Leasing – or renting – an office is still seen as the most popular method of running a business. Despite the work-from-home revolution, many companies still want to have office space to conduct their daily business. It's rare that companies will outright buy offices, purely because it's too expensive. Plus, small businesses move around quite a lot, so you might not stay in the building for long enough to warrant buying it.
Having said all of this, leasing office space isn't the most advantageous idea of all time. There are some disadvantages as well, which begs the question; should you lease an office? Are there some better alternatives that might work well for your business?
To help you answer this question, you'll find some reasons for and against the concept of renting office space:
For: A professional work environment
Having an office gives you a professional work environment that can help you be more productive. It allows you to keep all of your staff in one place, allowing for better collaboration on projects. Communication is much easier when everyone's in an office, and you don't have to worry about things like someone's internet breaking down. As we've all experienced over Zoom or Microsoft Teams meetings, a dodgy internet connection can make communication a huge problem when remote working.
Many people argue that working in an office is better for them mentally as they feel more professional. It's a way of letting people switch to ‘work mode' rather than working from home and feeling too relaxed and distracted.
Against: A needless expense
On the other hand, you can easily argue that leasing an office is a needless expense. Sure, it has benefits, but do you actually need an office to run your business? Can you run it from home without any qualms or issues? The last 18 months have been a great way for businesses to test if remote working is effective for them or not. Ask yourself, have you seen significant drops in productivity over this period?
If the answer is no, then you may want to consider ditching the office altogether. You can clearly run your company with no issues if everyone works remotely, so why bother spending money on office rent? It's not just the cost of renting that's a factor; it's all the other expenses as well. Office energy bills, office equipment for all your employees – these things add up. Yes, some can be taken off your tax bill as business expenses, but you still have to purchase them, which may interrupt your cash flow.
For: Free advertising
An underrated and unappreciated advantage of leasing an office is that it gives you free advertising. When you work in an office, you can place your sign outside. If you're the only business in the building, you can put clear signage outside the office for everyone to see. Even if multiple businesses work in the same building, there will usually be a sign outside with everyone's logos on it. You could even add signs to your windows to further promote your business.
Ultimately, an office gives you a chance to promote your business to anyone that walks by. If you're located in a busy city center, you could potentially have hundreds of eyes on your logo and sign every day. This plants the seed of your business in people's minds, making them think about you subconsciously. They can also be intrigued by your business if you offer something they're interested in. In essence, you can potentially gain customers just by leasing an office.
Another possible bad side of leasing office space is that it can lead to constant lateness from your employees. It all depends on your office location and how easy it is to get to. In some cases, there are no public transport links, so the only way to get there is by car or foot. If your whole team drives in from different locations, they can easily get caught in the morning traffic rush. This means that certain employees are always turning up late, and there's nothing they can do about it.
By contrast, if everyone worked from home, you'd never have an issue with lateness. People don't have to commute to work every day, so you should be able to get more productive hours out of them. Granted, this point is definitely situational and depends on the office. You may find an office in an excellent location that's close to all of your employees and is easy to get to – even during rush hour. However, this brings us back to the money issue; offices like this will command a premium rental price!
For: Sublease to make money
Again, an underrated benefit of leasing offices is that you do have the potential to make money from the space. In most office leasing contracts, you can sublease to let other businesses rent a share of the office space. Let's say you lease an office, but you only use around a third of the space you have in the building. Maybe, after last year, you realized that half of your team can work remotely, while the other half stay in the office. As a result, there's a lot of spare space lying around. You can then lease this to another business – or two – and they pay you to work there.
This is a highly common idea, and it's called office sharing. Now, there's a key thing to understand, and it's that everyone subleasing from you will have their own separate office areas. They will work in the same office building, but not in your actual office. This differs from coworking, which is where everyone works together in the same place and shares resources. It can be confusing differentiating between the two, but there are some great points made in an article I read called 14 Ways Office Sharing Differs From Coworking that explains it all. The bottom line is that you can make money by leasing an office if you have extra space to sublease to others. As such, this can go some way to covering your own rental costs!
Against: A bad work-life balance
Achieving a good work-life balance is essential if you want to get the most from your employees. A good balance between the two means that people can easily drift between work and their personal lives. Essentially, it mainly revolves around the idea of bringing work stress back home with them or having enough time to themselves at the end of each day. Leasing an office could lead to a bad work-life balance, particularly when compared to working from home.
Did you know that a lot of workers found that working from home provided them with a better work-life balance in 2020? Over 4,000 people were surveyed by FlexJobs, and they discovered that 73% believed they had a better work-life balance by being at home. Why? Because it allowed them to cut down on commuting, letting them spend more time with their kids, partners, pets, etc. Not having to go to the office every morning also meant they could sleep in an hour later than usual in some cases, leading to a better sleep schedule and decreasing stress. This might not be the case for everyone, but the stats show that a large majority of workers have a worse work-life balance in the office.
For: Better networking opportunities
The last point in the ‘for' column is that an office gives you more opportunities to network. If you sublease to other companies, you could have someone right next to you that provides the services you need. Likewise, if you're in a building that loads of other businesses are also in, the same networking opportunities present themselves.
A significant downside of working from home is that you miss out on these ongoing networking and relationship-building opportunities.
Against: A higher carbon footprint
Finally, one argument against leasing offices is that they make your business generate a larger carbon footprint. By working from home, you prevent the need for commuting, saving many carbon emissions from being pumped into the air every day. It's not something you tend to think about that often, but it's a genuine problem.
You also use less energy as you won't have numerous PCs plugged into the wall every single day – or loads of other office equipment. So, you can run a greener business by not having an office.
Overall, leasing an office can be both beneficial and disruptive. It depends on your business and the issues you hold closest to your heart. Also, some businesses may have to work in an office for one reason or another. In this case, leasing is definitely better and more financially savvy than buying an office building. Ultimately, it comes down to what you think will benefit your business the most. Can you work from home without any productivity issues? Can you rent an office without seeing the financial problems?