Over the last decade Serviced Office Space has become more popular than leasing. This has been driven by the need for ever greater flexibility. The main focus for many companies is on financial and tenurial flexibility which is not provided by all types of business space. Serviced office space however does meet these criteria
Organisations are changing where and how they manage their operations on an increasingly regular basis. This has created a need for not only flexible human resources but also flexibility in the capital infrastructure underpinning an organization of which property forms a key element.
There are several very important reasons why companies opt for licensing Serviced Office Space rather then leasing the space:
Speed of OccupationAbility to vacate at short noticeShort Term commitmentExpansion of space made easy within the samebuilding/addressRange of additional servicesavailable at minimal costs.Furnished office space at minimal monthly fees.No legal feesNo excessive capital outlay
Some firms may use serviced space for short-term projects, as temporary overflow space, or to gain an initial presence in and familiarity with a market. Others may be unwilling to accept long term onerous commitments or prefer the “one stop” nature of the serviced office environment.
The above facts reflect the inflexibility of the typical UK lease. In brief the main drawbacks for leasing office space are:
Minimum lease commitments are from 3 to 15 years therefore expansion can be problematic and initial outlay is expensive.
Pinpointing, agreeing terms, refurbishing and fitting out can take several months and requires a substantial capital outlay.
Long Rental deposits are required for new or non-profitable companies.
Capital outlay will be required at the end of the lease for dilapidation’s liability.
Legal fees.
Lengthy and complicated Terms of Contract.
To summarize the above, between Lease and Serviced Office, the conclusion reached is that the latter is providing a measure of flexibility that seems absent in the conventional market and, hence, is capturing an important niche market share.
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Antoinette Attias, Centre Manager CP House Business Centre, Watford
http://www.lentabusinesscentres.co.uk
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