Commercial Real Estate, Clutch Report

Working in an Office in 2021? Small Businesses Share Their Plan

February 10, 2021

by Seamus Roddy

Content Writer and Marketer

Small businesses will take different approaches to office space depending on company needs, according to Clutch's survey of 500 small business owners and managers. Companies found that their employees could execute remotely, and employees at the smallest companies are less likely than those at larger businesses to work in an office during 2021. Overall, each small business has different needs and requires different office space.

One year ago, an employee at a small business probably had a different routine.

Back then, many workers commuted to an office, where they would sit, stand, and talk with coworkers in close proximity.

COVID-19 dealt that traditional office experience a blow, and now employees may wonder: Will I be working in an office in 2021?

According to Clutch's survey of 500 small business owners and managers, the answer depends on the business:

  • The smallest businesses are more likely to keep their workers remote.
  • Businesses without office space typically don't plan to acquire it in the future.
  • Companies are increasingly interested in coworking spaces.
  • Some employees who do report back to the office will do so through a "hybrid" model.

As small business leaders determine their office space plans for 2021, they will weigh their company's needs. As employees debate whether they'll be back in a cubicle, they should prepare to be flexible and adaptable.

Small Business Office Space Plans for 2021

  1. Small businesses take different approaches to real estate based on their specific company needs: 35% of small businesses own office space; 33% lease office space; 21% don’t own or lease office space.
  2. For the smallest businesses, especially, remote work is becoming more popular and widespread: 59% of small businesses currently without office space do not plan to invest in it in the future.
  3. For companies seeking flexibility and community, coworking is an option: 10% of small businesses have a contract with a coworking space.
  4. Small businesses with office space leases will continue to adjust their real estate plans throughout 2021: 33% of small businesses that lease office space plan to bring all employees back to the office in 2021. 32% plan to bring some employees back to in-person work; 15% plan to downsize.

1. Small Businesses Will Adjust Their Office Space Situations Based on the Business Climate in 2021

The COVID-19 pandemic upended many business processes and conventions. Depending on whether they own, lease, or do not have any office space, businesses will face different real estate decisions in 2021.

Most businesses either own or lease office space.

More than one-third of small businesses (35%) own office space, while 33% hold a short- or long-term lease on real estate.

what are small business's real estate situations?

More than one-fifth of small businesses (21%) have a remote workforce and do not own or rent office space. 1 out of 10 small businesses (10%) have a contract with a coworking space.

The range of office space setups at small businesses indicates that each company has specific real estate needs.

Consider how different small business owners and managers might make decisions regarding office space:

  • OWNING OFFICE SPACE: The owner of a laundromat knows he needs a storefront location where customers can physically drop off their clothes for cleaning. His business’s physical location is one of its most important assets, and his employees are expected to report for in-person work.
  • LEASING OFFICE SPACE: The founder of a tech startup has doubled the company’s size in the past year. She believes in the value of in-person work and collaboration, and wants to have a dedicated office space for her workers. The company expects to do more hiring, so the founder leases an office in order to have the flexibility to move to a bigger space in the future.
  • CONTRACTING WITH A COWORKING SPACE: A boutique public relations agency has a handful of employees, all of whom live in the same city. They want to collaborate in-person but the company’s owner is concerned about the costs of owning or leasing office spacing. Instead, the owner reaches a contract with a coworking space, where workers from different companies share office space and equipment.
  • NO OFFICE SPACE: The founder of an online freelancing platform has never rented or leased office space. Instead, his workers perform their job remotely. This way, the company saves money and can recruit talent from anywhere in the world.

Each of these companies had different business needs and came to a different conclusion about whether to work out of an office.

Small businesses deciding on their office space situation in 2021 will also consider the ongoing COVID-19 pandemic.

Andres Lares, managing partner at Shapiro Negotiations Institute, which provides sales and negotiation training, said his company has changed its real estate plan because of the COVID-19 pandemic.

Typically, the company would renew their lease for 3 to 5 years. At the beginning of this year, Shapiro Negotiations instead renewed their lease for only 1 year. Lares said that renewing for only 1 year allows the company to consider its future needs regarding office space, since some employees may now permanently work remotely.

As with any aspect of running a business, office space is situational. Every company has different workforces and needs, and every company will adjust its real estate holdings to meet the current business climate.

2. Companies Currently Without Office Space Not Usually Looking for it in 2021

2020 was not known for a hot commercial real estate market.

While more businesses will be looking for office spaces in 2021 than last year, companies without real estate generally do not plan to invest in it.

Most small businesses who do not lease or own office space (59%) do not plan to invest in office space in the future.

59% of businesses without office space do not plan to acquire any in the future.

Most American workers worked remotely for at least part of 2020, and experts say that many businesses now recognize the benefits of having a remote team. 

“The main benefit of embracing a remote workforce for small teams is that it allows them to punch above their weight,” said Kevin Harrington, CEO of Joblist, a job searching platform that has had an entirely remote workforce since its founding in April 2019.

In particular, Harrington identifies 4 benefits that an all-remote workforce provides:

  1. Reduced administrative and overhead costs that come with an office
  2. Ability to recruit from a broader, geographically dispersed talent pool
  3. Improved employee satisfaction and work-life balance
  4. Increased worker productivity

Joblist doesn’t have office space and has no plans to acquire any. Harrington considers that a competitive advantage, and thinks that forward-thinking organizations will continue to trend away from owning, renting, or leasing office space.

Smaller Businesses Less Likely to Rent Office Space

The smallest businesses often have the lowest overhead, so it’s no surprise that companies with 10 employees and fewer are far less likely to rent or own office space.

