Serviced Office Costs

If you are looking to rent a serviced office make sure you are aware of all the serviced office costs. In this article we look at the various costs with renting a serviced office so that you have the information to make an informed decision.

Serviced Office Costs – Rental

Although often not required, Serviced offices may request credit checks and references to confirm you are able to pay your rent. To avoid missed payments or delays rents are normally paid monthly in advance. Standard contract terms usually give the office provider the rights to recover additional charges so it is important to ensure any rental payments due are paid on the due date. Check contract terms as these additional charges could be considerable.

A benefit of serviced offices is that rental periods are often very flexible and can vary from a minimum of one month up to whatever duration suits you. At Brightfield Business Hub they have a Flexioffice package that allows you to rent a serviced office for the day / days. Serviced offices can vary significantly in size and format. Some will feature the very basic fundamental office furniture ( desk / table) others may have a couch / meeting area. This diversity, in size and specification means that rental values will vary.

In addition of the size variation, there are a variety of other factors that determine the rental costs including:

• Location within the country – it costs considerably more for a serviced office in Central London compared to Peterborough
• Quality of the office space – tired and dated or modern and contemporary
• Location within the office building (business centre) – prime spot with window views or stuck in an internal corridor with no natural light
• Number and location of windows – having windows but being by the side of a busy road with all the associated noise and pollution means you get the light but no ventilation
• Number of desks available – well managed centres will have serviced offices of different sizes that can grow or contract with your needs
• Additional services available for example on site gym or nursery

Business centres can set up you up with your own dedicated telephone landline number and usually charge for telephones on a handset basis. You may be required to take a telephone for each desk space taken. Call charges will vary depending on whether you are calling mobiles, locally or nationally. Each business centre will have its own tariff rate – make sure you ask to see these in advance of signing a contract.

Often located in the suburbs or significantly cheaper areas and within older buildings, Grade B or C serviced offices will be more cost-effective. Grade B or C offices may not benefit from raised flooring or air conditioning. The quality is usually much lower with Grade B & C serviced offices; internal decoration and furnishings will not normally be of the same quality as grade A rated offices. A detailed information of each grade of serviced office is shown below.

Characteristics of Grade A Offices (Superior Quality)

• Usually located in prime locations (e.g. Canary Wharf, Orton Southgate)
• The buildings are well maintained
• Some may be architectural landmarks (e.g. The Shard)
• Are often in buildings over 100,00 sq ft
• Provide excellent accessibility to transport and other facilities making it easy for employees to commute

Grade A offices are generally occupied by high profile companies, including banks, law firms and investment banking organisations who appeal to an international market.

Characteristics of Grade B Offices (Fair / Good Quality)

Rental costs for Grade B serviced offices will be lower than Grade A offices. Rates vary but are typically between around 25 – 40 per cent under. Grade B offices tend to have high functionality and be well located, but likely to have less attractive designs and infrastructure. Grade B offices are often older than 10 years old and can be ex Grade A office calibre.

Grade C Offices (Lowest rent option)

If the most important factor that you are looking for in a serviced office is low rents, then a Grade C office will be ideal for your business. Designs, furnishing and infrastructures are normally not as contemporary, as well as being located in less sought after areas.

Deposit

Most serviced offices will require you to pay a deposit (which will most likely be refundable upon termination) to cover service charges. The majority accept debit and credit cards to pay for your rental. Deposits will vary but are generally equivalent to one or two months’ rent, if rented for longer than three months. Discuss with your business centre provider the termination notice required for your serviced office.

Professional service fees

If you want to use a solicitor to review your licence then that will incur costs. Importantly these will be much lower than those fees attached to preparing a lease. Broker fees are usually paid by the serviced office provider.

Costs that are not relevant

You don’t need to budget for

• Business rates
• Local authority charges for services,
• Repairs and maintenance,
• Running costs, EPC and SDLT need not be budgeted for, as an additional items as most agreements will be inclusive of these charges.

Serviced Office Costs – Summary

Renting a serviced office versus committing to a long-term office lease is a decision that hinges on various factors, each carrying its own advantages and drawbacks. Understanding your business’s unique needs and circumstances is crucial in making the right choice.

A serviced office can be an excellent option when flexibility is a paramount concern. Startups, small businesses, and even larger enterprises that require short-term or project-specific spaces can benefit from serviced offices. These spaces come fully furnished and equipped with essential amenities such as internet, utilities, and administrative support. This makes them an attractive choice for companies that want to avoid the hassle and upfront costs of setting up infrastructure. Additionally, serviced offices often provide the convenience of a ready-to-use workspace, enabling companies to focus on their core operations rather than dealing with logistical concerns.

On the other hand, opting for a long-term office lease might make sense for businesses with a stable and predictable growth trajectory. Larger corporations or established firms that have a clearer sense of their space requirements can often negotiate better rates and terms for longer leases. This can result in cost savings over time, especially if the real estate market trends favour long-term commitments. Leasing also offers greater customisation potential, as companies can design and tailor the space to their branding and operational needs. This level of control can contribute to fostering a unique company culture and enhancing employee engagement.

The financial aspect is another crucial consideration. While serviced offices generally come with higher monthly costs, they include a range of services that might otherwise incur separate expenses, such as cleaning, maintenance, and reception services. For businesses looking to minimise upfront capital expenditures, serviced offices present a more manageable option. On the contrary, committing to a long-term lease might require significant upfront investment for renovations and furnishing. However, in the long run, a lease can often result in lower overall costs, especially when considering the cost per square foot.

Market trends and the local real estate landscape also play a significant role in this decision-making process. In dynamic markets with fluctuating demand and supply, serviced offices provide a safety net against potential volatility. Conversely, in more stable markets, locking in a long-term lease might be a sounder financial move, offering stability and potential appreciation in value over time.

Ultimately, the choice between a serviced office and a long-term lease depends on your business’s unique circumstances, including growth projections, budget constraints, and desired level of operational involvement. Evaluating these factors comprehensively will guide you towards the option that aligns most effectively with your business goals and resources.

Contact Michelle Craig at Brightfield Business Hub on 01733 595885 or email Michelle Craig at arrange an appointment to see the wide range of serviced offices at BBH. Click here to have all your serviced offices answered.

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