Startup Office Space in NYC: The Right Office for Each Stage, and the Mistakes Between

Seed, Series A, Series B: what fits at each stage

• Seed, up to about 15 people. Coworking. Per-desk pricing beats the cost of running a floor, and headcount is still a guess. Manhattan desks run roughly $800 to $1,400 a month.
• Series A, roughly 15 to 30 people. A sublease, or a furnished floor for one to three years. The team gets privacy and its own address, moves in within weeks, and keeps the commitment short while the plan firms up.
• Series B and after, 40 people and up. A private headquarters on a direct lease. The longer term earns free rent and an improvement allowance, and the floor is laid out for how the team works.

The ranges overlap, and between 15 and 25 people the specific deals decide. Coworking, sublease or a private headquarters prices each path.

Sizing for the next 18 to 24 months

Take the headcount in the plan your board has seen, not the stretch case, and multiply by 175 square feet per person. A company that is hiring typically leases 15 to 25 percent beyond what its present team requires. A year of some empty desks usually costs less than moving again inside the term.

The other way to buy room is on paper: a right of first offer on the adjacent floor, or a shorter term that lets you decide again after two years. The floors on this page fit roughly 35 people, the kind of target a team of 20 or 25 sets when it plans to keep hiring. Leasing from Series A to Series B works through the choice.

Total occupancy cost, and the lines founders miss

The asking rent is the largest line, not the only one.

• Electricity, about $2 to $4 a square foot each year.
• Escalations of 2.5 to 3 percent a year, compounding, plus your share of tax and operating increases above the base year.
• The security deposit or letter of credit: several months of rent, and more for a young company.
• Furniture, at $2,000 to $4,000 a desk if bought new, and cabling.
• Buildout cost above the landlord's allowance, with custom construction at $50 to $150 per square foot.
• Overlap: rent on the old space while the new one is made ready.

What office space really costs prices each line.

The three flexibility clauses a founder should negotiate

• Sublet and assignment. Consent not unreasonably withheld, and assignment permitted if the company is acquired. If the round does not come, this is how surplus space gets paid for.
• Expansion. A right of first offer on the floor above, below or next door, so growth means more space in the same building.
• Termination. A right to end the lease at a set date for a fee. Landlords grant it reluctantly.

All three are settled at the letter of intent or not at all, and your attorney should confirm how each reads in the lease.

Mistakes between stages that cost founders most

• Signing for the stretch case. The base case pays the rent.
• Starting when coworking becomes unbearable. A search, a lease and a move take six to eight weeks at the fastest and four to six months with construction, so begin two quarters ahead.
• Taking a term longer than the runway plus one raise.
• Giving up the coworking membership before the new floor is ready.
• Comparing a per-desk price with a per-square-foot rent, and never converting both to a monthly total for the same headcount.