The Struggle to Find Startup Office Space

Many startups pride themselves on having hip workspaces. Before you unload the laptops and the modular furniture, however, you need to find the right space for your company. For a growing startup, finding the right office space can be a challenge.

Why it's Difficult for Startups to Find Office Space

Despite the startup boom here in the US, most traditional landlords do not know how to work with startups. Most landlords are looking to work with established businesses that have a credit history and a willingness to sign a lease for several years.

"Those are luxuries that a startup doesn’t have", states Jonathan Wasserstrum, founder of the TheSquareFoot, an online platform that connects entrepreneurs with startup office space. "A startup is new or else they don’t have the credit history, they don’t want to sign a long-term deal, because even if a startup is doing okay now and has office space for five people, [they] have no idea if a year from now [they]’ll need office space for 5, 15, 50, or 500." Because a startup can undergo rapid changes within a short period of time, a long-term lease can be an uncomfortable situation.

While most big cities are home to several commercial real estate brokers, they may not always be the best choice for a startup. According to Wasserstrum, "There’s oftentimes a mismatch between the tenants needs and what a broker can provide." Since startups do not have huge office space requirements, they often end up working with less than reputable brokers. For example, a broker may take on a startup because he thinks it's a quick transaction even if the startup is looking for a different product or neighborhood than the one the broker specializes in.

While startups do not have to go the traditional route for securing office space, finding alternatives can be difficult. According to Wasserstrum, "A lot of times, startups don't even realize the variety of options that are out there for them."
 

TheSquareFoot

A Startup that Helps Other Startups Find Office Space

The struggle to find startup office space is what led to the creation of TheSquareFoot at the end of 2010. Jonathan Wasserstrum, a May 2012 graduate of Columbia Business School, had begun his MBA program. He enjoyed the real estate work he had done before embarking on his MBA, but was also interested in starting his own business. At the end of his first semester at Columbia, Wasserstrum learned that one of his friends was having trouble finding startup office space. The friend (who would later go on to become a co-founder of TheSquareFoot), Aron Susman, worked for a company that was relocating from Texas to California. Susman had reached out to Wasserstrum and TheSquareFoot co-founder Justin Lee for help since they both had commercial real estate experience.

"We realized that most of the tools out there from a tenant perspective are really geared towards the industry and not geared towards helping entrepreneurs and small business owners find out anything about the process or how to do any of this for themselves", states Wasserstrum. That's why Wasserstrum, Susman and Lee created TheSquareFoot -- so that other startups would have a platform that made it equal for all the parties involved instead of having to rely on a broker or the "wild west" that is Craigslist.

Instead of going on the typical MBA summer internship, Wasserstrum spent his summer starting TheSquareFoot. He says that being able to utilize the resources at Columbia's Lang Center for Entrepreneurship and the Milstein Center for Entrepreneurship was very helpful. Although Columbia has gotten a lot of press for their entrepreneurship programs, including TheSquareFoot's headquarters -- the Columbia Business Labs -- Wasserstrum says that the real estate community was equally (if not more) important to what TheSquareFoot is doing since "it's really best in class for real estate".

According to Wasserstrum, TheSquareFoot makes the startup office space search easier for tenants because "it’s an easy-to-use interface that has everything they need." Beyond property listings, TheSquareFoot offers educational tools and resources so entrepreneurs can educate themselves about their startup office space options. It also allows startups to connect to the services they need to "get their business ready for business", including furniture, artwork, telephones, commerical janitorial service, and movers.

The sleep apnea clinic TheSquareFoot worked with is an example of a case where TheSquareFoot was able to connect a startup with office space, educational resources, and services. The CFO had approached the TheSquareFoot by asking about his options, and was given an education about the process of obtaining startup office space through TheSquareFoot's educational tools, such as Leasopedia. This educational framework made the CFO realize that he needed to choose between a traditional lease or an executive suite, so TheSquareFoot website connected him with both a broker and a company that provides executive suites. Since the company wanted the kind of flexibility that isn't available with a traditional lease, they chose to go with an executive suite. TheSquareFoot also connected them with telephone and furniture providers and Wasserstrum says they have been happy ever since.

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