Budgeting for office space can be tricky, especially if you think your space needs might change in the coming months or years.
Several elements will ultimately determine the price you pay for your space, including location, size, amenities, construction, and other expenses.
Let’s look at the most common expenses in more detail so you can calculate the true cost of a private office and start planning your budget.
Most office spaces need to be built out. In many cases, you’ll need to knock down or build walls to create meeting rooms, break rooms, and private workspaces, depending on your needs. Plan to include the following construction costs in your budget:
Hard costs include structural items used in construction, such as doors, windows, flooring, and HVAC systems. These costs usually make up 75% to 85% of your overall construction budget, but they can be difficult to estimate since you must also consider installation costs.
Soft costs contribute to the construction project but don’t physically alter the environment. These expenses include legal fees, permits, and design fees.
Unless you want to pull double duty as a business owner and project manager, you’ll need to hire someone to oversee your project. This is usually 3% to 5% of your final budget, but the actual price can vary.
You’ll also need to account for fees associated with vendor services, such as signage, IT system installation, and security systems, if applicable. These fees can vary by provider, and you may need to shop around for the best price.
Once your buildout is complete, you’ll also have ongoing expenses associated with your private office. Consider what the following expenses will cost you:
Mortgage or Lease
Whether you buy your office space or lease it, you’ll need to budget for your monthly payment.
Internet, phone, power, and water bills must be paid each month. The larger your office space, the more expensive these bills can become.
Offices don’t maintain themselves. Funds for repairs should be reserved to avoid major expenses later. Also, you’ll need routine maintenance like landscaping and trash collection to keep your space looking professional.
If you purchase your own private office space, you’ll have to budget for annual property taxes. Taxes are affected by the age, size, and location of your space.
Other Costs to Consider
In addition to construction and ongoing expenses, the following factors contribute to how much your office space will cost you:
As the first rule of real estate, the location has a lot to do with a property’s price. If your office is in a high-end area or near popular businesses or attractions, the price will likely match.
If you’re renting your office, you’ll likely have to pay a security deposit before you move in. This deposit may or may not be refundable.
You’ll need to purchase enough office furniture so that your space won’t look empty. Desks, chairs, cubicles, bookcases, and other pieces aren’t cheap, especially if you want them to last.
Shared Workspace: The Cost-Effective Alternative to the Pricy Private Office
Whatever you’re spending on an office, you’ll have to make up that much in revenue before you can even think about seeing a profit. Lowering the cost of your office can help you to see gains faster, especially if you’re only paying for what you really need.
The shared workspace provides a viable, cost-effective alternative to expensive offices. There’s no buildout to eat up funds because you choose the space that works for you, be it a single desk or private office suite.
Coworking spaces include everything you need, from utilities to furniture to maintenance, in one monthly fee so there’s never any guesswork about what your office will cost you month to month. Plus, your space can scale with your business without incurring major renovations or expensive moves.
There’s a lot to consider when budgeting for your office, and minor expenses can easily be overlooked. The more you can control your office costs, the better you’re able to plan for your business’s future.
Written by: Office Evolution Louisville
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Office Evolution has more than 70 locations open, 140 units sold in markets across the country and is poised for further growth as the demand for affordable and safe, workspace close-to-home continues to rise.