Are you sitting down? Good...
Some costs of moving your office are obvious, and some not so much until you look behind the curtain.
OK, the physical space itself is certainly the biggest expense by far. But you might need to budget for some other areas of spending as well.
There are four main costs to be aware of:
Finding and securing your new office, fitting out the space, the logistics of the move, and putting your current space back to normal.
1. The costs of finding and securing your new office
For a leased office:
Deposit: You’ll usually pay a deposit of between 3-12 months’ rent, depending on your business accounts, term of the lease, and capital outlay from ownership
Attorney fees: You may also need to pay real estate attorney fees
Real estate taxes
Operating expenses: Such as water, power, trash removal, cleaning, and other maintenance fees.
For a fully-managed flexible office:
You’ll usually need to pay a rent deposit or the first 1-3 months in advance. (This isn’t an extra cost, but it is an upfront outlay you need to plan for!)
2. The costs of fitting out the space
A “build-out” means you take the blank canvas of the building and turn it into a space that’s ready to move into, with places for your team to eat, sit, work, meet, talk, meditate (if that’s your bag), and generally win at life.
You’ll probably only face these costs if you’re going for a leased office. But they may also apply if you’re going for a fully-managed flexible office where you want to go above and beyond on the specs, add some form of custom design or other, or want an abnormal number of meeting rooms.
A good idea would be to get a project manager (PM). There are multiple layers to this process and a multitude of ways to save money. Usually, a PM will manage lead times for materials, to ensure there are no delays for critical benchmarks and move-in, which can result in monetary penalties and/or loss of free rent. This person can also manage the purchasing of furniture etc. to level bids.
As you might expect, the cost of fit-out varies.
It depends on the specs you want, any niche requirements, and which of the following two routes you choose to go down.
Also worth noting is that there’s a chance the landlord will offer you Tenant Incentives (a TI package), as a contribution to your fit-out. Not bad, eh? See what you can negotiate! You need to have deal comps and know precedent and the real-time market conditions to even understand how to arrive at the correct number. Not to mention understanding construction costs and union vs non-union labor. Construction costs are a big variable cost, so having the correct expert to assist can be very beneficial.
Keep in mind that a fully managed flexible office that’s ready to move into means you can forget the cost and hassle of a fit-out. For some companies, having control over the design, shape, and feel of the space makes sense, but remember... you have options.
3. The logistical costs of moving
The day of your move draws ever closer and suddenly you realize just how much stuff your company has accumulated over the last chapter of life. That all your furniture and art happens to be weirdly shaped and fragile. And your scanner has become heavier than a black hole.
Feeling brave? Some companies tackle the moving logistics themselves.
Yes. It can be done. You buy or rent the boxes, bubble wrap, and so on, rally the troops and get everyone to pitch in for a couple of days. The biggest cost in this case is a van or truck for you to get up close and personal with on the day (hello U-Haul). We’ve done this several times in the past at Kontor and our plants have the scars to prove it… kidding (not kidding).
There is also a cost of moving in and out that a lot of tenants don’t think about, e.g. the cost of freight elevators. However, this can also form part of your lease negotiation.
If you have more than a handful of employees though, watch out for the false economy. Any money you save may pale in comparison to the cost in productivity, sanity, and damaged equipment.
The alternative? Pay a logistics company to sort out all the packing materials, plan the choreography and do the grunt work. Then all your team needs to do is pop their things in a box on a Friday afternoon, rock up at the new office on Monday morning, and get to it. (So things don’t get lost, make sure you know where every item is going before you start packing. Write it all down. Don’t overfill the boxes, and give everyone their own.)
Remember, in a fully-managed flexible office, the majority of furniture is already included. So just pack up the laptops, the random cacti, and off you go. In fact, it may be a good idea to go back to your original agreement to check the inventory.
Don’t forget there might be additional costs for wiring and security systems.
4. Ancillary charges
There will likely be a variety of other, “smaller” costs, that are often forgotten, such as real estate taxes, operating expenses, and other day-to-day costs. It is important to not forget about these and work with someone to include these as part of your lease negotiations.
Ready to rock and roll? We can help you crunch the numbers and answer any thorny questions you have about costs (not to mention help you find and secure the office you need) at kontor.com.