What Do Small Businesses Want in Office Space? A Lot

Small businesses are vitally important to the U.S. economy, and many people are unaware of just how much they contribute to the nation's fiscal health each year.

By Vanessa Anderson September 4

Small businesses are vitally important to the U.S. economy, and many people are unaware of just how much they contribute to the nation’s fiscal health each year. What many do not know is that they account for a sizable amount of the nation’s GDP – 44% to be exact. They are a prime driver of growth and create more jobs than any other sector in our economy. Because of their importance, small business owners are supported by several national and local professional and governmental organizations that advocate for them, including the Small Business Administration, the National Federation of Independent Business, and local Chambers of Commerce. These organizations provide advice and education about a number of topics from how to start a business to how to leverage local economic incentives when selecting a location.

Small business owners not only know about their business operations but also about the pressures facing them. As a group, they are informed: a little-known fact about small business owners is that 44% of them hold a 4-year degree compared to the general population, which is 33%. When you include associate degrees and some college, the percentage rises to 56%. 

Smalls businesses account for 44% of the nation's GDP

Site Selection for Tenants is Complex

One of the major challenges small business owners face is selecting the right location for their businesses. Leasing an office or coworking space can on occasion be a complex, time-consuming process, but it doesn’t have to be. Our Truss CRE platform is the leading online commercial real estate marketplace that helps all parties move through the leasing process in record time.  

When they are considering locations, most small business owners don’t know what spaces are available to them and how much they cost. Attracting commercial tenants can be a challenge: one way is to get their attention is to be clear about how much your space costs. Price transparency is a feature of our platform  – we include all the expenses associated with a space. This ensures that commercial tenants see space listings that match their budget. Truss CRE also provides 3D virtual tours so that a space shows well. This means less property tours, which saves everyone’s time.

Obviously, it’s always good to have informed tenant brokers acting as facilitators. With a seasoned professional assisting with the search-to-lease process, owners can pay attention to their businesses and get involved when necessary while a broker does the heavy lifting. Once a brokers determine what office tenants want, they can use our platform to guide them to the spaces that match their requirements. Our platform reduces the time it takes to execute a lease, and faster occupancy.

 

What We Are Seeing in Our Data

From our Truss database, we are tracking how small business owners preferences are changing.

Here are some of the trends we are seeing:

Shorter Leases 

The length of office leases has been trending down. Many owners are now offering pre-built, fully furnished suites for short-term leases of 6 months to 3 years. Perhaps this is because small business owners have become risk-averse and do not want to commit to longer contracts. 

2nd Generation and Spec Suites

Many business owners are preferring to lease spaces that have already been built out. They may not be able to handle the inevitable out-of-pocket expenses that come with construction. There’s also the time that it takes to complete a build out – it could take several months to finish a space. 

Space Amenities Matter 

Many business owners are selecting their office spaces based on space configuration and amenities rather than property amenities. For small tenants who tend to not invest in a custom buildout, the interior condition of their suite is very important. Class B and C buildings are destinations for these tenants.

Preview Experience and Virtual Tours

Business owners looking for space prefer to take virtual tours, eliminating those that don’t fit their needs. They are pressed for time – most look for new spaces outside of business hours. The effect of having more 3D tours has been measurable: business owners on the Truss platform tour an average of 5 spaces versus 10 to 15 the traditional way. 

Pricing information – our Truss platform only features spaces that have 100% price transparency: tenants want to know all-in costs for spaces.

Average Number of Tours Before Leasing Office Space Chart

Space Information

The more details that a property owner provides, the more those spaces are selected as favorites. Spaces with more than two space-level features are favorited and toured over twice as many times than ones that do not. “Dropping pins” in new areas – some business owners are considering office spaces in urban residential neighborhoods. Despite the lower amount of inventory, many business owners are considering these areas because the rents are lower and the neighborhoods are less dense

What We Are Hearing from Our Brokers

Here are some observations from our team: 

Open Floor Plans

They have become more common than traditional space with separate offices and cube farms. This design was originally adopted to promote dialog and decision-making and also to save money: open settings are less expensive than offices to construct. The main complaint about them is that they cause distractions and do not provide the privacy needed for such functions as legal and HR departments. Concerns have also been raised about how secure open spaces are. Open design has evolved to become more efficient and workable as many property owners have worked with interior architects to remain competitive. 

 

Coworking Spaces

This option offers greater flexibility than direct spaces. When all expenses are considered, they are on occasion less expensive than direct spaces. They are also good as interim spaces. Coworking spaces also feature short termination notices, no security deposits, and no personal guarantees to pay the rent.

 

Walk Score

It’s a reliable index that has been around for a while. The score is an index based on transit, safety, and how walkable neighborhoods are. Many times, clients consider this data when selecting a location.

 

Live-Work-Play 

Small business owners are selecting spaces that match their lifestyles. These spaces have become more popular than offices that do not offer amenities. 

 

Food Halls 

They are becoming more prolific. Local restaurants and other providers like food trucks find it profitable to open limited-service stands in halls, even if they are within close proximity to their original sites. They are profitable for property owners, with short-term leases and higher than usual rents. Because of the short-term leases, the property owner can quickly switch out restaurants that do not work. Purveyors also like the arrangement because they offer an additional revenue stream with low investment in the space. 

How to Find a Commercial Tenant

Tenants are becoming more engaged, so following their behaviors could help you boost your occupancy. At this market phase, we are seeing small business owners changing where they want to locate their businesses and what they require of their space. One trend is clear: they are eager to learn as much as they can about commercial real estate and how their space aligns with their business strategy: where they lease, how much space will cost, and whether it will accommodate business expansion or contraction. This vitally important sector of our economy continues to drive growth and establish new trends in many urban office markets.

About Truss

Truss is a leading online marketplace to help small and medium sized business owners find, tour and lease space.  Truss CRE is a unique listing and transactional commercial leasing marketplace. Vanessa Anderson is the Vice President of Operations and oversees the creation, maintenance, and automation of Truss’s listing inventory. To list your space on Truss, please visit our page for property owners.