Serviced Offices / Managed Solutions vs Leases

Intro

Office space falls into two main categories: ‘leased’ and ‘serviced or managed’. 

Leased offices have traditionally proved popular with long-established businesses and brands with large real estate budgets. Serviced offices, on the other hand, were known as the domain of start-ups and SMEs who require more contractual flexibility. 

Increasingly, serviced and managed offices are piquing the interest of larger businesses who have – until now – called leased offices home. 

Perhaps you’re one of the growing number of business owners who are considering switching from their leased office to serviced or managed agreement. 

Serviced and managed offices have flexible terms, all-inclusive services and innovative designs: an appealing proposition at a time of uncertainty and change.

What is a managed office?

A managed office is a type of serviced office – one that is designed with larger businesses in mind. Recently, there has been a significant shift in the market with companies downsizing from leases to smaller managed options. 

A managed office includes the services and amenities associated with a serviced office, but they are usually larger; the company renting it will likely be the sole occupier, and they get custom design, furnishing input, etc.

Choosing the right type of office for your needs can help you minimise risk, facilitate your unique hybrid working setup, and even attract and retain the talent your business needs to thrive. 

This guide to leased vs serviced/managed offices highlights some of the key differences between the three main office setups, including:

• A comparison of setup costs
• Types of working environments within serviced/managed offices
• Levels of flexibility and control
• How to find the right serviced office for your needs

Which workspace is right for me: leased or serviced/managed?

The type of office you choose will depend – to a large extent – on your budget and the level of flexibility you require. For instance, if you're looking to expand into a new market and aren’t sure how it will work out, a serviced or managed office will help you test the market and scale (or downsize) at relatively short notice. 

On the other hand, if you are looking to have more control over your space, are willing to forgo the benefits of working in a serviced workspace and can afford the upfront costs, a leased office might be worth considering. 

A managed office – which sits in the middle of serviced and leased – could provide you with a happy medium. Designed with larger businesses in mind, managed offices provide the services associated with a serviced option with more control.

Start your office journey with the following considerations:

1. Upfront capital expenditure
When leasing an office, there are lots of upfront expenses to factor into your budget. Take furniture, for example. Serviced and managed offices are usually pre-furnished and ready to move into, whereas you will have to invest in your own furniture if you decide to go down the leased office route. 

Then there’s the legal costs involved in leasing, like hiring a qualified building surveyor to inspect the property before you sign. If you use an agent to find a leased office, you’ll have to pay agency fees too. 

When leasing, you’ll also be expected to pay service charges and maintenance costs (for aspects like air-conditioning, internet and cleaning) on top of your rent. 

It’s important to account for business rates too. Business rates are due on all leased commercial properties and are typically paid in 10 monthly instalments. 

Serviced and managed offices are priced on an all-inclusive basis. Although the price of a serviced/managed office might be more expensive per square foot, all the services and utilities are included. This can make it much easier to manage from a cash flow perspective.

Here are some common shared ‘services’ you’ll find in a serviced/managed office:

• A building manager who takes care of maintenance and operations
• A community manager who organises the social and networking events
• Kitchen facilities with unlimited free hot drinks
• Event space for meetups and seminars
• Meeting and conference facilities with the latest AV technology

2. Your workspace requirements
With a leased office, you have control over what your workspace looks like and how it’s organised. Serviced offices are shared with other companies. So, while you’ll have some autonomy over what your section of the office looks like, the common areas are designed and managed by the serviced office operator. 

Fortunately, many serviced offices, in order to compete, are designed to a high specification. Again, a managed office could fit your requirements if you’re looking for a space to call your own but want to benefit from contractual flexibility and services. 

Choose from the following serviced office membership types:

• Virtual office – where you rent an address for your business 
• Hot desk – provides access to a full or part-time desk in a coworking area
• Dedicated desk – your own desk in a coworking area, usually with storage
• Private office – a furnished, ready to move into office on the floor of a serviced building, complete with internet, chairs and desks
• Managed office – a larger space within a serviced office, often with a private bathroom, kitchen and meeting rooms, etc. 

3. Level of flexibility and control
While you might have more control with a leased office in terms of design, you have less control when it comes to moving out, downsizing or scaling up.

Leases are usually measured in years, while a serviced office can be rented on a month-by-month basis. 

For this reason, you’ll usually only have to provide a month’s notice (or up to three) if you want to move out of your serviced workspace. This level of flexibility can help safeguard you against paying for office space that you no longer require. 

Of course, there’s the flipside. 

The serviced office operator could also provide you with a month’s notice if they want you to move out. But it’s unlikely: the serviced office market is competitive and growing, and most operators rely on good occupier reviews to attract and retain their customers.

Often, serviced/managed offices are marketed on their flexibility. Supplier flexibility has been a lifeline for businesses over the last few years, enabling companies to reduce costs and continue trading through the coronavirus and cost of living crisis. 

You can also leverage your serviced/managed office as a perk to attract new employees by giving them the option to work in the office on a full or part-time basis. 

4. Finding a serviced office to move into
The serviced and managed office market is growing, and this can make it hard to identify the best option for your needs. An office broker like First Office Hub can help. Use First Office Hub to browse 5,000+ flexible offices in all major cities, in one place. 

Whether you want to accommodate a small team in a serviced office or are a larger business looking to switch from an office lease to a managed solution, there are lots of options to explore. A dedicated consultant will help you short-list options, arrange viewings and negotiate the best deal, free of charge. 

Reach out and start your search today.

Planning an office move? Go the office relocation planning resource centre