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What are Serviced Offices? – Definition, Benefits, Downsides

During these uncertain times, many businesses are looking for flexible types of offices that allow them to adjust the size, facilities and services to their demands easily and quickly. One type of real estate that has recently seen a significant increase in demand is the so-called “serviced office”. These properties bring many benefits over regular commercial spaces but might not be the right fit for everyone. Discover in the following article what they are, how they work and what benefits as well as downsides exist for potential tenants. 

What are Serviced Offices?

Serviced Offices are flexible working spaces that are being managed by a specialized operator. They include many amenities such as meeting rooms, office furniture, IT support, a reception, cleaning services, and more, which are already set up and ready to use by the office provider once the tenant wants to move in. Serviced offices offer more flexible leases and can easily be adjusted to the growth of a company.

serviced office space meeting

How do Serviced Offices Work?

Serviced offices are fully operational and ready to use, once a company is planning to move in. The provider of the premises is responsible for the general layout of the building and decides on the number of offices as well as their location. After signing the lease, some configurations can be made to the space, but not to the same extent as if the company would buy or rent their private office.

What Facilities and Services are Included in Serviced Offices?

Serviced offices are similar to a hotel, but for companies and their employees. They include many services and amenities that make working more convenient and comfortable. Furthermore, they are ready from the beginning and can be leased for a short amount of time.

Facilities and services in these offices include the following:

Facilities:

  • Office Furniture
  • Kitchen
  • Meeting Rooms
  • Conference Rooms
  • Breakout Rooms
  • IT and Communication
  • Heating and Air Conditioning
  • Social Areas
  • In some cases, gyms, exercising areas and more

Services:

  • Security and Surveillance
  • Reception 
  • Support
  • Telecommunication services
  • IT and Internet support
  • Mail Handling and Storage
  • Insurance
  • Food and Beverage Catering Service
  • Cleaning
  • Parking
  • Events (Networking, …)

 

What are Popular Serviced Office Providers?

The following serviced offices providers are some of the most popular and largest management companies with locations all over the world.

office desk at a window

Advantages of Serviced Offices

There are numerous advantages of using serviced offices that can benefit a business. They can help to support the growth of a company while being flexible and easy to use at the same time.

Prestigious Location
For many companies, it is important to be located at a central or prestigious address. This helps to improve the image of their brand, as well as offer a convenient place to hold meetings. Serviced offices allow smaller companies to choose these locations as they are cheaper in the short term than choosing to buy or lease an entire office.

Support and Services
There are a variety of services available that can support a business and additionally make the working environment more comfortable. As already explained above, these can include the following: Security, Reception, IT and Telecommunication, Mail Handling, Catering, Cleaning and Parking. In comparison to a regular office, most of these services are already included in the rent and do not need to be organized by the company itself.

Facilities and Services are Available from the Beginning
One of the main advantages of serviced offices is that they are ready from the point in time when a tenant wants to move in. All the furniture, facilities, services, internet and more are already installed or set up. This allows a business to save time while moving in and makes it more convenient to change offices.

Simple and Flexible Rental Agreements
Compared to usual leasing agreements, serviced office contracts are kept simple. This is because these spaces can often be rented for a short amount of time, such as a few months to a year and are directed at small companies or startups. Therefore, businesses that are looking for flexible offices can be expected to meet their demands.

Options for Growth
Another benefit is that not only the length of the contract is flexible, but also the size of the rented space. The company WeWork, for example, offers everything from a single desk in a shared office and small private desks, to larger office units and even whole floors in a building. When a small company with only a few employees starts to grow further, they can easily switch to a larger type of office without a hassle.

Furthermore, as we have seen recently with the covid crisis, it can also make sense to use a smaller office and shift to work from home for a number of employees. Shared offices allow a business to easily lower the number of desks and reduce costs, which can take up to many months in a regular office when selling a unit or building.

Networking Opportunities
Some providers of shared offices offer events during the year that are a great way to network with other people. But even if no event is currently planned, because of the shared facilities there will always be a possibility to meet someone new.

Cost-Effective in the Short-Term
In the short term, these types of offices are very cost-effective as most services and facilities are already included. In comparison, when leasing a regular office for 4 or 5 years, the first few months are usually the most expensive, as new technologies and equipment have to be bought and installed, services have to be purchased and the space has to be customized to the company’s expectation. Consequently, it makes more sense to choose a serviced office when planning to be there in the short term.

Disadvantages of Serviced Offices

Before signing the contract for a serviced office right away after seeing the advantages, there are still a few important things to consider. Even though these spaces come with numerous benefits, they might not be the right choice for everyone.

Minimal Customization and Visibility of a Brand
For a company, it is in many cases important to have a certain visibility of their corporate style or brand identity. This means that the office has to be customized with specific colours, logos, pictures and other design elements to express this image. Serviced offices are often very generic and do not offer the same options as a company-owned office would do. While there are certain design elements that can be changed, these spaces would not stand out to the same extent.

Shared Facilities and Services
Depending on the type of serviced office a tenant has booked, there might be a number of facilities or services that have to be shared with other companies and individuals. This can include the reception, meeting rooms, breakout rooms, kitchen, social spaces and more. While this can also be a benefit by meeting other people, it can be disruptive if a certain room is not available when it is needed.

Higher Costs in the Long-Term and Extra Fees
Because of high set-up and one-time costs, it can be beneficial to choose a serviced office over a regular one. On the other hand, in the long term these expenses will not exist anymore and the unit price of a regular office will be lower. This is because of the fees for extras such as services and facilities that the shared office provider is responsible for.

No Complete Control
The facility management company that is operating these offices has most of the control over the premises. This can mean that some changes made to the office are not in line with what the business is expecting. For example, the layout or design can be changed and it is even possible that a company’s office has to change location within a building.

Conclusion

Serviced offices offer many benefits for businesses such as a prestigious address, easy and flexible rental agreements, a variety of services and facilities, and the possibility to expand. While these arguments are great for many companies in the current, unpredictable period of time, there are also some downsides to it. These include minimal customization, shared facilities and higher long-term costs. In order to decide whether serviced offices are a good option for a business, it is important to look at the size of it, the current needs, growth potential and how long the serviced office is needed.

If you want to learn more about commercial real estate, PropTech, sustainable buildings and smart cities, feel free to take a look at our other articles.

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