Finding decent quality office space for any company is a challenge. However, the space challenges that a startup faces have a far greater impact on the business than most people realize.
In Silicon Valley, it’s mostly expected that a startup of less than ten people will work out of a garage or a basement. However, in other parts of the world, such as India, technology startups are almost required to have a “proper office”.
Because of the bull market in India over the last four to five years, more and more people have gotten into various aspects of the technology business and employees now weigh, environment as high as they weigh compensation. Many prospective employees will not show up for an interview if the location of your office is not in a “suitable” location (locale as well as building).
Many recruiters and vendors will turn down working with you unless you’re in a suitable space, plying that you’re “too small” for them to work with.
In a recent report called The Global Markets Report by CB Richard Ellis, New Delhi was listed as the seventh most expensive office market in the world. Mumbai was at fourth place, London’s West End was at first place. Midtown Manhattan in New York City was at number thirteen (you will have to register to download the report).
With the cost of office space in places like Mumbai and New Delhi soaring, it is becoming increasingly difficult for startups to find affordable and decent office space. In parts of New Delhi, like Nehru Place, rentals are going for Rs. 100 (roughly $2.38) to Rs. 150 (roughly $3.57) per square foot per month.
The problem with most of these spaces is a lack of power backup (availability of electricity in India is not very reliable), a lack of stable current (a UPS and current stabilizer are imperative, especially for computers and air conditioners) and overall appeal. Infrastructure costs for diesel generators and a UPS can run lakhs of Rupees (tens thousands of dollars) in CapEx and a few lakhs (thousands of dollars) in monthly maintenance costs. All of which, a startup typically can’t afford.
I’ve been searching for affordable yet presentable office space in New Delhi since January 2008 with almost no luck. Those spaces that are affordable are very poor quality spaces. Those spaces and locations that are, relatively, decent quality are completely unaffordable.
Not being able to find decent space in Delhi has severely impacted our ability to hire the ten to fifteen people we’ve been aiming for. Hence, it has a hurt our ability to get products completed on time and on budget.
I think, and hope, that is going to change over the next twelve months. With credit tightening, growth slowing, and inflation rising, I believe that commercial office space will become more affordable but will it be affordable enough, fast enough? Your guess is as good as mine.