Orginally posted by David Vivero of RentJuice.com.  This is a great article on search for and finding the right office space for your company.

We’re at an exciting inflection point for RentJuice, and part of our transition requires us to upgrade our office space in the next couple months to accommodate some new employees in the next year. (By the way, if you know someone who is looking for a great inside sales role at a growing SaaS company, please email me!)

Financial forecasting is a huge part of getting your company started and funded. In order to know how much money to raise from outside investors, you should have a clear idea of your cash need, and forecasting the costs of your future decisions lets you know how much cash you need today. One particularly opaque aspect of forecasting is the expense associated with your office space, and here are a few thoughts that might help a new entrepreneur think about their office need the right way.

Forecasting your office space need

In general, try to model out your office space need based on the number of employees you plan on hiring over the course of the lease you’re about to sign. Note that while your home lease may typically be a one-year lease, commercial office space often requires a 2-3 year lease to get a good rate. Given the length of these leases, getting involved with an office space can be a very risky endeavor — a long commitment for anyone starting a brand new company!

You have to think about your hiring rate over the period of the lease to understand your real need. My method is as follows: for every person you’re going to hire by the end of the lease, allocate about 100-150 square feet, which means everyone gets their 10×10 share of your office. That may seem like a lot, but keep in mind that you’ll need walking space, some storage space, and perhaps a conference room.

Once you’ve made that calculation, it’s pretty straightforward: going rates for office space are typically expressed in dollars/square foot. For example, right now we’re seeing rates in San Francisco of about $18-24/square foot. This is an annual rate, so divide that number by 12 to get a monthly rate. If you’re going to hire 10 people over the period, then you probably need 1,000 square feet, which represents about $18,000-$24,000/year in lease expense, or about $1,500-$2,000 per month.

Tricks to keep your costs down

Hopefully your company is growing quite fast, which makes the optimal answer to the above calculation a complex, moving target. There are a few ways to keep your costs down when you’re getting your company off the ground. Here are some of my favorites, many of which we’ve employed while getting our current company its space:

• Work from home at first. If you’re a sole founder or working with one partner, it may make sense to work out of your living room or home office. Some entrepreneurs I know have been able to get their businesses up and running by living together in the same space as their workspace. This is the cheapest option for a new company, but my personal experience is that this can quickly become unhealthy for you because you’re never away from work. Try this out for a while until you need to compartmentalize your day into work time and home time: it will be better for your health and the health of your personal relationships as well.
• Sublet desks from incubation spaces or other companies. The next step for us at RentJuice was subletting a small office within a great company founded by a friend of ours. Going rates for these spaces are often $250-$500/month depending on the amenities provided, and the flexibility of the lease. When it’s just a handful of people at your company, this is often the best option because it eliminates the feeling of isolation you may be experiencing by working quietly in your home office or living room. There are also spaces dedicated to this kind of work environment: some west coast options include Dogpatch Labs and Plug-and-Play Tech Centers, while in Boston, you have a great option in Betahouse run by a friend of mine. For a complete list, eVenues is a great place to start.
• Find a month-to-month sublease for an enclosed section of an existing space. At some point, you may be building your own culture at your firm, and having a dedicated office space is a subtle contribution to that goal. Dedicated office space lets you control your office layout, express your values, and hold loud “all-hands” meetings that include the entire space. In this case, you may still be able to work out sublease arrangements with existing companies that include a separation wall or its own enclosed area. In my view, as soon as you see momentum in hiring, you will want out of a shared co-working space so that you can focus attention on your company’s mission and culture.
• Sublet part of your space while your headcount catches up to your office space. Once you’ve reached a point where you have predictable hiring needs and are signing a longer-term lease, you can be the one providing the sublease. Try to sublease only to engineers and very early-stage companies, because your culture should be the dominant one in the office. Providing a part of your office to a company that will be making noise on countless sales calls or meetings will be distracting to your company in the space you’re paying for.

How do I find great office space?

Office space can be found using a number of resources. For small spaces, rentable desks, and sub-$2000 office sublets, Craigslist is a great resource. As with any search on Craigslist, it may be a bit cumbersome and difficult to navigate, but the low-end inventory is definitely there.

There is also a broad use of brokerage houses in the commercial office space market. In San Francisco, almost all direct leases and many subleases are available through brokerages, and landlords are typically responsible for paying their fees, making them free for an entrepreneur like you. Some brokerages specialize in specific areas of the city, but they all tend to have access to the same database of availabilities. Find a broker that has worked on behalf of startups in the past, and reach out to them with your specific needs.

One other resource worth mentioning is Rofo.com, an emerging search engine for commercial office space founded by Garrett Krueger, a friend who has been building that business for a couple years now. They’ve invested substantially in a usable interface and a good selection.

Characteristics of good office space

When I’m selecting office space, I generally keep the following attributes in mind:

• Access to public transit. In order to recruit employees from a broader geography, it’s helpful to be near a public transit station. That may be the T in Boston or BART in the Bay Area. Try to select space that is “generically convenient,” not necessarily convenient for the small sample that is your existing headcount. You’ll be thankful you did this when you win your first commuting employee, and the commute is a part of the conversation.
• Access to convenient food, gyms, and parking. Our third office space at RentJuice was convenient to reach for our staff, but lacked affordable and light food. When your startup is paying startup wages, you need to have burritos, sandwiches, salads and other take-away food nearby. Take a walk around the neighborhood and ask current tenants about the best lunch spots in the area. The same goes for parking and proximity to a popular chain of gyms.
• Availability of natural light, with high ceilings. If, like my team, you’re staring at a computer screen for most of the day, you want to avoid cramped and dark spaces as much as possible. Energy levels are higher when employees are working in a bright office, with a connection to the outside world. Balance this against the possible glare that may exist in a space that is too bright, and try to make sure there are window shades to adjust the amount of light penetrating your space. Spaces with high ceilings and natural light are often called “creative space” by those in the industry, and that might help as you read those ads on craigslist.
• Internet connectivity. Some older spaces, and many new ones, aren’t wired for Internet startups or modern companies who may choose to use VoIP phones rather than traditional ones. In our third office, the entire team shared a residential DSL connection which dropped constantly, especially when we were streaming music and working on intense front-end development (maps). Make sure to ask the landlord what Internet options are available and be sure to contact the utility companies directly to ensure that the space you are evaluating is connected to their service. They’ll often do a free assessment, and will charge the landlord if a new installation is required. It’s always best to know your options before you sign a lease so you can include that improvement in the lease if it is required.
• A like-minded community. There are few things better than having a great relationship with the businesses around you, if you have a technical challenge you’re struggling with or want to get members of the community together for happy hour drinks. We shared our second office space with a portfolio company of one of our investors, and they were generous with their common space and threw parties that we felt comfortable joining. Being able to concentrate on your own business while being a door away from an industry colleague is fantastic.
• Security. People love stealing laptops and monitors. It goes without saying that you should evaluate your next office space based on the level of security provided to you by the landlord and the quality of the neighborhood. Even if you’re in a high-rise, make sure to ask if there’s an alarm and who typically has access to the office suites. Ask if there have been any cases of intrusion or theft in the space.

In general, just keep in mind that office space for a startup should not be extravagant or a mismatch for the values you want to express to your employees. Your choice of location, amenities, layout, and price express to your investors, employees, and customers what kind of firm you are creating. Match your office space to your specific need and the goals you want to achieve.