The Modern Workplace: Purchasing, Expanding, or Renovating Your Office
During this previously recorded webinar, hosted by the Small Business Association of Michigan (SBAM), three panelists came together to share their experiences creating modern workplaces for small businesses, as well as an overview of some of the elements you need to consider in terms of purchasing, expanding or renovating an office facility.
The panelists of the webinar included Jennifer Jurgens, CEO of 1 Bold Step, Bob Von Kaenel, President of Kentwood Office Furniture, and Shannon Dwyer, Business Development Manager and Commercial Lender at Consumers Credit Union. All three panelists provided expert insight on building a modern workplace from the viewpoint of business owners, as well as the lender, and a checklist of things that other business owners can use to determine if they are ready to invest in an office space.
Read the Recap
Earlier this year, Jennifer Jurgens, alongside 1 Bold Step co-owner Adam Clarke worked with the City of Grand Rapids to acquire a building located on Front Ave NW. The marketing operations agency was able to purchase the property in collaboration with several different partners, including the Small Business Administration (SBA), Small Business Association of Michigan, and Consumers Credit Union to navigate the loan and purchase process.
From the start of the pandemic in 2020, 1 Bold Step saw an exponential increase in marketing operations inquiries. The company’s client base expanded, and to keep up with the demand, the 1 Bold Step team grew from four to 12. They were quickly growing out of their previous space and would need space to call their own.
Trends in the Workspace
The COVID-19 pandemic showed many organizations that remote work was possible and many employees could be successful. Some companies were even looking to reduce space because remote and hybrid working models were becoming the norm. And according to Von Kaenel, companies have been looking for the most flexible options to accommodate their employees and the way they work.
“When the pandemic hit, we all learned to work differently… And I think that was a good thing for many organizations, but with that being said, as things have recovered – people still have the desire to come back to work, and they want to do so in a way that is both productive and social,” Von Kaenel explained.
Kentwood Office Furniture has worked with hundreds of clients over the last 12 months to help redesign spaces that not only welcome employees but are safe, productive, and highly engaging. And that is a trend in office space design that doesn’t seem to be losing steam.
“People are looking at space in terms of how it really accommodates their ability to scale up or scale down as their business changes,” Von Kaenel said.
Even from the lender’s perspective, more and more companies are looking to fund more collaborative in-person workspaces but with a caveat from Dwyer, “I think it’s important employers are focusing on accessibility.”
Unfortunately, there is a lack of inventory when it comes to office space and many of the spaces in West Michigan are not as “plug and play” as some companies may need. Dwyer notes that it’s important for business owners to have an idea of what kind of space they need and be realistic about their expectations in finding that space.
Is physical space really necessary?
Every company is different, but it’s important to remember that your physical space is more than just a place for work to get done. It’s also about the community you foster and your company culture.
“When organizations are trying to grow and improve, having a physical space that really supports and builds that culture is critical,” Von Kaenel explained. “Having multiple generations of employees and a space that brings all those generations together is key — and it’s especially true for small and mid-sized businesses.”
For example, as the pandemic in Michigan shifted, many small and mid-sized businesses were the first to return to the office – but primarily because they had to. Not all businesses had all the resources necessary to fully support remote work. This has left companies looking for space that is both practical and pragmatic, to meet their unique needs.
Create a Space for Employees
When it comes to buying or renovating office space, it may serve your company well to consult your employees on what they actually want or need. Especially in order to get a good turnout in the office.
“When we started down this path, we immediately thought that of course everybody wants an office and we started full steam ahead,” Jurgens explained. “But we were met with a little trepidation and that allowed us a moment to step back and realize, why don’t we ask them what they want in an office? What would they need to make working in an office space ideal.”
A popcorn machine at 1 Bold Step? Hard pass. Listen in at 12:18 to find out why.
Instead of creating a more “traditional” office place with just desks, 1 Bold Step built a variety of working spaces. “We learned that everybody wanted an area of their own, where they could work if they needed but also some breakout space where two or three employees could get together in a quiet space,” Jurgens continued. When you enter the 1 Bold Step office, you’ll see they have a family room with plenty of soft seating, an open kitchen, a bathroom with a shower, and bicycles hanging on a front rack so that employees can get downtown easily to grab lunch or take breaks.
Do Your Due Diligence
Another important aspect of building or renovating office space is doing your due diligence. You have to know your budget, what kind of monthly payments your company can afford, and whether you want to rent/lease space or buy it.
It’s important to talk with a commercial lender early in the process to know what you qualify for or at what point you need to get to in order to qualify for specific loans or financing. It would also be incredibly helpful to get a soft proposal letter to help with negotiations as you navigate the market.
“It’s all about having all the right partners and resources lined up and ready to go — having a broker, working with an attorney, talking to an environmental firm. Doing your due diligence as early as possible is key to success,” Dwyer explained.
Research Your Financing Options
A big part of doing your due diligence is knowing your finances and what your options are. If you didn’t know, the SBA’s 504 Loan Program changes the commercial loan structure and makes it a lot more affordable for small businesses looking to acquire space.
When 1 Bold Step was looking for office space, they also consulted with the City of Grand Rapids and the State of Michigan to see what was available in terms of financing – because often your local community and state will have resources available.
