The Most Expensive Cities Worldwide To Set Up A Startup Office [REPORT]

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Aarzu Khan
A full-time data scientists and a part-time industry analyst; still learning power of effective presentation and firm believer of the thought "Numbers are always magical". Love to be in the network of people who 'know' how to respect their time and keep others engaged in meaningful activities.

In this era of Internet and Smartphone, youngsters aren’t afraid to ditch the traditional job offers. Startups seem to entice them more! For most of them, it’s always a bumpy ride and the biggest hurdle to overcome is office space. Startup founders always prefer to set up their offices that are easy to locate, commute and create positive vibes. But it’s never a cake walk considering the tight budget and other business priorities. And, when it’s going to be London’s Shoreditch district, it’s next to impossible for most of the startups. London Shoreditch district is one of the expensive cities for startups to operate, according to Knight Frank who compared the office costs of 600 sqft office spaces required for startups across the globe.

The report, titled 2017 Global Cities, lists world’s most expensive cities for startups to set up an office and operate. After Shoreditch district in London, Brooklyn in New York and Mid-Market in San Francisco are found to be the most expensive places for startups to operate.

To lease and to fit out a 600 sqft office in Shoreditch district, London, a startup coughs up nearly $5,500 per month, while the cost goes down to $5,100 monthly if a startup chooses to operate from Brooklyn, New York.

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Interestingly, these are not the places where some of the top tech giants are running from. Microsoft and Amazon, for example, have a large presence in the South Lake Union in Seattle where the cost for setting up an office is just $2,800 per month.

Silicon Dock in Dublin and The Domain in Austin also offer great value for money for startups, where the office rent is as low as $4,000 and $3,000 per month, respectively.

“As we head towards Brexit, tech start-ups are the sort of firms the UK will be looking to for future growth. So it is disappointing to discover London is such an expensive place for them to rent business space, at least if they want their own offices”, said James Roberts, Chief Economist at Knight Frank.

Co-Working Spaces Are Offering A Great Deal for Startups

The scenario is completely upside down when it comes to co-working spaces. Coworking spaces are slowly changing the landscape of the start-up ecosystem. Despite being the most expensive place, Shoreditch district in London offers the greatest cost savings for tech startups operating from a co-working space. A four team member startup will have to pay only $2,250 per month, occupying nearly 400 sqft space with all office amenities included. This allows them to have a direct savings of 57% on office rent compared to traditional office space in Shoreditch district.

Similarly, the office rent for a four-member team startup in a co-working space is just $2,000 in San Francisco’s Mid-Market district, allowing a savings of over $3,000 in office rent monthly.

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The study also highlights that co-working could be a viable option for startups to start with, but eventually, they will have to move to their own office as they grow and have more than six employees.

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