The Bay Area’s economic recovery is again being linked to investment in startup companies. Focusing on improving or creating entirely new technologies or services, these startups are not all large-scale endeavors. The federal government’s Small Business Administration states that small businesses start up at a rate of over 500,000 a year and account for 75% of all new jobs in our current economy. Recent commercial leasing reports for Silicon Valley and San Francisco show continued activity by startup companies in web technology, apps and gaming, and life-science sectors. While this activity seems to be stabilizing as this year draws to a close, the overall outlook continues to be positive. But let’s not confuse this with the tech gold rush of the late 1990’s – it is different this time.
As a result of the game-changing economic downturns of the dot-com bust, the 2008 stock market adjustment and the resulting “great recession”, the approach to seed funding, operational oversight, and cost control of startup companies now definitely (and thankfully) has a more sensible and conservative note. While the process of designing space for startups is a different game today, some fundamental keys to success have remained unchanged. Let’s look at some of the best practices:
– Create Learning Opportunity for Everyone –
Today’s startup leaders are often younger and/or first-time entrepreneurs and thus relatively new to the process of selecting and designing office space that reflects their company culture. This is a good thing. By nature, startups are just beginning to define their culture, so early planning with the real estate and design team offers the opportunity to identify and realize a company’s values through the evaluation of work styles and work settings. Statistics show that second only to salary, the physical work environment is the largest contributor to employee satisfaction and retention. It’s simple – great space equals happy and productive employees.
Explaining the often complex design and construction process to a client is an important first step. Projects are most successful when this dialogue is collaborative and continues for the duration. This builds critical trust between all involved parties and facilitates continuous learning. So while clients learn about how space impacts their business, design consultants learn as much as possible about the client’s business model in order to support their vision with creative design solutions.
How a startup actually intends to use their space greatly impacts the type of real estate to consider in the first place. For example, wider column spacing or more room between the building core and window line may allow users to sit in larger groups and to reconfigure workstations more easily. On the other hand, several segmented “neighborhoods” can allow for privacy between certain critical functions (e.g. a high energy sales area vs. a heads-down engineering area). Knowing which model best supports a user’s needs informs the space selection from day one.
– Return of the Spec Suite –
One current market trend is the proliferation of pre-built spaces complete with partitions, ceilings, lighting, and finishes, offering the ability to bring space online quickly. Especially for startups, this race to occupancy is often the primary determining factor in a real estate decision. Through creative design, these environments can often be re-purposed in exciting, non-traditional ways without much added cost. For a tech startup, private offices become huddle rooms, conference rooms become engineering bullpens, and training rooms can become all-hands meeting or demonstration rooms.
– Get Real on Schedule, Budget, and Program –
Clients who have never built out office space can be shocked at how long the process takes. Early schedule feedback from architects and contractors can help align a client’s expectations with the realities of construction. Too often, aggressive timeframes sound good from a leasing perspective but can only be accommodated by incurring some financial or functional penalties.
Similarly, developing a realistic project budget from the onset helps the design team formulate better solutions to client objectives. Knowing “what you get for the money” helps to prioritize needs versus wants, and even prior to that, enables the real estate broker to negotiate better lease terms based on those priorities. A budget should also take into consideration possible future modifications to the space. Most startups grow exponentially, so accommodating flexibility is paramount. This is particularly true for electrical and HVAC infrastructure which can typically make up 30-35% or more of a construction budget. Cloud computing and off-site data storage services have liberated many office spaces from large IT infrastructure requirements. However, adding two or three times the amount of people into a space over time must also be considered in planning for cooling and electrical plug loads. Retrofitting a space later on is usually far more costly than planning for future needs up front.
– Be Innovative and Open to New Ideas –
The best companies recruit the most talented employees, and these are often people who seek out the most innovative work environments. Therefore, the workplace should foster creativity and knowledge sharing. Startup employees often hold multiple roles and are not fixed to traditional office workspaces, such as private offices or individual desks. As a result, space needs to perform multiple functions, which presents the chance to introduce flexible and often mobile design elements in architectural and furniture products that allow for easy reconfiguration. But with mobility comes a new set of challenges.
– Set the Stage for Success –
Today’s startups have less money to spend on real estate, so it must be spent more intelligently. Experienced design and real estate professionals can help emerging business succeed by harnessing the power of their work environment and maximizing available capital. The key is collaboratively sharing goals, expectations, and experiences, clearly defining roles and responsibilities, yet staying flexible and lean. With this approach, the team lays the foundation for a successful project and an enduring client relationship that hopefully leads to more opportunities as today’s startups evolve to become the next industry leaders.
Sascha Wagner is a Principal at Huntsman Architectural Group. He is an advocate for highly collaborative, client driven, interdisciplinary design with sustainability at its core. He is also President of the International Interior Design Association (IIDA)’s Northern California Chapter. Steven Gerten also contributed to this article.