Comparing apples with pears – which is the right office solution for your organisation?

Serviced Offices

Drab, low quality, and the choice of the small or start-up company.  This was once the perception of the serviced office industry.  But as more serviced office providers have entered the market, bringing with them high-quality designed spaces, the industry has been forced through an exciting revolution and is now almost universally accepted as an attractive real estate solution for nearly every type of company.

A serviced office is a working environment that has been created by a serviced office provider.  These providers will take large spaces and then divide this large space into many smaller spaces to service the needs of many other companies.  The concept of a serviced office is that everything is set up and ready to go as soon as the contract is signed, and all costs are wrapped up into one monthly membership fee.  Compared to the more complex arrangements of a traditional leased office, serviced offices are specifically suited to those companies that prioritise convenience when it comes to real estate.

As well as offering ready-to-go working spaces, the serviced office market is also recognised for allowing significantly more flexibility in respect of contract lengths.  Often, a serviced office contract can be anything from very short term, such as a few months, and up to several years, with the potential for being able to scale up or down in size within that contract term (subject to availabilities at that time).

The providers will create common/shared amenities such as café or kitchen facilities, meeting rooms, phone booths, print facilities, wellness spaces, and more; all of which are available to the “members” of the serviced office.

Memberships come in different packages to serve the different needs of a varied member community:

Co-Working / Hot-Desking

Co-working spaces are often large, open-plan spaces, allowing many people from lots of different companies (often freelancers, and start-ups) to work from an environment that may be more conducive to working than the home or a coffee shop.  Costs are based on a price for monthly access, but without a dedicated desk – its just drop down where you can and open your laptop.

Dedicated Desk

A dedicated desk is the step up from hot-desking.  Often in a different part of the serviced providers space, but still within an open-plan area amongst other “fixed-deskers”.  For the increased monthly price you are granted a dedicated desk that will be exclusively yours at which no other member can use.

Private Office

The private office is, as you may expect, a fully enclosed space that is securely your own, containing desks, chairs and other furniture.  It can be as small as a 2-person office, or as large as an entire office building!  Whilst at the smaller end, the shared amenities that are offered by the serviced office provider are all included in the monthly price, it is now possible for larger suites to incorporate their own meeting rooms, phone booths, break out spaces, etc, as more and more occupiers require the benefits of the serviced office environment but with the privacy of building in their own private amenities.

There are serviced offices to suit all tastes and budgets, but navigating the serviced office market and gaining a clear and confident oversight of the options, differences and details can be a particularly challenging task.  But, once a space has been identified and terms agreed, the move-in process is extremely quick.

Leased Offices

A conventional leased office is the predominant method for companies occupying office premises.  A company (the Tenant) will agree a lease contract to rent an office space for a period of time (usually a number of years) from a third party (the Landlord).

It is a more complex arrangement than that of the simplicity of a serviced office.  Rather than all costs being wrapped up into one monthly rent sum, with a leased space the different occupational costs are separately paid by the Tenant to the various parties required, i.e. rents and service charges to the Landlord, business rates to the local authority, utilities to the associated providers, etc.  But where this solution is more complex than that of a serviced office, with it comes substantially more freedom to create exactly the space you want, as well as greater privacy, and significantly more security from a legal rights perspective.

The leased office market is comprised of:

New Leases

New leases, offered by the building owner, are typically on contractual terms of 5 -20 years, and incorporating lease break opportunities within those periods.  These are often presented in a condition known as CAT-A; meaning heating, lighting, ventilation and power are all supplied to the space, but the incoming Tenant will need to install their own fixtures, fittings and furnishings, etc.  Although, it is becoming more frequent for Landlords to install a “speculative fit-out” (known as CAT-A+) that offers most elements of what a business may need from a space.

Sub-Leases

Sub-leases are offered by Tenants who no longer need some or all of their space.  This will be an office that is typically offered with the existing fit-out in place, although larger spaces with many years left on the lease may be stripped out and offered as CAT-A space.  By taking out a sub-lease, it is the outgoing Tenant who becomes your Landlord, and they themselves retain their Tenant relationship with their original Landlord, the Superior Landlord.  Sub-leases may be short term, such as 18 months, and sometimes up to 10 years. 

Assignments

Assignments are existing lease contracts that are being offered to the market by the outgoing Tenant.  Unlike a sub-lease, which can offer part or all of the demised area on new contractual terms, an assignment of a lease is the trading of an existing lease on its prescribed terms, though it is possible to latterly make amendments to the prescribed terms, to a certain degree.  Assigning their lease, for the most part, absolves the assignor Tenant from their contractual obligations to the premises, and the assignee Tenant becomes entirely responsible.  Much like sub-leases, assigned office premises are frequently offered with the existing fit-out in situ, and are often for terms from 12 months – 5 years.

Comparing and concluding

Today’s organisations are in a wonderful position in terms of the breadth of choice, but navigating these choices to ensure your company acquires the most suitable space can be a headache at best, or ludicrously overwhelming at worst.  But whilst the differences between these solutions are many, one principal question will help – is having flexibility to move in the near term a paramount requirement for the business?  If it is then your focus should be on serviced offices, but if your occupation of a space is likely to be 18 months or more then there is much more to consider.