Have visibility over the state of the market and what type of space people are demanding 4. Have confidence that if you let your space on a flexible basis, that you will always be able to sustain a high rate of occupancy 5. A beautiful profile of your space online, where thousands of businesses looking for space in your area can come across you
mattmanser 13y ago
Feedback on the actual app: Make the pictures click-able in the search view. In fact, why not make the whole search result click-able... Also the -/+ and the </> buttons are just a bit of a strange UX feature and have too small a hit area for such an important feature. I was a bit confused as to what the '£500' actually meant, turns out it's pppm. I now notice you have a hover state, but hmmmm. Also the font looks horrible on Win 7 Chrome. I know, I know, it's Chrome's fault, but it still looks horrible. Overall, nice app, looks good.
- tmwatson100 13y ago
  Cheers for the feedback, all valid. We've heard some of those things before and will definitely keep iterating on it! Appreciate you taking the time to comment!
deleted 13y ago
[deleted]
ghiro 13y ago
I have literally all the problems you outlined in the blog and so I checked out the app. It looks cool but why on earth do I have to signup for an account after browsing for a bit? I understand that at some point you want people to login for the enquiry but it makes browsing a new application very very irritating. Additionally, my biggest annoyance with the commercial real estate is the "MANY OFFICES UP TO Xsqft/FROM £Y". I was hoping this would be something where the lettor had to list offices as opposed to just a general space that can be broken up.
angelohuang 13y ago
When we started our project Peer.im (http://peer.im http://peer.im), we were very lucky to find an office in Santa Clara for merely $500 a month. The space is large enough for 6 people. If anyone is interested, here is the address. 3200 Coronado Drive, Santa Clara.
pc86 13y ago
It would be helpful to see different map markets for shared/serviced/SA, or to have the markers change with tab selection.
- tmwatson100 13y ago
  Thanks pc86 - really helpful feedback!
ChuckMcM 13y ago
Personally I think this would have worked better for me if it were a 'Show HN:' type post rather than a blogvertisement. That said, look at www.42Floors.com, clean, crisp, right to the point. Better yet hope they don't open a London branch :-). As an exemplar for an online experience tailored to a particular demographic (small space seekers, ie startups) they hit a lot of the right pain points. Sort by neighborhood? check, space constraints? Check, it goes on but I'm not here to advertise them, I'm just comparing notes. If you're catering to startups, and it looks like you are, then the 'office space' problem is probably the CEO or VP Ops' "other" job. Their needs change from seed, to series A, to series B+. How do you transition them into 'bigger' space and hand over the reigns to dedicated facilities person in the company? Do you co-ordinate other services? Janitorial, snacks services, 'fix it' type services? How about vetting/rating landlords, another useful service for the startup founder. If you want to be the "AppStore of Space" you need to consider that the person using your service really doesn't want to make it their life's work, and at the same time doesn't want to look stupid for picking "this space."
- tmwatson100 13y ago
  Thanks Chuck! Really appreciate the feedback and we have indeed looked at 42floors The other points you mentioned are things we are thinking hard about at the moment and building out solutions using a lot of customer discovery

29 points by tmwatson100 13y ago

This post really underlines my own experience of trying to find an office space for a startup in London. There are so many sharks out there, and everyone tries to get you to sign a 3 year (or more!) lease. We might not be around in 6 months! But co-working spaces are sometimes just as bad, especially the ones which are basically just feeder funnels for landlords who want you to upgrade to one of their serviced offices / large units (looking at you, ClubWorkspace). I think what Spacious is doing is really cool therefore - and I'll definitely be trying out the service when our current office space expires at the end of March :)

