Serviced Office Space or an Office on a Traditional Lease?
Many occupiers who choose a serviced office space do so because they want flexibility. Contract terms typically range from one month to two years and allow occupiers to increase or decrease the amount of space they take without the need to wait for a lengthy lease expiry date.
Whilst, the overall cost per sq.ft. is generally higher than taking space on a traditional office lease, the all-inclusive monthly cost usually covers rent, business rates, heating and lighting, building maintenance, cleaning and even furniture and is preferred by occupiers who don’t want to have to manage an office themselves and have the obligations of a traditional lease.
With the benefit of the speed and ease by which an occupier can move in and set up, a serviced office space is ideal for an occupier who is starting up, growing, or working on short term projects.
Alternatively, leasing office space by way of a traditional lease typically requires a commitment of at least 5 years, although some Landlords may agree to a break clause within the term. Sub-leases and lease assignments are sometimes available and may suit an occupier who wants the benefit of a traditional office lease but on a shorter term.
Office spaces on traditional office leases are generally sought by established businesses who can take a long term view on the amount of office space they require. With a typically lower cost per sq.ft and with the ability to fit-out the space to an occupier’s exact requirements, an occupier has much more control of how they use their space.
The occupier is responsible for paying rent, service charges, business rates, utilities and office running costs separately, however, the rent is usually fixed until lease expiry or a rent review date.
If going down the traditional lease route, a company must consider not only their immediate space needs but also growth and other factors that could change their space requirements over the course of the lease.
Having the right travel links for staff and clients is important. A long and difficult commute may push staff to look for jobs elsewhere. Consideration should also be made to staff who need to regularly visit clients' offices (and vice versa). If the new office is too far away, staff may spend more time travelling than with the client.
Does the new office convey the right company image to staff and clients?
Proper financial planning is vital. Before committing to a new office space, companies should consider the annual costs of occupying the space and also upfront costs such as the requirement to provide a rent deposit and fit-out costs, amongst other things.
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