In fact, more than one-third of companies that do not have office space (36%) have 10 employees or fewer.

what small businesses work fully remotely without office space?

Only 11% of companies with a remote workforce have 11 to 50 employees, and even fewer have 51 to 250 employees (10%) or 251 to 500 employees (8%).

Small businesses owners say that for the smallest companies, the benefits of remote work are especially pronounced.

“Renting office space is expensive and is simply not cost-effective for small businesses with fewer than 10 employees,” said Gilad Rom, founder and chief executive of Huan, a digital lost-and-found network for pets with 2 employees. “Small companies that eschew office space and hire remotely have a much broader range of workers to choose from, which is helpful when we are looking for specialist skill sets.”

Employees at businesses with only a handful of employees are far less likely than other workers to work in an office building in 2021. 

3. Coworking Spaces Option for Businesses in 2021

The way that companies and employees think about work was upended in 2020. In 2021, some small businesses will continue to pursue new work arrangements by signing contracts for coworking spaces.

Currently, 1 in 10 small businesses (10%) have contracts with a coworking space.

10% of small businesses have a contract with a coworking space

Coworking involves companies sharing office space and equipment. Experts say that coworking can provide flexibility and financial savings for small businesses.

Stewart Dunlop, founder of Airsoft Pal, a website dedicated to airsoft gun research and ratings, says that coworking spaces are attractive to small businesses because they are flexible and low-risk.

Dunlop says that coworking spaces are flexible because it is easy to move in and out of a shared space. Businesses, especially those that are growing, can sign a short-term contract for a space and not have to worry about the costs and hassles associated with setting up an office. When it’s time for a new space, moving is generally quick and doesn’t require direct dealings with internet or furniture providers.

Dunlop says that coworking spaces are low-risk because they cost less than traditional office space and don’t require a long-term lease. Even if a business has a negative experience in a coworking space, it will probably not have crippled the company financially.

According to Dunlop, additional benefits of coworking spaces include collaborating with other professionals and reducing potential drawbacks of remote work, such as loneliness and reduced work-life balance.

Still, the COVID-19 pandemic significantly reduced the number of companies and workers using coworking spaces.

Since the pandemic started, coworking providers have worked to reconstruct their spaces to promote better ventilation, cleanliness, and social distancing.

Over time, some professionals may work in a coworking space. For this year, companies will have to weigh whether a coworking space suits their needs and provides sufficient protection from COVID-19.'

4. Small Businesses Holding Leases for Office Space Prize Flexibility for 2021

Companies that lease real estate always wonder how to make the most of their office space. In 2021, small businesses will have plenty of office space decisions to consider, and are especially likely to value flexibility.

One-third of small businesses that currently hold a lease for office space (33%) plan to continue to lease the office space with all employees returning to work in-person in 2021.

how do small businesses with office space plan to use it in 2021?

Thirty-two percent (32%) plan to continue to lease the office space with a partially remote workforce; 20% are looking for a new office with more space or amenities; 15% are searching for a smaller office while employees remain remote.

The range of options indicate that the most valuable office space commodity is flexibility.

Eric Wu, co-founder and COO of Gainful, a sports nutrition company, says his company will move to a hybrid model of combining in-person and remote work in 2021. 

“While our team has proven that we’re able to make incredible progress and work effectively from home, I don’t anticipate that we’ll ever see a total disappearance of
in-person workplace culture,” Wu said.

In 2021, Gainful will offer interested employees the opportunity to work in the office. Wu says that some employees have indicated a preference to work in the office for a few days each workweek, so Gainful invested in health and safety measures such as surgical grade air purifiers, touchless thermometers, mandatory mask wearing, and a physical distancing plan.

While Wu doesn’t think that the 5-day-per-week in-office routine will resume before employees are vaccinated, he does think that offering workers flexibility is important to keeping his team engaged as the COVID-19 pandemic ends.

Other companies are using flexibility to continue to provide client services while searching for new office space.

Laura Goldstein, is a clinical marriage therapist and the founder of the Montgomery County Counseling Center. The mental health affects the pandemic has placed on couples has increased the counseling center’s business.

To meet demand, Goldstein and her team offer both telehealth and in-person therapy. This summer, Goldstein plans to look for a second office space so that there is room for the new clinicians and administrative staffers she has hired in the past year.

Companies with office leases have an array of real estate options and their employees should prepare to be flexible and adaptable in 2021.

Small Businesses Face Office Space Challenges and Opportunities in 2021

Small businesses will adjust their office space plans throughout 2021.

The COVID-19 pandemic greatly affected commercial real estate, and employees will have to be adaptable as the pandemic ends.

In general, employees at the smallest businesses are less likely to return to the office in 2021. Workers that do return to the office may do so through a hybrid model in which they sometimes work at the office and sometimes work from home.

Small businesses will evaluate the business climate and their own company's needs in order to find the best office space situation.

About The Survey

Clutch surveyed 500 small business owners and managers in the U.S.

Fourty-three percent of the businesses (43%) have 1 to 10 employees; 25% employee between 11 and 50 people; 18% employee 51 to 250 people; 15% employee 251 to 500 people.

Thirty-five percent of respondents (35%) live in the South; 23% live in the Northeast; 22% live in the West; 20% live in the Midwest.

Fifty-three percent of respondents (53%) are male; 47% are female.

Twenty-six percent of respondents (26%) are between 18 and 34 years old; 50% are between 35 and 54 years old; 24% are 55 and over.

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