tmwatson100 13y ago
Cheers! I'm the co-founder of Spacious. The company itself came out of months of talking to startups and this blog was the result of us finally having the time to articulate it.
logicallee 13y ago
"No, no, NO. We can't sign a 1-year lease - you don't get it. We might not be around in 6 months!" lol for honesty.
Gusfoo_2 13y ago
> This post really underlines my own experience of trying to find an office space for a startup in London I didn't find it hard. We got a serviced office near Farringdon tube via a broker. (flexi offices) after looking at about 10 places in the arc from there to Old St. Signed a 1-year lease with a 6-month break, just in case things went south.
- atoosh 13y ago
  Appreciate your response Gusfoo!It's awesome that you found an office quite easily! We have received a lot of feedback from those who have found it difficult, especially to do this online and that's what we're trying to fix.
roel_v 13y ago
"We might not be around in 6 months!" What kind of premium were you prepared to pay for this risk to the owner? If your answer is <10%, or even <50% depending on the actual amounts we're talking here, do you find it irrational that you had trouble finding an office?
- mattmanser 13y ago
  What risk? That they'll have to pay advertising again? Because if you don't move in, it's still empty.
  - mkohlmyr 13y ago
    Assuming no-one else wants the space. If no-one was interested in or willing to sign a 3 year contract they wouldn't be able demand it.
    - tmwatson100 13y ago
      Absolutely agree. There are still plenty of companies out there who have the relevant covenants and ability to sign that 3 year lease. However, as the economy evolves and high growth companies companies become the norm the number of people willing to commit to a 3 year lease will start diminishing. This not just because they are not able to forecast their financials, but they are not able to forecast their staff numbers either. It's an interesting time for commercial property and it'll be intriguing to see how this plays out.
  - tmwatson100 13y ago
    Hi Matt, Completely agree. At the end of the day markets depend upon supply and demand forces. The economic landscape looks much different to what it did 10 years ago. Smaller companies that need contract flexibility are springing up everywhere, and the demand for flexible space is increasing. There's only so long this can be ignored by those operating or owning commercial space.
  - roel_v 13y ago
    This post just shows that you have never let out any real estate. Let me tell you, it's not as simple as this. It's not just the 50$ or whatever to put up one online ad. You need to advertise on several websites plus offline. You need to show around various candidates, and do background checks on the serious ones. You have to transfer utilities, deal with mail, and other assorted tasks when somebody moves in. All of this for (in terms of yield) slim margins. And assuming that nothing is damaged or needs fixing up after somebody moves out. Now, for commercial space it gets worse. When they go out of business, it's highly unlikely that you will recover the owed rent - likely several (2-3) months. Commercial real estate is vacant for longer, and having a tenant 'in between' basically 'resets' the cycle of getting a new tenant. (businesses take a few weeks to months before deciding, residential is usually faster, i.e. faster turnover) Also, businesses usually make changes when they move in, not always for the better (network rewiring, dividing space etc for offices - for storefront it's much worse still). If they go bankrupt, you as the owner are stuck with the cost of repairing. The deposit (a paltry 2 or 3 months rent) is usually not sufficient. Again, all of this is assuming that there are no 'real' troubles - no lawyers involved, no 'real' renovations needed after they move out, ... Just the cost of getting somebody to dispose of an abandoned office full of furniture costs a month rent, because second-hand office furniture isn't worth anything! For me, I don't bother with terms of < 6 months for rentals, not even for a 100% premium (residential that is, I don't do commercial). And 1-year leases I only take as a 'probation' period, if it's clear from the beginning that they have no or little intention on staying longer, I won't accept such a candidate. Financially it just doesn't make any sense, and I'm not even counting the stress and the hassle.

ahtomski 13y ago

So what do you do apart from just list spaces?

atoosh 13y ago
Hey there ahtomski! I'm Tushar, co-founder of Spacious (tushar@spaciousapp.com). Our vision is to make renting an office easy by pulling together a fragmented market and presenting the company searching with all the options available for their specific criteria. Once you know where you want to move to, we help you arrange your entire move, storage, furniture, utilities etc. If you are renting out excess space, we manage the entire headache of taking rental payments and licencing agreement for your space. Do let me know if you have any more questions!
deleted 13y ago
[deleted]

bowlofpetunias 13y ago

This may not apply anywhere else (though I suspect it does), but in the Netherlands the office space market is deliberately kept obscure due to the much higher supply than demand. Many thousands of square meters of office space are currently vacant, and real estate investors are terrified of the paper value of that office space collapsing. As a result, cost and availability are deliberately kept obscure. Cheap small office space is abundant, but usually not offered publicly. You have to ask, and then you get things like "sure, we can split this huge space into smaller units", or "we'll throw in x-months free rent" (so they can officially keep the rent, and therefor the value, high).

tmwatson100 13y ago
Hi Bowlofpetunias, Absolutely, this is the norm rather than the exception. However, asymmetric information only works as long as most parties in the market are acting in this way. As soon as people start being more open, this changed the landscape very quickly, which is what we are seeing in London. If the market does indeed stay that way, rather than wasting time talking to individual spaces we are working on technology that should be able to inform all those with space (even if they keep the price hidden) of search and budget requirements of a potential. This should at least open dialogue.

n0 13y ago

Why is it so difficult to read that font?

atoosh 13y ago
Apologies n0! We just started blogging and are yet to optimise our post page for design. I agree with you - it needs to be easier on the eyes!
- Heavy 13y ago
  You need to stop hotlinking all your images too: www.washingtonparent.com, creativeteachersupport.files.wordpress.com, www.nicoletschampel.com, etc...
  - tmwatson100 13y ago
    All valid - thanks for the feedback!

apunic 13y ago

Linkbait

atoosh 13y ago
Hey apunic Thanks for the feedback! We were initially hesitant in posting this on HN because of this exact reason. However, this was actually posted on our blog and people actually found the content useful. This included not only those who were searching for space, but also serviced office operators and some of the largest commercial agents in London. We decided to post it on here this week to see if people had the same problems in London, but also in other cities. The market is very opaque, so it took us a while to figure out and articulate these issues.

