Mobile vs Traditional Offices for a Tech Startup: Flexible or Leased, on Four Variables

What mobile covers, and what a traditional lease adds

Mobile, or flexible, is a family of three products.

• Coworking: desks or a lockable room on a floor an operator runs, priced per desk, often month to month.
• Flex space: a private, serviced suite or floor on a term counted in months.
• A furnished floor on a short lease: a real lease of one to three years on space already built and furnished.

A traditional lease adds a layout drawn to your own plan, a landlord's contribution toward building it, and usually a lower rent per square foot. It also adds costs beyond rent: a power bill of roughly $2 to $4 per square foot a year, rent increases of 2.5 to 3 percent annually, a security deposit, furniture and cabling, and any buildout cost past the allowance.

Flexible or leased: four variables in two columns

• Headcount. Flexible: strongest under about 15, where a per-desk price beats the cost of running a floor. Leased: strongest above about 20, where the floor's cost is spread over more people.
• Runway. Flexible: little capital up front, and a commitment you can leave in months. Leased: a deposit, furniture and possibly construction, on a term that should not outlast the money.
• Hiring plan. Flexible: add desks one at a time at the same price. Leased: take 15 to 25 percent more than the current team needs, or write in an expansion right.
• Time to move in. Flexible: days for coworking, two to four weeks for a furnished floor. Leased: 10 to 16 weeks of buildout after signing, four to six months from the first tour.

Where the cost lines cross for a 20-person team

A Manhattan coworking desk costs about $800 to $1,400 a month, so 20 desks come to $16,000 to $28,000, and each new hire adds the same again. A lease is priced on square feet, and a bigger team needs fewer of them per head, because meeting rooms and the pantry are shared.

Plan a private floor at 175 square feet per person, which for 20 people is about 3,500 rentable square feet. Multiply that by the asking rent of a floor in the block on this page and divide by twelve for the lease column in base rent, before electricity. Between 15 and 20 people the specific deals decide. Flexible lease or coworking runs both columns at real team sizes.

The middle path: a furnished private floor for one to three years

Most tech teams leaving coworking do not go straight to a five-year lease. They take a furnished or prebuilt floor on a shorter term. It is a lease, with a deposit and rights that hold through a bad quarter, but the furniture and wiring are in place and the team can be at its desks within weeks of signing. Leases of 12 months exist, 24 and 36 are more usual, and the shorter the term, the more each square foot costs. Every furnished floor we list is on one page.

What a tech team should check in either kind of office

• Connectivity: which carriers serve the building, and whether a fiber circuit is already in the space.
• Meeting rooms and call booths: engineers on video need more enclosed space than a standard plan gives. One room for every eight people, plus booths, is a workable ratio.
• Room to add desks: in coworking, whether neighboring desks are really free; on a lease, whether the layout holds the headcount you expect in 18 months.
• Power: if hardware will run on site, ask the building for its electrical capacity in writing.