The similarity between a ‘Serviced Office’ and a ‘Lease’

Part 1 Investing in a new office can be a daunting task. With more and more choice out there, it’s hard to know what the right property solution for you and your business is. There are a number of factors you need to think about such as cost, length of term, location, environment, accessibility for staff, accessibility for clients to name but a few. The first thing you need to decide before you even begin your search is whether you want to take a conventional lease or would you rather pursue a serviced office option. Below we take a look at the differences. 1 – Length of term Traditionally taking a conventional lease means you need to commit to long term let. The most common lease is a 10 year lease with a break option at 5 years. A lot of businesses will find this inflexible and won’t suit their ever changing business needs. You are bound to the terms of the lease so if things do change for your business there isn’t much you can do. When choosing a Serviced Office, you typically take office space for a 12 month licence. You can take shorter term agreements, but these normally come at a higher cost. When choosing between both you need to think about your long term business plans. This is why Start Ups and SME’s most commonly choose a Serviced Office as it allows a lot more flexibility. There is no point in taking a long term lease if you think your business will grow out of the space. There are however cost advantages of taking a long term lease. You do ‘lock’ in your price for the term whilst with a Serviced Office you could potentially pay a licence fee increase year on year.   2 – Cost Comparison There’s no two ways about it… renting an office costs money which will effect your bottom line and your overall company performance. We all have to pay ‘rent.’ However what you get for that monthly / annual amount varies between a Serviced Office and a Conventional Lease. With a Serviced Office everything is included in the price, i.e. the landlord / business centre provides all your typical office outlays such as furniture, kitchen facilities, cleaning etc within its monthly licence fee. With a traditional lease, you normally have a large outlay at the start as you need to fit out the office with furniture, kitchen facilities and equipment, etc and you need to arrange for cleaning / maintenance contractors to service the office space. This costs time and money. And the end of the lease there is also a dilapidation charge which the landlord will charge to return the office back to the condition in which it was presented. These are important factors when considering which letting to choose.   This table below highlights what’s included in the monthly licence fee (rent) for a Serviced Office vs a Lease.

Serviced Office vs Lease

This comparison shows that a Serviced Office is a lot easier to manage as you pay a monthly licence fee with everything included. The leasehold option shows that you have to not only factor in all the other costs but you have to source and arrange for them yourself.