Real Estate Weekly
Image default
Deals & Dealmakers Featured

Startups get real with space needs

What do startups want in their office space? According to a new report, it’s not foosball tables and Dr. Who phone booths.

In its first ever Startup Office Survey, office leasing platform TheSquareFoot showed that startups are more practical than expected, with a majority picking their office spaces based on cost and location.


According to the survey, 68 percent of startups identified cost and location as a determining factor when searching for office space. These trumped building amenities and design, which have become signature elements of startup offices.

To better illustrate the practicality of startups, the survey also accounted for the importance of “location trendiness.” About 41 percent of respondents said that the trendiness of a location had “little to no impact” in choosing office space.

Startups were also less picky when it came to their office interiors and their immediate surroundings. The survey found that 85 percent of startups did not have “strong feelings” regarding floor plans and the layout of their offices. “For most, layout is an afterthought if they have the time and budget for it,” the report read.

Companies were also nonchalant when it came to who they shared walls with. The survey found that 75 percent had “moderate feelings” when asked about the importance of office neighbors.

Out of all the respondents, only eight percent said that office neighbors were an important factor in choosing their space. This open attitude even extends to sharing office space, with 41 percent of respondents saying that they would be willing to share underutilized space with other companies to offset costs.

“While we’ve all known, at least anecdotally, the differences between startups and later stage companies, these survey findings present validation and new insights on how startups view office space. The study also uncovers the factors that impact a startup’s office leasing decisions,” said Jonathan Wasserstrum, TheSquareFoot’s co-founder and CEO.

“The office space is particularly important to startups, most of which are always competing to attract top talent. And because it can have a tremendous impact on office culture, it’s become crucial for startups to provide their employees with a collaborative environment that’s both comfortable and fully representative of the company’s brand and mission.”

The survey, which covered deals from January 4 to February 29, involved 75 start-ups, most of which work in real estate, e-commerce, travel and enterprise software technology. Out of the total number of start-ups, the majority were in bootstrapped (36 percent) and seed funding (36 percent) stages. However, startups in the seed stage were the most cost-conscious, with price levels having twice as much impact on their operations.

The sensitivity to price produces hesitation when it comes committing to office spaces in the long term. Five to seven year leases, the industry standard for commercial spaces, are basically non-existent when it comes to start-ups. The survey found that 72 percent have leases that are two years or shorter. Only a small minority, 4 percent of respondents, were in leases that are five years or longer. More than half of the respondents (52 percent) also said that they will be looking for office space in the next six months. “For the most part, they won’t be looking for leases longer than what they currently have,” the report read.

Out of the total number of respondents, 46 percent already have their own office space. The rest are either operating out of a co-working space (29 percent), subleasing desks in another company’s office (14 percent) or operating out of a home or a public space (11 percent). Most of the deals were in the Midtown South area, with the Flatiron District, Chelsea and SoHo being the most popular targets.

(Visited 1 times, 1 visits today)

Related posts

Mesa West Capital Finances Acquisition of 534,000-SF Office Complex in Charlotte, N.C.


The Brodsky Organization Announces Full Lease Up of Plank Road at Pacific Park


NAI DiLeo-Bram & Co.’s Robert Dinner Closes over 33,000 Square Feet of Leases at Metroplex Corporate Center in Edison, NJ