With the high cost of office rents in Central London and the increase in business rates last year, companies are faced with mounting costs when deciding to move. When it comes to looking for office space, companies have a choice of taking an office on a traditional lease, or a serviced office space.
Serviced Office Space
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.
With an increase in the amount of serviced office operators in the marketplace, there’s a great choice of contemporary to traditional corporate style space to choose from.
Positives
- Lower set up costs than taking an office on a traditional lease.
- Occupiers are usually able to quickly agree terms and move in.
- Flexible contract terms typically range from one to twenty four months.
- Fully furnished spaces, a dedicated receptionist, admin support, installed telecoms, IT
infrastructure and internet ready, meeting rooms by the hour, etc provide an occupier with
a ready-made solution to work from.
- An all-inclusive monthly cost (please note that faster internet, using meeting rooms and
admin/printing services, etc can increase the monthly cost).
Negatives
- Serviced office providers generally work on a smaller amount of space per desk.
- The overall cost per sq.ft. is generally higher than taking office space on a traditional lease
and can be more costly in the long run.
- The ability to fix signage and brand the office space is limited and visitors are likely to know
an occupier is working from a serviced office space.
Office Space on a Traditional Lease
Leasing office space in Central London on a new 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.
Unlike a serviced office space licence agreement, finalising the deal can take much longer and the legal’s can typically take 4 – 6 weeks to complete and sometimes much longer.
Positives
- The office space usually works out at a lower cost per sq.ft. than serviced offices space.
- An occupier has the flexibility to fit-out, brand and use the space to suit their requirement.
- A office on a traditional lease generally conveys a more established image for an occupier.
- The rent is usually fixed until lease expiry or a rent review date.
Negatives
- Sometimes an office space may require fitting out which will result in a high upfront cost.
- There may be a cost for the removal of the office fit-out and reinstatement of the office at
the end of the lease.
- A large rent deposit may be required as security subject to covenant strength.
- The space taken is fixed for the term of the lease and the ability to sub-let or assign the
lease mid-term will be subject to the terms of the lease and market conditions.
We can help!
We’re Central London office experts and we can take away the frustration and time needed to try to find a suitable office yourself. We’re usually able to provide a list of properties to view within a few days of taking on an instruction. We’re independent and will provide you with impartial advice.
We have an in-depth understanding of the Central London office market and whether you’re looking for an office space to rent on a traditional lease, or a flexible serviced office space, we can help.
You can get in touch with us on 020 7164 6204, by e-mail at info@zarach.co.uk or by filling out the enquiry form on our Contact page on our website.
We look forward to hearing from you.