Business Start-ups…Serviced office or traditional lease?

www.searchofficespace.com/uk/

For anyone starting a business, the to-do list is a long one, and that's an understatement. Where to work from is one of your first major considerations. Working from home initially is a possibility and if you chose this option, you can take advantage of the benefits of a Virtual Office, which is a service offered by most serviced offices i.e. mailing address of your choice, plus telephone answering service, plus use of meeting rooms and even touch down offices by the hour or day, when you need them.

However if you want to work away from home then renting an office is nowhere near as daunting as one might expect, especially if you opt for a Serviced Office (SO) as opposed to a Traditional Leasehold Office (TLO), so take a few moments to mull over the thoughts of Richard Smith, MD of SOS, Search Office Space, who makes the following observation when comparing the two options.

Finder’s fees payable to commercial property agents (who play a key role in finding the right site and negotiating the best deal) are common for TLO’s Finding a serviced office is one call to SOS who list SO's all over the UK and Worldwide and offer a free office finder service and impartial advice.

Rent deposits - 6 months to one year in a TLO - usually one month in a SO.

Legal fees incurred when acquiring a TLO can run into £1000's as leases are long winded and full of legal jargon. Legal fees are zero or nominal in a SO as license agreements are short and "in English".

SO’s within Landmark buildings e.g. Canary Wharf, The Gherkin, Berkeley Square House are, within reason, open to all, however in these buildings, it is almost impossible to secure landlords consent on TLO’s unless you are a "corporate" or a company with a strong track record.

Capital Outlay - once you find the right TLO you need to spend significant sums fitting out the space (furniture, partitioning, IT infrastructure, phone system, Internet access/bandwidth, copiers etc etc - in SO’s the office space is pre wired, partitioned, furnished and ready to move into, all you need to do is turn the key, walk in the room, plug in your laptop and off you go, hence the terms, “turn-key offices" and "plug and play" - the best thing about this is that you can use your precious start up capital for mission critical items as opposed to fitting out your office - in fact in a SO you can also utilise their support staff on a pay as you go basis which means you can make additional savings by not having to employ support staff, until you really need them.

Flexibility - what about when your business expands and you do decide to employ additional team members - in a TLO, you either have to take on more space than you initially need (plus space that you may only rarely use like meeting rooms) or you have to move to bigger space – “oh no, not another office move!!” Don't worry in a SO you can expand (or downsize) as and when you need to i.e. only pay for space you need, when you need it.

What about those unexpected costs? We all hate those! - in a SO you can budget easily because the billing is predominantly all inclusive, in a TLO you can sometimes receive unexpected service charge bills for your share of costs for “extraordinary" (landlord speak for out of the ordinary “fall off your chair”) items such as maintenance works or building improvements e.g. works to lift, roof, exterior facelift, and you usually have no choice as to whether these works take place or not, if the landlord decides to do it……. then that's that! Then there are those dreaded dilapidations or reinstatement clauses, also not applicable in a SO.

So… the bottom line is, I recommend you seriously consider the merits and savings you can make in a flexible serviced office before you think about signing a traditional lease.