Upgrading the office

[goodal]

We have been in a small 1,000ft office since our humble beginning 11 years ago and have wanted for the last several years to build/buy a newer/nicer place. The area our office is in is rather depressed, not much if any constrction going on and not much if, any place to rent. Fortunatetly our consulting is done in larger cities so the economy of our immediate area isn't that important. We want to stay in this area for several reasons. Recently 2 places have come to our attention to purchase. One is a very nice, large office of a large mechanical contracting firm that went bankrupt a few years ago. Would need no work to move in and open up shop and its at the highest point in town physically. only down side is its around 10,000ft, about 5 times what we need. the other option is a prefab metal building with 4 acres in an industrial park. The front half is about 30% finished out so it would require a good bit to get it ready to work in. the back half is warehouse/storage style.

When taking into acount construction cost to get the metal building finished, the big office will only cost about 10k more to purchase. We have had very good times up until last year and have been off our pace considerably for 2 years now, but we arent struggling yet and things have picked up pretty good in the lat 4 months.

Im curious what you guys and gals think we should do and why. Any ideas?

 

[Kephart P.E.]

We have been in a small 1,000ft office since our humble beginning 11 years ago and have wanted for the last several years to build/buy a newer/nicer place. The area our office is in is rather depressed, not much if any constrction going on and not much if, any place to rent. Fortunatetly our consulting is done in larger cities so the economy of our immediate area isn't that important. We want to stay in this area for several reasons. Recently 2 places have come to our attention to purchase. One is a very nice, large office of a large mechanical contracting firm that went bankrupt a few years ago. Would need no work to move in and open up shop and its at the highest point in town physically. only down side is its around 10,000ft, about 5 times what we need. the other option is a prefab metal building with 4 acres in an industrial park. The front half is about 30% finished out so it would require a good bit to get it ready to work in. the back half is warehouse/storage style.
When taking into acount construction cost to get the metal building finished, the big office will only cost about 10k more to purchase. We have had very good times up until last year and have been off our pace considerably for 2 years now, but we arent struggling yet and things have picked up pretty good in the lat 4 months.

Im curious what you guys and gals think we should do and why. Any ideas?

Obviously I am making some assumptions. But without knowing the your situation details. My answer is: Location, location, location.

First choice would be the Prefab building in Industrial Park. It will be easier to locate for you clients. Parking is no problem. Extra space (of the Big office) may seem wasteful to your clients. Is the Industrial Park close to major freeways and the airport? This makes a huge difference to your employees especially if they travel a lot for work. Plus you are going to do some construction so you can set it up how you want it. I don't know what sort of work you do, but you can always find uses for warehouse space. If nothing else set up a fitness area and showers for yourselves.

I would go with the Office Bldg. downtown, but only if it provides convenient access to your clients or a better opportunity to recruit talent. And you think you can set up the office so that it isn't apparent its half empty. And if traffic commuting will work.

Another thing to think about is would you lose any people by moving to one or the other? And are they key personnel?

 

[FLJhawk]

Would it be possible to lease out part of the big office for the time being and eventually expand into that area in the future if the growth is there? That is what my current company did some years ago. I would imagine that the lease helped to cover the rent for a space much larger than they could use.

I would agree that location is very important. If one is in an area where it could be valued far higher in the future, e.g. highest point in town, rather than in the middle of an industrial park it seems that it might be a better facade for potential clients.

 

[Fudgey]

What about renting out some of the extra space in the big office to get a return on your investment?

 

[ARLORD]

I agree with the others, if you can afford the larger space rent out the unused area. It would be a good long term investment.

 

[dastuff]

What about renting out some of the extra space in the big office to get a return on your investment?

Or.... Build really big offices for your employees!

"This 2000 sf corner is your office, and this 3500 sf corner over here is the conference room"

What about resale value when the economy turns? The bigger one could be a good investment.

 

[Dleg]

I think the metal building sounds more fun. You could set up a basketball court in the warehouse.

Or rent it out to that guy who repairs lawnmowers and dumps his used oil down the stormdrain.

Or manufacture something really strange in your spare time.

Or start a farm on the 4 acres and advertise yourself as a 100% Organic Engineering Firm.

 

[Supe]

Buy the big one, model it after the Google office.

 

[goodal]

Thanks for the advice. I think we are going to go for the larger, nicer office because we can probably lease some of it out and because renovating the metal bldg is going to get too pricey. Thanks again.