leonroy 13y ago

The post seems slightly melodramatic and certainly doesn't mirror my experience finding an office for our company in the same area. I'll agree that trying to find an office in London online is pretty futile - the best thing to do is leave the desk and take a walk. Allocate an afternoon or two to pound pavement and start calling all the letting agencies with signs on the outside of buildings. In one afternoon I managed to get two viewings sorted for the same day and several for the following days. Most of the agents would email us a daily summary of new properties they'd get in which met our requirements (1500sq ft, Old Street area etc.) We had our new office sorted within two to three weeks. 6 month rolling lease. Only fly in the ointment is that I'm still getting emails!

atoosh 13y ago
Hi Leonroy I'm Tushar, co-founder of Spacious (tushar@spaciousapp.com) I'm glad that you found the process easy once you called up the relevant agents. The problem we are trying to fix is finding the space online. A lot of people don't want to commit the time to pounding the pavements and physically calling numbers. They would rather be able to browse space online, see all the relevant information and be able to make an informed decision about what they would like to view. In an age where we can browse most things from the comfort of our home, why should commercial property be different? This is especially the case for those who don't live near the area they would like to move into. Again, everyone's different and I do very much appreciate the feedback! I agree there are some agents out there who are excellent, and we maintain a very good relationship with them over here in London.
- leonroy 13y ago
  Hi Tushar, you raise a fair point and you're right spaciousapp does solve a problem that could do with being a little easier for us couch surfers :) Site looks pretty good. Like the app, and I think once our lease is up (sometime this year) we might just be using it!

nikanj 13y ago

It's easy to see how this benefits startups, but what's the upside for the landlords?

tmwatson100 13y ago
Hi Nikanj, We think this is of enormous benefit to landlords: 1. Fill vacant space for which you are business rates (UK specific) 2. Be more visible in search for when companies are looking for space 3. Have visibility over the state of the market and what type of space people are demanding 4. Have confidence that if you let your space on a flexible basis, that you will always be able to sustain a high rate of occupancy 5. A beautiful profile of your space online, where thousands of businesses looking for space in your area can come across you

mattmanser 13y ago

Feedback on the actual app: Make the pictures click-able in the search view. In fact, why not make the whole search result click-able... Also the -/+ and the </> buttons are just a bit of a strange UX feature and have too small a hit area for such an important feature. I was a bit confused as to what the '£500' actually meant, turns out it's pppm. I now notice you have a hover state, but hmmmm. Also the font looks horrible on Win 7 Chrome. I know, I know, it's Chrome's fault, but it still looks horrible. Overall, nice app, looks good.

tmwatson100 13y ago
Cheers for the feedback, all valid. We've heard some of those things before and will definitely keep iterating on it! Appreciate you taking the time to comment!

deleted 13y ago

[deleted]

ghiro 13y ago

I have literally all the problems you outlined in the blog and so I checked out the app. It looks cool but why on earth do I have to signup for an account after browsing for a bit? I understand that at some point you want people to login for the enquiry but it makes browsing a new application very very irritating. Additionally, my biggest annoyance with the commercial real estate is the "MANY OFFICES UP TO Xsqft/FROM £Y". I was hoping this would be something where the lettor had to list offices as opposed to just a general space that can be broken up.

angelohuang 13y ago

When we started our project Peer.im (http://peer.im http://peer.im), we were very lucky to find an office in Santa Clara for merely $500 a month. The space is large enough for 6 people. If anyone is interested, here is the address. 3200 Coronado Drive, Santa Clara.

pc86 13y ago

It would be helpful to see different map markets for shared/serviced/SA, or to have the markers change with tab selection.

tmwatson100 13y ago
Thanks pc86 - really helpful feedback!

ChuckMcM 13y ago

Personally I think this would have worked better for me if it were a 'Show HN:' type post rather than a blogvertisement. That said, look at www.42Floors.com, clean, crisp, right to the point. Better yet hope they don't open a London branch :-). As an exemplar for an online experience tailored to a particular demographic (small space seekers, ie startups) they hit a lot of the right pain points. Sort by neighborhood? check, space constraints? Check, it goes on but I'm not here to advertise them, I'm just comparing notes. If you're catering to startups, and it looks like you are, then the 'office space' problem is probably the CEO or VP Ops' "other" job. Their needs change from seed, to series A, to series B+. How do you transition them into 'bigger' space and hand over the reigns to dedicated facilities person in the company? Do you co-ordinate other services? Janitorial, snacks services, 'fix it' type services? How about vetting/rating landlords, another useful service for the startup founder. If you want to be the "AppStore of Space" you need to consider that the person using your service really doesn't want to make it their life's work, and at the same time doesn't want to look stupid for picking "this space."

tmwatson100 13y ago
Thanks Chuck! Really appreciate the feedback and we have indeed looked at 42floors The other points you mentioned are things we are thinking hard about at the moment and building out solutions using a lot of customer discovery