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The benefits of serviced offices over leased offices

The benefits of serviced offices over leased offices
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The benefits of serviced offices over leased offices
Siobhan Stirling - Sharp Minds Communications for Capital Space by Siobhan Stirling - Sharp Minds Communications for Capital Space
Owner/Director - Sharp Minds Communications Ltd

If your business is growing and you’re getting to the stage of moving out of your home office, or you’re already in an office but need a bigger one, you will have lots of things to consider. How much space you need, location and whether the property upholds your brand are key. One of the other big decisions is whether to opt for a serviced office or take out a lease on an office. To help you with your decision, we’ve pulled together some of the things to consider when weighing up the pros and cons of serviced and leased offices.

There are times when a leased office, or even buying a property, is the right business decision. Serviced offices normally cater for the small- to medium-sized enterprise sector, so as your business grows there may come a stage when you can no longer find serviced offices that can accommodate your organisation. You may have limited opportunities to ‘badge’ a serviced office externally, and for some businesses that will be an important consideration, especially if passing trade is important to the business model.

However, before you get dazzled by the location or grandeur of a leased office, it’s worth taking time to understand what is and isn’t included with leased/serviced offices so you can factor the costs – both money and time – into your decision making so you choose an office that matches your business needs.

Length of lease

How long do you think you’ll be in your next office? Most leased offices require you to commit for between three and 10 years, often with a half-way break clause on longer leases. This means you need a crystal ball to anticipate what your business needs will be in three or even 10 years’ time. Get it wrong, and you could end up stuck in an office that becomes cramped as your business develops, and which could even hinder growth. Alternatively, you may have to take out a lease on an office that is far too big for your current needs to allow for projected business growth; while the four walls around you may not hold you back, you will increase your costs considerably. What’s more, if things change, you would still be liable for the lease until the end of the contract.

As business leases are so complicated, you will also have to have a solicitor to check through it, so will need to make provision for legal fees.

By contrast, most serviced offices come with short-term contracts, with the option to give only a few weeks’ or months’ notice. Capital Space business accommodation centres operate on a simply rolling monthly contract; if you need to scale up or down, you only need to give one month’s notice – and you will only ever be liable for one month’s rent, providing huge peace of mind about the limit of your potential liability if the going got tough.

Services

No matter where you end up, you will need the same utilities, including reliable broadband. With most leased offices, this will be your responsibility – and you will need to add the costs of these onto the monthly/quarterly rent, as well as the time it will take to manage them. If you’re a small business, you will have little clout with big utility companies, so can expect to pay the top business tariffs.

By contrast, serviced office suppliers take on the responsibility of providing utilities and will normally include them in the monthly charge. Most good serviced office providers also understand that connectivity is vital for their customers’ success, so will invest in state-of-the-art, high-speed broadband to enable them to work efficiently and effectively. What’s more, as a larger user they should be able to negotiate better tariffs, which they will probably pass onto their customers as an additional benefit.

All Capital Space business centres have internet with a full failover to give customers complete peace of mind that they won’t grind to a halt because the broadband can’t cope, which we can offer to customers as part of their monthly licence fee (subject to a fair use policy) as our total usage enables us to secure a good deal from the suppliers.

Additional responsibilities and charges

Tenants in leased offices often have additional responsibilities, such as for the infrastructure of the building. This could present unexpected bills; if the roof started leaking, you may be responsible – at least in part – for the repairs, even if you had only moved in one month ago.

In a leased office, you will often be required to pay a service charge on top of your rent. You may also be liable for business rates.

Again, companies that choose a serviced office would normally only be responsible for keeping their office in good order, as well as respecting any communal areas; any other costs would be met by the accommodation provider. Some serviced office providers include business rates in their monthly rent.  In this case, rents are typically more expensive. At Capital Space, business rates are not included in the monthly licence but many of our units fall below the business rates threshold. Anyone looking to hire commercial properties should always contact the business rates department of their local council to find out the business rate of the unit they are considering so there are not faced with any nasty surprises in the future.

Parking

This is a major consideration – and potentially a major headache for your staff, customers and suppliers. If the office you’re considering has onsite parking, is it included in the rent or will you have to pay an additional charge per space? If there isn’t any onsite parking, how much disruption will this cause? Would it be worth considering renting parking spaces nearby, such as in a council car park; if so, how much will this cost? If you have to rent parking spaces, how will you weigh up the benefits against the costs – and how will you decide which members of staff are entitled to a parking space? And what will the impact be on office politics? It’s a political minefield!

Capital Space business centres all come with onsite parking for all centre users, their visitors and clients. (Phew!)

Additional services

Serviced offices usually provide additional business support services, either within your monthly charge or on-site at competitive rates. At Capital Space, our office, workshop and studio customers benefit from supportive centre management teams who act as their receptionists and gatekeepers, collect their mail and take phone calls for them. Additionally, they can provide printing, copying, shredding and mail franking services at very competitive rates.

In leased offices, all such services would have to be arranged by you and would be in addition to your monthly rent and service charges.

Total costs

Before you decide which office to move into, make sure you have understood and added up all the costs:

 

Leased office

Capital Space office, studio or workshop

Solicitor’s fees

Typically required

Not required  

Deposit

Often 3-6 months’ rent  

Two month’s rent with no VAT

Service charges

Extra costs

Inclusive in monthly licence fee

Business Rates

Subject to rateable value

Subject to rateable value

Utilities

Typically an extra cost

Included in office rental (excluding our workshops and studios)

Broadband

Typically an extra cost

Included in monthly licence (subject to our fair use policy)

Parking

Varies

FREE for customers and visitors

Security

Typically an extra cost

FREE

Building infrastructure

Potentially liable

FREE

Reception

Varies

Centre management team will meet and greet your visitors, and act as your gatekeepers

Business support services, including

  • printing and copying
  • shredding
  • mail franking
  • Telephone forwarding/answering services

Mail handling services

Varies

Available from business centre management teams

Business empathy

There are some things on which you can’t put a price. One of these is the enthusiasm and support that your landlord has for your business success. At Capital Space, we pride ourselves on supporting small-business owners generally because helping them succeed is what gets us out of bed in the morning.  Developing a welcoming, supportive atmosphere for businesses to thrive, providing business advice and referrals, and being on first name terms with the majority of our customers is all in a day’s work for our business centre teams - with many of our clients saying they chose us and choose to stay with us because of the fantastic support they receive.

This philosophy goes to the heart of our company owner and managing director Peter Boam, who founded Capital Space in 1999 because he wanted to create accommodation that would facilitate entrepreneurs in growing their businesses.

Business empathy, support and encouragement is included as standard with all Capital Space offices, workshops and studios.

To find out how  Capital Space virtual offices or business premises

could benefit your growing business,

call 0800 107 3667