Starting a new business can be exciting – and a number of Torontonians are doing just that. Canada has recently been named North America’s startup core, with Toronto leading as the fastest growing hub. Just last year alone, 2700 new startups were launched in the city!
As the number of startups in Toronto increase, there is a growing need for office real estate. While working from home or a coffee shop may suffice some new entrepreneurs, an actual office space becomes a necessity for a growing company. However, many startups often find it difficult to pick a new home for their venture, mainly because startup real estate is expensive and time-consuming.
Ultimately, coworking and traditional office space are often the only consideration for many startups. But these two models may not be the best option for modern organizations.
The Coworking Space Dilemma
There are over 20 coworking spaces catering to startups in Toronto in the downtown core area. While there is a high demand for shared office space, it may not be the best fit for a growing organization. Coworking may seem like the best option for solopreneurs or small teams, but it has its own set of limitations.
Here are three reasons why coworking is no longer practical for rapidly expanding startups:
1. It’s Hard to Develop Identity and Culture
As a new startup, establishing an identity and developing a strong work culture is important. But this can be difficult when working out of a coworking space. With so many different types of companies working together under one roof, it can be difficult to create a unique personality that works well for your brand and team.
2. Sharing (Does Not) = Convenience
When you’re sharing facilities with others, you have to plan your day around the availability of common spaces such as meeting rooms. What happens when you have to book a boardroom for a meeting with a new client, and there aren’t any available? You’re in a tight spot and either have to request others to give up their slot, or host the client somewhere out in the open (which might not leave the most professional impression).
3. What Happens When Your Team Grows?
Working out of a coworking space may not be the most convenient for a growing startup. Coworking spaces normally charge for desk space, which can become quite expensive for larger teams.
Once you hit 15+ people, buying desk space can not only cost more, the dynamics don’t make sense as finding the room to collaborate with a large team can be difficult in a shared office.
The Traditional Office Space Predicament
Alternatively, a traditional office lease may sound like a better substitute for a fast-growing company. While it may seem fun and exciting to build your own space, if you’re inexperienced, finding and developing office real estate can be more difficult. When time is equally important as saving money for new business owners, opting in for a traditional office may seem impractical.
Here are three reasons why owning a traditional office is not feasible for startups:
1. Building Your Own Office Is Costly and Tedious
Most business owners underestimate how expensive it can be to build your own office. When you’re trying to save capital for important business activities, spending a large chunk on real estate doesn’t make much sense. Most startups take up an estimated office space of 5,000 square feet. With an average cost of $50-$60 per square foot, the bill can rack up quite high when personalizing a boring looking office. The other option is that you hunt for affordable furniture and fixtures – but let’s be honest – your time can be better spent elsewhere. Also, cheap furniture may not leave the best impression on your employees or clients.
2. Office Space Doesn’t Adjust with Your Team
Most traditional office spaces come with long-term leases, often going up to 10 years. As modern businesses become more agile, it’s often difficult to forecast employee headcount for the future. At any given time, startups may be employing more employees but may find the size of their team shrink later on. As a result, startups often have to lease more space than they need, or are forced to end their contracts early. This often means paying hefty fees to real estate agents and real estate management companies. Therefore, traditional offices are becoming less relevant for modern businesses.
3. Setting up an Office Is a Major Distraction
For many entrepreneurs time = money. So why spend it trying to build an office when you can use it to build your business? Business owners often underestimate how long it takes to find the right office space, build a lease, and move into a new space. You have to hunt for an office space that is conveniently located, easily accessible for employees, and must fit your budget. Once you do find an office space, you have to negotiate a lease and even hire contractors to customize your space. Sometimes, it can take as long as six months. You have to ask yourself, is it really worth your time?
Clearspace, a New Alternative for Outdated Real Estate Models
It’s obvious that the current two models for real estate don’t work for startups. Traditional offices work better for large organizations, where economies of scale make sense. And coworking spaces are suitable for one-person or smaller teams, where they can pick and choose a flexible workspace.
What growing organizations, particularly startups, need is a new solution that is customizable and affordable.
ClearSpace offers such option to growing companies, where they can build a culture, bring clients and investors with confidence, and confidently rent out flexible office space.
ClearSpace provides a flexible working space for companies that are completely customizable and ready to move in for immediate occupancy.