When you’re looking for the right kind of office to set up your business in, there are various options out there for you to choose from that might suit your needs better. These types include serviced offices, managed offices and leasehold.
Serviced Offices
Serviced offices provide the best and easiest option amongst 3. They provide a workplace that works with a plug and play approach. You also get to benefit from the various amenities provided that include internet connections, furniture as well as phone lines. Moreover, advanced serviced offices offer additional incentives that include free beverages, organised events, spaces to collaborate, and online applications to maintain the office spaces while you’re on the move.
Benefits of serviced offices
Flexibility
Cost-effective
The rent agreements that you sign with serviced offices are typically for a relatively short duration. They can be as short as 12 months, or even shorter if you so wish. This flexibility is desirable to start-ups or SMB, that do not have a solid idea of their business needs or future growth. They might also not have the financial stability to commit to a long lease like for 5 years as well as all the liabilities that tag along with it. Serviced offices offering a flexible lease enable businesses to move in and out with rapid speed, which makes it an extremely cost-effective option for businesses.
Serviced offices include fees for IT or data infrastructure, fit-out, as well as professional fees, into their rent agreement that has to be paid quarterly. So all the elements that you would have to invest in building from the ground up when you move into a new space or start a new business serviced offices provide these at an economical cost with a ready set up for your use. So while long term it could be an expensive alternative, short term it works wonderfully by making the procedures of your accounting and budgeting rather easy.
Time
Availability
Traditional lease agreements were incredibly complex, needing the involvement of a legal team and took a considerable chunk of time to sift through. Serviced offices have a rather short form of a lease agreement which saves you a lot of time as well as money spent on hiring a lawyer to understand the ins and outs of your contract. Therefore, if you want to move your business to a new location, you can benefit from this as it is well managed, quicker, well furnished, and plug and play kind of a facility.
If you’re looking for a place to set up your business in, you might have specific preferences when it comes to the location. However, it does not necessarily mean there will be free space available for you to rent in any area of your choice. For example, if you’re looking to rent a 3000 sq. ft. space in central London, you might not be successful in your endeavour as there is extremely limited availability of space. Serviced offices help in such situations as they provide workspaces of varying sizes, which can be beneficial for a variety of businesses, big and small.
Community
Simplicity
The newer generation based businesses place a lot of value on building their company through networking. Serviced offices are the perfect place to build a unified business entity as there are ample opportunities to collaborate with the businesses that are run in the area surrounding yours. This can be extremely beneficial for start-up businesses that can build contacts and collaborate easily with the surrounding businesses, which help build a community that provides benefits by being an organised and effective work relationship.
The serviced offices providers take care of various services, including managing your entire premises, starting from cleaning to paying your business rates. Therefore, the primary responsibility pertaining to your business comes is taken care of by your serviced office provider, which leaves you enough time to focus on the critical responsibilities of your business.
Disadvantages of serviced offices
Cost
Control
Privacy
The more flexibility afforded by serviced is equivalent to an increase in the expenses. If you take into consideration long term leases, a short term rental agreement might be relatively more expensive as they include a number of other costs within the total amount. In addition to this, your serviced office provider will have complete control over the elements of cost, which could result in an unfair share of saving made during your lease. They might not trickle through to your pockets. There is also a possibility of the fees increasing by the provider as well as the business tenant without any hiccups or clause to avoid it.
The contra is structured in a way that allows you very limited control. There are various elements that you do not get a say in. These include who you have to share the space with, signage and fit-out. It can lead to a lack of unique and individual brand identity for your employees as well as your clients. There is also an element of the agreement being more a licence which does not give you complete control over the space. So there might be problems with renewal of the same area, or you could be moved to a different space once your licence has expired.
Serviced offices are primarily shared, which means that even though you have an office dedicated, you are still put in an area that is filled and is bustling with a number of tenants. Some businesses might have concerns regarding privacy and to keep your confidential information private. Plus if you have to deal with clients on a regular basis, it can cause issues regarding confidentiality.
Managed offices
These fall between services offices and leasehold, as they incorporate elements of both types. These areas are leaseholds that are managed and obtained by a third party specifically for you. They are usually on lease for a duration of 2 or 3 years. However, you can rent them for a longer period of time. The point of it is to incorporate the flexibility afforded by a serviced office with the control and security brought to the table by a leased option. All of this is offered without a massive sum of money expected to be paid upfront or hidden exit costs buried in the fine print.
