Budget-Friendly Startup Headquarters: Five Cheaper Options and Where Each Breaks

Five options for a founder watching burn, cheapest first

• Remote. What it is: no office. Cost: no rent. Where it breaks: hiring people who want a place to work, and anything that needs the team in one room.
• Virtual office. What it is: a business address, mail handling and meeting rooms by the hour, with no desk. Cost: a monthly membership, the lowest paid option. Where it breaks: the first week the team wants to sit together.
• Coworking. What it is: desks or a lockable room on a shared floor. Cost: about $800 to $1,400 a desk each month in Manhattan, with everything included. Where it breaks: between 15 and 25 people, when the per-desk bill passes the cost of a private floor.
• Sublease. What it is: another company's built space for what remains of its lease. Cost: per square foot, typically 10 to 25 percent below direct asking rents. Where it breaks: the term and the layout are someone else's.
• Furnished floor on a flexible lease. What it is: your own floor, furnished, for one to three years. Cost: per square foot, somewhat above a long lease. Where it breaks: when the team can forecast for years and a longer lease would cost less.

Coworking or a serviced office: what a seed team is buying

Both are sold per seat on a floor an operator runs. A coworking desk is a seat in an open room, hot or dedicated. A serviced office is a private, lockable room in the same kind of building, with the operator's furniture, staff and house rules. Each seat costs more than an open desk, and what the extra buys is a door for calls and client work.

Neither is a lease. The agreement is usually a membership or a license, so read the notice period, the renewal terms and how the price can rise. Flexible lease or coworking covers what the agreement should say.

Using a coworking or virtual office address as the registered address

For mail and correspondence, often yes, and many operators sell an address for that purpose. Whether the same address can go on formation documents, a registered agent filing, or bank and tax records is a different matter. That depends on the operator's agreement and on the law of the state where you incorporated.

Check with the lawyer or registered agent service that formed the company before the address goes on an official filing, and find out what happens to your mail if the membership ends. Your attorney should confirm this point.

The point where a cheap option stops being cheap

Upgrade to a lease when two things are true: the team is past about 20, and you can see headcount roughly 18 months ahead. By then a per-desk price that never falls is costing more than a floor would, and the flexibility it buys insures a risk the company no longer carries.

Two signals that are not about cost count as well. Senior candidates ask about the office. And the work becomes something you would not discuss within earshot of another company. Coworking, sublease or a private headquarters prices each step up.

The lower-priced private floors on our book

When a lease does make sense, the asking rent decides what it costs per person. Plan on 175 square feet per person, multiply by the asking rent and divide by twelve for the monthly base rent, then add electricity. The block on this page shows the private floors at the lower end of our asking range, each with its size and rent. What office space costs in New York covers what comes on top.