Commercial Real Estate Investing From A-Z What Do Startups Need When Leasing an Office Space
In this episode, we interview Reuben Torenberg, a commercial real estate broker who specializes in helping startups, technology companies, and venture capital firms find office space in the San Francisco Bay Area and beyond.
You can read this episode here: https://montecarlorei.com/what-do-startups-look-for-when-leasing-an-office/
What do startups look for when leasing an office?
Every startup is in rapid growth mode. At the very beginning you don't know exactly what your projections are 12 months out, even six months out. So you are looking for a space to do a few things:
1. Attract talent.
2. Manage growth. You don't want to get an office that's too big and be hemorrhaging money.
3. Staying flexible. It's very hard both in San Francisco and throughout the world to find space that will let you stay flexible as you continue to grow larger, as landlords are looking for three to five year terms.
You have to be creative in how you're able to position your client to stay short term. One of the things you can do is actually get into subleasing. A lot of companies that are growing too quickly or shrinking faster and they'd hope need to offload space for 12 months, 18 months, which tend to be very, very attractive situations for our clients.
Who would be responsible for subleasing that space? The tenant or the landlord?
The tenant is responsible. They become a sub landlord in that instance, and they put the space in the sublease market, usually at a premium here in San Francisco because it is so attractive to startups. And then once they managed that whole leasing process, they need to get the landlord's consent where they present the sublease to the landlord and the landlord has 30 days to say, yes we would like this new tenant, or no. Another huge thing for startups is being near public transit. Attracting talent in San Francisco has become extremely difficult. They're now looking to the East Bay. There's also a lot of talent down in the South Bay with Stanford, with Berkeley in the East Bay. Being near Caltrain and being near Bart is a huge plus, and rents are much higher near those areas. So startups try and find something in between. Subleasing is one option.
What are some other things that they look for when leasing an office?
It all ties into the big main question: will this place help us attract talent? Once you get past that, it goes into a lot of the comfort stuff, so a big one is how many meeting rooms are in this space. A lot of times startups like to be in wide open environment to maximize the amount of people you can fit in, and to endorse collaboration, to have everyone talking, hanging out, help the culture. But everyone at some point needs to enclose themselves in a room to have a private conversation. The question is, are there enough meeting rooms for us to fit? This is frequently a pain point. We have a metric actually for it, and it will vary between companies, but we say that startups should have at least one meeting room for every 7 - 10 employees. So if you have 50 employees, you should get at least five meeting rooms. Another one is size. Can we fit all of our employees for the duration of the term? If this is a three year lease, but we're going to be blowing out of it in a year, do we need to take on more space? Are there enough restrooms?
Reuben Torenberg:
reuben.torenberg@cbre.com
Linkedin: https://www.linkedin.com/in/reuben-torenberg-b985b646/
Twitter: rtorenberg021
Instagram: rtorenberg021