Key advantages of managed offices
You get the best of both worlds
Simplicity in accounting
The third-party will be obtaining the leasehold area for you while taking all of the responsibilities that come along with it. They will manage and fund your office with all the elements that you need to run your business and will add more customised services with a specific cost that cater to all of your needs. This includes several services that are provided by the serviced office. They also include flexibility in their leases that can be customised to meet your specific requirements. The duration can vary between one to five years. However, the average is usually 2-3 years.
There is a limited expenditure of capital upfront as the office is fleshed out head to toe according to your directions and the needs of your business. The best part is that all the service charges, including the dilapidations and business rates, are included in the quarterly payment. This helps you design and manage your budget as you know the exact amount of money that you’re going to have to spend for a quarter of a year, if not longer.
Disadvantages of managed offices
Limited flexibility
Limited amenities
While the claim several providers make is that the contract is extremely flexible. Well, reality would beg to differ. The aspects of managed offices are quite unyielding compared to serviced offices. This is due to the fact that the provider invests his own money as well as time in creating an office that encompasses all of your needs. Hence, they might ask you to sign up for a certain amount of time.
Serviced offices are well known for the full range of services they provide. Managed offices might not be able to provide as many. It is of vital importance to take stock of the inclusions in your contracts and agreements when it comes to the services that will be provided and the ones that you have to pay for yourself. You need to take all of these factors into account when you draw up a budget and decide on the option that might be best for you.
No sense of community
Expensive
You will not be in direct contact with other tenants as you do not share space with them. So if you are looking to network and widen your contacts to enable collaboration, then managed offices might not be the best option for your business.
Since the third-party invests their won money in getting the place up to the standard of your business needs, they need to not only make sure those costs are covered, but also manage to make a profit. This leads to the overall cost being much higher compared to a direct traditional lease. In addition to this, the possible savings made on expenses such as business rates are reduced immensely with barely anything ending up in your pocket.
Leasehold
It is a traditional format of an office lease. It includes renting an office from a landlord that is involved in commercial subletting of offices. The duration is typically more than 5 years. You are given full control of the space as well as various aspects, including room layout, decoration, etc. It also means that you’re responsible for security, maintenance and repairs around the office.
Benefits of a leasehold office space
Cost
Control
If you’re looking for a long term investment, this could be your best option as it provides a better monthly rate long term than a serviced office or a managed office does. They also provide stability, so that you can create a long term budget plan easily and knowing that there won’t be any sudden changes for the most part.
You get a lot more control and decision making power in the way your office looks and is structured, which can be in alignment with the needs of your business. You can also customise your place by installing new technologies and making sure all of your needs are consequently met.
Transparency
Availability
Suitability
Since you have more or less majority of the control, you can manage different elements like rents, liabilities, lease rights and any other component that is included in your acquired asset.
If you’re looking for a place to lease long term with a large number of people, this option is your best bet. A space of 5000 sq. ft. that houses approximately 50 people can work wonderfully for a leasehold workspace.
Established businesses usually opt for such leases as they have surpassed their main stage of growth, are financially secure and can see a concrete plan of where their company is headed for the next 5 years, which makes it possible to commit to a lease for a longer period of time.
Disadvantages of a leasehold office
Complete liability
Maintenance
Rigidity
As you’re the captain of this ship and have utter control over all the elements during the term of your lease agreement, you have to bear responsibility for everything. It includes the cost it takes to build setup from scratch when you first inhabit the space. Not only do you have to sift through a ridiculous amount of paperwork since you’re responsible of handling internet providers, insurance, utility companies, etc.; but you also have to then shell out considerable sums of money to get it going and set it up according to your needs and standards.
You are responsible for making sure everything is up to the mark. It includes daily maintenance such as cleaning, removal of garbage, lighting and security. It also means taking care of parking problems and possible leakage in the roof.
You will be obligated to a landlord and tenant relationship that has a number of pitfalls including a loss of flexibility since it is hard to alter contracts once they are signed, or even to break them.
It is important that the option you decide to go with is aligned with the needs of you and your business, not only in the present but the future as well.
