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Exploding Rents: What Startups Should Look for in Office Search

One of the biggest advantages for Berlin as a European startup hotspot was the cheap rents. But that was once. In the central districts, the rents for offices are usually over 31 euros per square meter, as an evaluation of the real estate consultant Colliers shows. Many founders initially go to the center, but there are hardly any free spaces left. In the entire capital, just 1.5 percent of the offices are empty. Many start-ups now make way for the outskirts: Makerist moved to Treptow outside the S-Bahn ring at the end of 2016, the Heycar second-hand car platform to Wedding in October, and some biotech companies settle in the remote Adlershof.

But how do founders ever find a new office and what should they look out for?

Buy or Rent?

The question of whether companies simply want to rent new rooms or even buy ones themselves, usually affects rather large companies. The headquarters of Rocket Internet, for example, belongs to the company builder itself. If the company has fixed capital and the size does not change in the next few years, then this may be a possible option. However, in Berlin it is usually only possible to buy complete buildings, not individual floors, according to Colliers partner Marcus Lehmann.

Allow enough time

Startups should plan at least one year to find rental space, Lehmann advises. For offices over 1,000 square meters, even longer. As a rule, entrepreneurs visited at least five locations, but no more than 20, until they found the right one, according to the Colliers partner. The tenants should not forget that even more interested parties apply for the advertised real estate. In Berlin, that can sometimes be ten candidates for an office.

For example, Makerist found his new premises within five months, while “looking at 15 very different objects,” writes co-founder Axel Heinz. The IT job market Honeypot searched for their own information for a similar length of time. Anders Heycar: The mobility startup took about a year, says CEO Markus Kröger.

Use different platforms

The cheapest way is via your own network. Frequently, startups rent out rooms in their own offices or report on vacated premises on Linkedin or Facebook. For example, Heycar has heard of some available locations through friendly entrepreneurs. The catering start-up Heycater has discovered his current office on Ebay classifieds, according to the founder Therese Köhler.

Also on portals such as Immobilienscout24 are repeatedly advertised areas. However, the search requires time, only then to be referred to brokers. The real estate agents require high fees, but take a lot of work. The latter was a reason for Makerist to hire an expert: “The search with the broker has cost 10,000 euros. However, we have thereby saved a lot of time and found in the end the most beautiful and even the cheapest object. So we saved the commission after one and a half months, “said co-founder Heinz.

Keep credit information up to date

The information about the credit reform of a company is similar to the credit check by the Schufa The first information that landlords catch up with is about the economic situation of the applicants, according to Lehmann von Colliers. He therefore suggests that startups should enter all accounts with Creditreform to have a good credit rating compared to other applicants. In the information, landlords not only see how the profits and losses of the company develop, but also how much the number of employees fluctuates or with what external funds the startup financed.

Prepare criteria catalog

Did founders actually get a viewing appointment, they should ask themselves various questions. Just to name a few: is the office well-designed to effectively divide jobs? Is the area more suitable for a large office or individual office? Is it possible to tear out walls as an alternative to get larger rooms? What is included in the additional costs – elevator, cooling, reception? Colliers partner Lehman says that the additional costs should cost a maximum of eight euros per square meter. What catering options are available at the location? If there are hardly any snacks, is the kitchen big enough to cook there? How is the office connected to public transport? Is there a minimum rental period and what happens if the contract is terminated prematurely?

Only reduce requirements to a limited extent

After the experiences of real estate consultant Marcus Lehmann, startups often put their demands on the new office down after a long, fruitless search. When it comes to the situation, founders should also consider other districts, but this should not affect the quality of jobs, according to the Colliers partner.

Too expensive office space: The startup scene is leaving Berlin Mitte Expensive rents and lack of office space are forcing startups to relocate. The scene has found new locations in Moabit, Wedding or Treptow.

For the placement portal for volunteers Vostel another district would not be an option, as co-founder Hannah Lutz told in a conversation with founder scene. Currently the 13-member team is based in Neukölln. Moving to West Berlin was not an option for Vostel. The startup sees itself as a social company whose image in the wealthier Charlottenburg would not work. “We are a Neuköllner startup”, says Lutz determined.

Although the situation was not as important to Honeypot as it was to Vostel, the startup still had to revise its criteria. Initially, the job board was looking for an office between 600 and 800 square meters, said a spokesman. When it did not find it, the platform had expanded the searched area and also looked for subleased locations and short contract periods. In the end, Honeypot moved into an office with 460 square meters, smaller than originally planned.

Consider other options

For example, the volunteer portal Vostel is located in a community office with a law firm. Coworking spaces can also be an option, especially when it comes to locations in other cities. However, a new location does not always have to be the only solution, says Colliers partner Lehmann. Maybe you can easily convert offices. Meeting rooms or lounge areas could be converted into workplaces.

Also published on Medium.

Published inStartups

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