During the process, 1 Bold Step actually discovered Grand Rapids’ Brownfield Redevelopment Program, which identifies several older, industrial neighborhoods primed for economic opportunity. Property in this area isn’t necessarily all environmentally contaminated, but there are some additional steps on getting financing and environmental testing that has to happen on the parcels. The program provided a grant to help cover the cost of the testing and the city of Grand Rapids reimbursed 1 Bold Step for 50% of the fees.
“My recommendation is if you are looking at certain buildings, get out and look at the survey, find out where that parcel is located, and just start asking around,” Jurgens explained. “It was a huge help in the overall process.”
Thinking of purchasing an office space? Hear some pros and cons at 22:16.
Work with the Right Commercial Real Estate Broker
Another critical component of this process is having a commercial real estate broker on your side. The right broker will line up the properties with a completely unbiased perspective. It’s important to work with a professional because there’s really no way to know all of the properties on the market, “unless you connect with someone who has their finger on the pulse of what is available within your price point,” Jurgens recommended.
And that is critical to finding your perfect space. “it’s important to really get out there, look at a number of properties and understand what’s in the marketplace because you’ll have a better understanding of the range of possibilities,” Von Kaenel added. “When you see the right property, you’ll know it because it will fit what you’re trying to accomplish and you’ll see that possibility for the space.”
Considering tenants in your building? Here’s a quick breakdown of the rules when utilizing the SBA 504 program. Listen in at 26:13.
Know Your Shortcomings
There are several resources available for small and mid-sized businesses that need them, and when embarking on this process, it’s imperative that you seek them out. Find all of the financing and lending options, lean on your real estate broker, and turn to a design partner to help create the best space for your business.
“I think it’s important as the owner of a small business to do an honest assessment of your skill set,” Jurgens explained. “I was very comfortable with the finances and my husband is a commercial construction expert. But I personally can't do pretty. I don’t know what matches. I don’t know how to lay things out, so finding a partner like Kentwood was critical to our success.”
“And everybody’s going to be different, but if you’re honest with yourself and really look at your shortcomings and line up with good partners – it makes all the difference in the world.”
Consider Your Future
One very important aspect of expanding, renovating, or purchasing space as a small or mid-sized business is thinking about the future. How do you know that the space you’re going to buy or rent will last into the future?
“At 1 Bold Step, we run EOS for our strategic planning and one of the things that EOS has you do is a one-year plan, a three-year plan, and a 10-year plan” Jurgens explained. “Our three-year plan, we wanted a cool office with a shower so Adam could go out for a run at lunch and that actually came true, almost right on schedule.”
“And I think stepping back and doing that three-year look and that 10-year look is really important so that you don’t end up in a space that you’re going to outgrow very quickly. We intentionally purchased something a little bigger than what we needed so that we could grow into it. Planning ahead, just having a plan at all, is one of the best things you can do.”
It can get murky trying to look far into the future, and that’s when it’s critical to consider flexibility and ask yourself: Do I have enough space for potential growth? How do we make sure that we’re designing a space that supports change?
“One thing we know that is going to be constant for all of us is change. So, how do we think about how people work, where they work, and how adjustable a space is? Does the space allow us to reconfigure on the fly? How can we turn a casual conference area into a more dedicated workspace and vice versa?” Von Kaenel explained.
It really goes beyond just having a plan, but thinking long term which is critical to finding or creating a space that works for your business in the way you need. Considering all the factors, even those you might not think apply to you at the moment to ensure you’re always primed and ready for growth or even downsizing if necessary.
“Finally, getting the entire team involved in the process in some way — the more satisfied everyone is going to be,” Von Kaenel explained. Kentwood Office Furniture actually redesigned its headquarters in Grand Rapids right before the pandemic hit.
Once employees began to return to the space, it needed some reconfiguring to better adapt to the way they worked. But inherent flexibility made the process easy and allowed Kentwood the opportunity to infuse more fun and personality into their space.
“Our kitchen and cafe tend to be one of the most used spaces we have, it’s a place where people gather, not just for lunch or a quick bite but a place to commune and come together,” Von Kaenel added.
Jurgens had similar sentiments when designing 1 Bold Step’s office. “I didn’t want people to walk in and think OFFICE. I wanted the team to walk in and feel like ‘this is our place.’”
The perfect office space is made up of a specific trifecta: talent, place, and culture. You need to accommodate all three when thinking of building, renovating, or expanding your office space. You should also rely on the network that you have and the other business owners and resources that might be able to help guide you through the process.
“As small business owners, we need to be able to answer questions honestly and help give direction,” Jurgens explained. Build up that team of partners, brokers, lawyers, and even your lender.
“There can (and will) be unexpected twists and turns with the due diligence,” Dwyer added. “So, from the lender’s perspective, we really try to stay engaged with the different partners involved.”
SBAM is a great resource for small businesses, along with Small Business Development Centers, Grow, and even your own business network. Really make it a point to reach out to those who have gone through the process and different organizations that can help, even in the planning process, for second opinions, and more. You don’t have to navigate these waters alone and the earlier you start, the better understanding you have of what you’re working with and what you can do.