Why is Startup Leasing so Funky?
Too many startups employ a broken process in securing office space. I began to wonder, is it because many of the junior brokers who “advise” startups define their value by the spaces they show, not by the process they run? Or does AI have a hand in shaping how these tenants engage the market? I already know about the broker issue, so I decided to put AI to the test to see how it may be influencing startup behavior.
I gave Claude the following prompt: “I have been asked by our founders to secure a new office lease for our company. We are 50 people now. We work in the office 5 days a week. We just secured Series B funding in the amount of $300M. We plan to hire 50 more people in the next 6 months. I’ve been asked to find 20,000 SF of space in a building that provides future growth in downtown San Francisco. We need the space immediately. How should I approach this project to ensure success?”
The response got some things right and others wrong.
The most useful element was the framing: “Treat this as a speed and flexibility problem, not a rent problem. At this stage, the cost of being wrong on space (stalled hiring, a forced second move) dwarfs any rent savings.”
On sequencing, Claude correctly made “locking the requirements” step one. We talk about this a lot. Search is hard when you don’t know what you’re looking for.
The very next step Claude recommended was to hire a tenant advisor. That is sound advice, but the model repeated a common misconception: that a tenant representative is “free” because the landlord pays the commission. Landlords generally do pay it, but it is built into the financial structure of the lease, which means the tenant pays for it through rent.
Claude also recommended bringing on an architect and/or project manager to help evaluate space. Both are valuable.
I then shared with Claude my plan to work with several brokers at once, as that seemed the fastest way to see every relevant space and be sure I wasn’t missing something. Claude flagged the approach as problematic and cited several good reason why.
However, in arguing for one broker, Claude seemed to reinforce the notion that a broker is only as good as the space he shows. There was no talk of selecting the broker with the best strategy and track record, for example.
My sense is that startups typically begin thinking about space, not advisors. Then, they meet brokers who pitch space, not process. And when they turn to AI for answers, it reinforces the idea that a good broker is the one who knows where all the space is being hidden.