Big Shop Now Or Try To Get By In A Small One?

02/21/2014


From original questioner:

Long story short, our landlord has us backed into a corner. We can move into his slightly larger, 1400 sqft space and keep overhead lower (his rate is about $1/sqft, going rate is ~.85), or take on his 2800 sqft space. If we tell him KMAG YOYO (google it) we still have to eat 6 months of lease on our old space.

I don't want to move again for a long time. It's a PITA and very expensive. But, our market is hot and there is every chance we will grow again.

We build custom cabinets using a 4x8 CNC, and need a spray booth. We have 2 employees plus me. The 1400 sqft space has vertical space to build mezzanines, etc.

From contributor Je


If it was 2,800 vs 4,000 sq ft it would be an easier decision for me....1,400 square ft is very small in my opinion. I couldn't operate in that space comfortably.
There's really no one else that can make that call for you are even give you a good suggestion.
Me...I always want more space.


From contributor Ev


True JeffM, 1400 is very small, especially with the big footprint of the router, and we ideally need aisles big enough for our forklift. I've looked around for spaces closer to 4000, but there is virtually no inventory in our area.

I almost moved on a 4200 foot space six months ago for roughly the same as I would pay now for 2800, but the timing was bad. Now I'm kicking myself with a big boot!

From contributor Sh


wait and save money to make the move to a much bigger shop for same money when 1 comes available. be prepared to move quick and plan ahead on all aspects.

From contributor Je


I'm a bit confusedů.which space are you in now? Is he asking you to move before the lease is up? If so seems as though he's canceling the lease?

If the lease is up in 6 months I'd hang tight and move when it's up. If he's over market rate there's no sense in staying and you should let him know that. Moving is a PITA but 1400 sq. ft. is pretty small and your really not going to be able to grow in that small a space.

good luck,
JeffD

From contributor La


Start looking for that better space now. Should you happen to find one soon, sub-lease your existing space to someone for storage or the like. You may not get your full payment as storage but at least something. As I read your post you are actually in a space smaller than 1400. Just as a sort of rule you need at least 1000'/person. The more equipment you get the less space left for other things.

From contributor Ev


OK the long story: We had 1100 ft, then took on another 1400 foot space in the same complex. Now we have two leases, one ending 3/31 and one ending 10/31. I'm trying to squeeze the whole shop now into the 1400, I don't think it can happen, even building a second floor.

So, I was dumb to not see that coming. He has offered to allow us to break the 1400 lease so we can move to 2800 ft space which is conveniently across the parking lot, but he knows he has us by the curlies so the rate is above market. And he wants 3%/year increases on a 3 year lease.

The good news is that it's a well maintained complex, so I do get some return on the extra rent. When we have a showroom it will be a good place for customers to visit, with easy parking and a nice glass storefront.

Either way, I have to move all my machines and rebuild all the infrastructure, so it might as well be a big enough space to stay put for a while. The rent bill is going to hurt but at least we won't have to move again so soon.


From contributor Ca


We went from 4000 to 2900 with the recession and then to 8000. We don't even feel the rent or the taxes.

We are on a triple net lease and our lease renewal includes the 5% lease increase. I'm with you I don't even want to deal with the idea of moving again. Especially the crane crap for the cnc router and machinery dollies. Damn last electricians were absolute bastards

From contributor Ev


Yeah, I'm almost wondering if it's time to "go big or go home".

When you start talking about 5,000-8000 feet, the rates are almost half what I'm paying. There is a threshold where I could get enough space to grow and still only pay a little more than I am now.

But, I'm not even sure I want the business to get that big. I make a decent living as it is, and a bigger headache is not worth the bigger paycheck.

From contributor Sh


than you should be in a bigger space. wtheck.

From contributor La


I agree, go for the bigger space. It costs a lot to move. More space gives you options and might make working more efficient.

From contributor Je


I don't know if it would be worth it in the short run or not, but with a bigger space you could split the space up and sub it out until you got to a point where you needed it all. Even if you never grow enough to need it all it could still work out if you get a significantly lower per sq. ft. cost. That could bring your rent down enough to make the move more appealing?

good luck,
JeffD

From contributor Sh


i know a guy that got a huge space and split into 4. big large shop and 3 small. all 4 where woodworking but they all did different things. the guy paid his rent with 3 sub-leases. there was a community entrance and then split off into different spaces.

From contributor Ch


One day I will do what Shawn said. It's all just a leap of faith. Shoulda been a doctor haha

From contributor Ev


We are moving across the parking lot to a 3,500 square foot space, same landlord. He is letting us out of the old lease, and he came to his senses on the price. It will cost us only 15% more than our current rent, and we have room to grow. Now the fun part begins!