A step-by-step guide businesses can use to assess their budget for office space in New York City or Brooklyn:
Determining how much office space a business can afford involves analyzing several key financial and operational factors. Finding the right office space in New York City or Brooklyn is a significant decision for any business. With high rental prices and varying lease structures, it’s crucial to assess how much space your business can afford while maintaining financial stability. This guide will help businesses calculate their office space budget, understand rental costs, and make informed leasing decisions.
1. Calculate Your Office Space Budget
A general rule of thumb is that office rent should not exceed 10-15% of gross revenue. This ensures that businesses maintain healthy cash flow without overcommitting to real estate expenses.
Formula:
📌 Monthly Rent Budget = Annual Revenue × 10-15% ÷ 12
For example, if a business generates $1 million in annual revenue, a sustainable office rent budget would be $8,300 - $12,500 per month.
2. Research Market Rental Rates in NYC & Brooklyn
Office rental prices in NYC and Brooklyn vary based on location, building class, and amenities:
Manhattan (Class A Buildings): $70-$100+ per sq. ft. annually
Brooklyn (Class B & Creative Spaces): $30-$60 per sq. ft. annually
Coworking Spaces: $300-$1,500 per desk/month
Knowing these price points helps businesses set realistic expectations when searching for office space.
3. Determine the Required Office Size
The amount of space a business needs depends on the number of employees and workspace layout:
Traditional Layout (Private Offices & Cubicles): 125-250 sq. ft. per employee
Open-Plan Layout: 100-150 sq. ft. per employee
Hybrid/Remote Model: Less space required per employee
Formula:
📌 Office Size (sq. ft.) = Number of Employees × Space per Employee
For example, a company with 10 employees using an open-plan layout would need 1,000 - 1,500 sq. ft.
4. Factor in Additional Costs
Beyond base rent, businesses must consider additional costs such as:
✅ Utilities & Internet: $2-$3 per sq. ft. per year
✅ Property Taxes & Insurance: $2-$5 per sq. ft.
✅ Common Area Maintenance (CAM) Fees: Varies by lease type
✅ Furnishing & Build-Out Costs: $50-$150 per sq. ft.
These costs can significantly impact the overall affordability of an office space.
5. Choose the Right Lease Type
Businesses should consider different leasing options based on financial flexibility:
Traditional Leases (3-10 years): Best for established businesses, higher upfront costs.
Flexible Leases & Coworking Spaces: Ideal for startups or businesses with fluctuating team sizes.
Subleasing: Often more affordable with shorter lease terms.
Final Thoughts
To determine how much office space your business can afford in New York City or Brooklyn, evaluate your revenue, expenses, and growth plans. Consulting with an NYC office space broker can help you find the best options within your budget while considering factors like location, lease terms, and additional costs.