Cohabitation: How Businesses Can Rent Office Space and Attract New Tenants

We live in amazing times. Our idea of the office is changing. For decades, generations even, the office was the place that everyone who you worked with went to. We sat at the same places, in the same building, and worked the same hours. Mobile technology has changed all that, and has allowed more and more people to work outside the traditional office. Your business is changing, and you may not need as many people at HQ as you once did. This is exciting, but comes with its own problems: what to do with your underused office space?

If you are renting, you might be able to move, but if you have owned an office you are faced with a few tough decisions. Do you sell and move out? Even if that is possible, it might not be your best bet. Renting or buying will be expensive as well, and right now, office space is hot. Demand for rental offices is high. One popular alternative is leveraging your empty space into profits by renting your extra room out to tenants. Using a hard-money cash-out re-fi loan from a trusted lender to get your office set up for attracting and retaining tenants can help you hold on to your building while making money off the rent.

Why Is the Market So Good?

To start with, we have to understand what is driving demand. The economy is changing, and not just as a result of the Recession and its aftermath. The technological and mobile revolution has allowed people to do more with less manpower than ever before. Additionally, the ACA has dislocated insurance from employment and encouraged people to strike out on their own without losing healthcare. This combination has led to a growing movement toward startup firms and small businesses.

Not all of these businesses need space for an office, and of the ones that do very few are initially going to need a whole lot of space. They might need a just cluster of desks and a conference room, or several small offices in a central location. This is a perfect time for businesses who have recently acquired space of their own and would like to rent a portion. Depending on how much space you have, you may be able to fit a tiny startup, or perhaps a growing firm that is looking for their own floor, entrance, etc. Either way, you will have to prepare your building for them.

What Tenants Need

Renting your office is a great plan, but that doesn’t mean it is an exclusive one. You’re going to have competition, and that means you’ll have to stand out to both attract and retain the right kind of tenants. Here are some things tenants are looking for:

Energy-Efficiency and Ecotechnology

Obviously, people will be paying their own utility bills, and companies will want to know that they are getting the best bang for their rental dollar, as well as fit the standards, both personal and societal, that people are growing to expect. This means a possible Green Energy Upgrade, or even total retrofit. This includes:

  • Smart lighting that reacts intelligently to conditions, learns office habits and needs, and develops the most efficient method to lighting.
  • LEED-Certified HVAC systems improve air quality and efficiency while reducing costs. A CBRE study showed that every point on the government EnergyStar rating system reduces costs by almost 1%.
  • Solar upgrades/green rooftop. These both lower costs while raising the profile of your building. They are smart and a good PR move for attracting tenants.


Every cool office has killer amenities now. You aren’t going to be Google, most likely, and have indoor racing tracks or anything like that, but you might want to have a workout room, a cooler and bigger kitchen, an outdoor area where employees can relax (this can dovetail with the green roof initiative), a lounge and anything else you can think of. Basically, you want the tenants to feel like they are moving into a new home.


This is key. There has been a movement toward flexible grid architecture, which is a design principle that allows for the size and shape of rooms to be altered dramatically according to need. In this example, you can have three renters, each needing approximately a third of your space. Two are making an app, one is designing a new engine for cars. One app goes bust and moves, the other app grows, and the engine makes change their business model from theoretical calculations to practical technology.

Flexible grid architecture allows you to quickly divide the new space. Some goes to the app, and a portion goes toward making an engineering room for the engine. There is really any number of permutations – The point of it is that it allows your office to attract any kind of residents. All knowing their needs will be met.

Having office space is a great thing in today’s economy. You just need to be smart about how you attract and retain them. Using a hard-money cash-out refi loan gives you the capital and the maneuverability you need to improve your business, increase your equity, and become a home for tomorrow’s exciting industries.

Your real estate assets are your best investments for the future. At Socotra Capital, we’re proud to be the premier direct hard money lender for California real estate. Contact us today to learn more about how we can help.


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