“Are serviced offices the future?”
I’ve been asked this question more and more in recent times. It’s important to begin by saying serviced offices are very much the present as well. Not for every company of course, but across London, the UK and Europe, serviced offices – and the flexibility they provide – are increasingly popular.
Household names choose serviced offices
In the UK alone, there are approximately 2500 Serviced Office Business Centres, still a small percentage of total UK office space, but a huge increase on ten years ago. Thousands upon thousands of companies, of all shapes and sizes I might add, are choosing serviced offices, including many household names – especially within the Technology, Media and Finance sectors. In fact, I was standing outside the office of one of the major Social Media companies just last week during a viewing with one of my clients. And what a beautiful office it was!
Start-up businesses demand flexibility
The major factor for the huge increase in demand and supply of serviced office space is the tens of thousands of start-up companies which have been born out of the most recent double-dip recession. Naturally, when a business is in its infant stages, no one quite knows what is going to happen in those first couple of years, so they simply cannot justify signing a conventional lease of 5 years, even with a break at year 3.
What are the key benefits of serviced offices?
- When you spell it out, it’s obvious why stat-ups are attracted to service office space:
- The flexible terms on offer: you can sign for as long or as little as you like – usually between 3 months and 3 years
- A short, straightforward contract in form of a two-page licence agreement. So no need for solicitors and their subsequent fees
- No dilapidations on exit
- Office space comes fully furnished as standard and usually to a high specification
- IT & Telecoms is provided for you
- Kitchens are fully stocked for communal use, with break-out areas to relax or hold informal meetings. In some cases beautiful roof terraces for staff to utilise as and when they want.
- Fully staffed receptions, 24/7 access, excellent security for the building and your office within it
- Daily cleaning and building maintenance
- Access to meeting rooms available to hire on an ad hoc basis, if you do not have your own dedicated meeting room
- Flexibility and Expandability: you can upsize and downsize your office whenever you need to – ideal for companies with fluctuating staff numbers.
- There are NO exit costs
- All paid for in a single monthly bill – including rent, rates and service charges!
Which start up business wouldn’t be attracted to all of that?
All inclusive mod-cons allow you to focus on what is important
Who really wants to be responsible for sourcing IT & Telecoms, furniture, cleaners, receptionists etc? In this day and age, companies are so focussed on trying to get on in the rat race. The flexible, all-inclusive serviced office option really does allow them to focus on what’s really important, growing their business.
How much does serviced office space cost?
So what of the cost? Well, there is always going to be slight premium to be paid for the flexibility serviced offices offers, but the difference is minimal, especially in the first 2-3 years, once all costs of a conventional lease are accounted for.
Remember, a serviced office is fully-inclusive, so rent, business rates, service charges and everything else mentioned above is part of one monthly bill. This is not the case when taking on a conventional lease where all the responsibility is on the leaseholder to source and manage everything – including all additional costs from the price per square foot quoted, which only covers rent, business rates and service charge.
So – is a serviced office right for your business?
In my experience, if you have a business plan beyond 2-3 years and expect staff numbers not to fluctuate too much in that time, then a conventional lease is usually the preferable and most cost effective route to pursue. However – if you need flexibility – it will be more cost effective – for the first couple of years at lease – to opt for a serviced office.
We are currently compiling a comprehensive cost/benefit report – comparing serviced offices with conventional leases. If you want a copy of this report, please let us have your email below.