Real Estate
Making expansion
plans.
So you’re adding employees one after the other. Now your problem is space. Can you still fit into the same inexpensive rental suite? Is there room for even one more desk? At Salo the answer has been “no”—repeatedly. They’ve had three office locations so far, and there’s no end in sight to their real estate adventures.
“Originally, when we started, it was just barely a year after 9-11,” Langer explains. “If you think of the market conditions then, there was a little bit of apprehension about starting a new business. In fact, the week we opened, the newspaper ran an article about the two-and-a-half-year backlog of unemployed CFOs. It was looking bleak.”
Langer and Folkestad decided to keep their financial obligations to a bare minimum. They rented two suites in an executive suite complex. One suite, where they met clients, was decked out in gorgeous (but secondhand) cherry wood furniture. The other, where they actually worked behind the scenes, was cobbled together out of upturned boxes and ancient desks with peeling veneer.
“Amy and I were so close in that office that if she slid her chair back, I couldn’t get out of my seat,” Folkestad laughs. “But it was what we had to do, because we couldn’t know then how we were going to grow. It was all about flexibility.”
But then the company started growing precipitously, and Salo leased a 3,000-square-foot build-out. It was an exciting time, Langer says. The only problem was, by the time they got into it, they rechecked their projections and realized it would only accommodate them for about six months.
So finally, 10 months ago, the company leased a 12,000-square-foot space. The firm’s banker and advisors said it should cover them for two to three years, easily. Then Salo began working with the Mayo Clinic on a treadmill desk program that allows employees to work as they walk. The new workstations take up more room, and growth has continued unabated, so—you guessed it—the company expects to be packed to the gills in a year and a half. “Which, again, is a bummer,” laughs Folkestad. “But it is what it is. I guess there are worse problems than growth.”
Is there any way to handle physical growth without having to reshuffle? Probably not, but there are some ground rules that’ll help you avoid getting stuck in a bad situation. Matt Nicoll, managing director of asset services at CB Richard Ellis, a commercial real estate firm in Bloomington, says the first and most obvious rule is not to buy too soon.
