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What is a serviced office and how can it help you keep costs down?

4-minute read

Josh Hall

Josh Hall

4 March 2009

Serviced offices can be a great way to get a space of your own in a way that's convenient and affordable. And, luckily, the range and quality of serviced offices has exploded in the last few years, meaning that there's more choice than ever, even in parts of the country that had previously been ignored.

So what are serviced offices, and how can they help your business?

What is a service office?

A serviced office – or managed office – is a fully equipped office space or building, managed by a facility management company, which rents out individual offices or floors to other companies. Serviced offices typically allow for more flexible rental terms than conventional office leases.

There's a few big players in the serviced office space, of which Regus are the best-known. However, the last couple of years have seen a huge growth in the number of serviced office options available. Perhaps the most visible of the new entrants is WeWork, who offer trendy, flexible space in major cities, and who are the subject of huge investment. But there are also many smaller players, some of which specialise in specific industries or sectors. Today, if you're in or near a UK city, the likelihood is that there will be a good serviced option available to you.

Cut your overheads with serviced offices

Office, retail, or workshop space is frequently amongst the biggest overheads facing a business. Unless your business is operated exclusively from home or from clients' premises, you will need some sort of dedicated space from which to run your organisation. Clearly, the type and amount of space you require will depend on the nature of your business. However, if you require office space but are finding that the associated costs are too high, you may wish to consider serviced offices as a way of meeting your company's needs and cutting your costs.

Serviced offices vs. conventional leases

Conventional office leases are frequently strict, and tend not to reflect the real-life concerns and needs of businesses. For example, many businesses find that they are forced into five-year leases with no get-out clauses. This is clearly untenable if there is any possibility of your business expanding and outgrowing the space during that period. Furthermore, the initial costs associated with conventional leases can be significant. Depending on the state of the office space it may be necessary, for example, to have phone lines installed or bring in furniture and computers. Finally, businesses in conventionally leased office space take on responsibility for maintenance costs and business rates, which can add a hefty amount to your rent payments.

The benefits of serviced offices

Serviced offices have a number of important benefits in terms of cost, scalability and convenience. In the first instance, the bills for serviced offices are all-inclusive. When you get a quote for a serviced office this will include all maintenance, for which the office management takes responsibility, and probably phone and internet access. In some circumstances your fee may include reception services as well.

While conventional leases tend to be payable on a quarterly basis, serviced offices are normally paid for monthly. This can help smooth out cashflow problems for two main reasons: your business will not be clobbered with a huge rent bill every three months, and all of your office-related outgoings will be collated into a single regular payment.

Low initial costs

Serviced offices also have the benefit of lower initial outlays. While you will normally be required to provide your own computers, the office management will ensure that sufficient furniture, phone lines, broadband connections and other amenities are installed and working ready for your arrival. It is important that you explain your needs to your office manager well in advance of signing any agreement, in order to make sure that the office is as it should be. Given the importance of a good working relationship between you and your office management, it may be beneficial to use a broker or agency. These intermediaries can frequently secure a better deal, and have existing relationships with office managers. Furthermore, they generally take their fee from the office management company, rather than charging your business, meaning that your costs are kept down as far as possible.


Another important benefit of serviced offices is their intrinsic scalability. While many businesses find themselves locked in to conventional leases for years at a time, those in serviced offices can arrange to leave at very short notice. This is particularly important for businesses that may expand rapidly and with little notice. It makes no sense for a successful business on the brink of expansion to be hobbled by, of all things, their premises. Serviced offices are frequently let in units, meaning that you may even be able to take on more space without having to move buildings.

Finally, it is easy to underestimate the amount of work required to keep an office running smoothly. It is no coincidence that many firms employ office managers to deal with the day-to-day maintenance and administration of their premises; these firms recognise that the other members of staff are more productive when they are in a well managed office, and that they should be getting on with their job, rather than fixing the desks. Serviced offices allow you to concentrate on what you do best - running your business. You will not be sidetracked by mending broken furniture or tinkering with broadband connections, but will instead be free to spend your time ensuring that your business is as successful as it possibly can be.

Serviced offices are seen by many businesses as something of a luxury, but this is inaccurate. Certainly, the 'headline' rent figure for serviced offices may be higher than their conventional equivalent. However, this figure does not provide a true picture. To begin with you must add the cost of utilities to the rent on a conventional lease. However, many of the other costs are more difficult to quantify. You must factor in the cost of work hours lost as a result of you or your staff having to perform basic maintenance tasks, and you must consider the potentially enormous costs in lost opportunity if your expansion is hampered as a result of your lease.

Serviced offices make good business sense in a wide variety of circumstances. This is particularly true in the current climate - the last thing any business wants today is an unexpected hike in business rates or utility bills. Serviced offices provide certainty about your outgoings, combined with value for money and flexibility. This solid base will help you build an efficient, successful business.

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