How much do you spend on your office compared with your payroll expense?


2

My company is a little over 2 years old and profitable with 6 employees. We currently sublease space from another company and now we are looking to get our own space. We don't have customers at our office, but I do feel that our office is a powerful tool for recruiting and employee enjoyment and productivity.

I am curious how much other young software companies pay for space relative to their payroll. We're located in a reasonable real estate market and so we could afford to get some fun space, but I'm trying to think about the return I'll get on that.

I would really appreciate your thoughts. Thanks.

Office Space

asked Feb 11 '11 at 00:27
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Jason Cianchette
511 points
  • Is relative to your payroll the best way to figure this out? We calculate our overhead against revenue in order to maximize profits. Payroll, insurance, office, utilities, etc. all are expenses. They really don't have a x:y relationship as far as I can tell. – Sean 8 years ago

4 Answers


2

It's important to have a good work environment for your employees. Subleasing is a good option when you are starting out but having a space to call your own just feels better.

The cost of office space is highly variable. Things like location, market conditions and services plan a huge roll in the price. It's probably not a good metric to compare it to payroll expenses since that varies wildly as well.

A better rule of thumb would be that each person needs around 250 sq feet or so. This is pretty generous as companies go (typically, you just get an 8 x 5 foot cube) but if you want a good environment that scales nicely, then start there.

Again, pricing is going to be variable, depending on your location. Since you don't need to bring clients in, you can probably get away with a little more of an industrial space.

I would recommend finding a place that's within easy walking distance to restaurants. That's a huge plus for a small, nimble company.

answered Feb 11 '11 at 00:51
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Jarie Bolander
11,421 points

1

I would highly recommend looking for incentives to businesses willing to lease property in a previously depressed area. Many cities offer these subsides to spur growth. It also just happens to be that these 'depressed areas' are often the cool young hip areas. Good places to look are historic areas in your city that are run down, big businesses tend to shy away from old buildings...

answered Feb 11 '11 at 02:36
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Teshy
11 points

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We pay less than 10% of our salaries' worth for a fully serviced office. We have a receptionist, the place gets cleaned and we have furniture, internet and electricity all for the same price.

Think along the lines of www.pbcoffices.com (US West Coast) and ParkOffice.com (Belgium)

answered Feb 11 '11 at 02:45
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Philippe
297 points

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Your new space should be in a retail area (shops, restaurants, bars), in the opposite direction of traffic, with good (free?) parking and near quality infrastructure. Once had an office in an area where a T1 could short out under sustained rain due to old wiring. Fun!

Speaking of "fun", while it is nice and does help attract talent, make sure you don't ignore the fundamentals. Find a location that is both well-served and helps establish your company's attitude. Doesn't need to be Class A in looks since you are getting visitors, but it does need that in infrastructure, being a software company.

The flipside is asking the talent where they'd rather be. In some areas devs want to be "downtown", whereas in other areas, they'd prefer "the beach". Are you plugged in enough in your area to be able to ask a lot of devs where they'd like to work?

Also, depending on your own philosophy, have you considered other approaches, like shared/serviced offices, or telework?

answered Feb 11 '11 at 02:01
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Alphadogg
1,383 points

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