Business Is Booming As Demand For Serviced Office Space Soars
An increase in self-employment and small business start-ups may be fueling the rise in demand for serviced business premises. Aided by flexible lease terms and an ability to supply high level services, serviced office providers seem well insulated from the harsh economic climate.
Break With Tradition
Until recently, securing office space followed a well-worn path. Business owners who needed offices would find a suitable space, negotiate a lease (sometimes as long as a quarter of a century in the UK, although that is much less common now), take possession of the office, pay to fit it out with the latest gadgetry, wiring, furniture and front-of-house staff and crack on with business. As the years went by they would pay all bills, from heating and lighting to security and staffing and then, when the lease ended, pay to get the building stripped out and returned to the state it was in when they acquired it. Simple.
Of course now things are less simple, largely due to the harsh economic climate. Businesses are far less willing to commit their funds and security to such an extent, indeed many are keen to drastically limit their exposure to the real estate market. This is easy enough to understand: the property market has been affected by economic contraction and is unlikely to be a safe, predictable investment for a while yet. In addition, one of the UK’s responses to austerity has been a huge increase in self-employment and therefore, in business start-ups. These are small to medium enterprises, quite often started on shoestring funding and so very risk averse. However, such businesses still need respectable office space, in order to function and present a credible face to the world. The solution? Serviced office rental.
What Are Serviced Offices?
Serviced offices comprise office space, generally part of a larger building, that is already furnished by and has front-of-house staff employed by the serviced office supplier. Heating, lighting and other costs are also paid by the supplier and some even include telephone and technology in their pricing. Serviced offices are provided on very flexible lease terms, often as short as a few weeks although many terms are longer. These elements combined mean that any business moving into serviced offices is instantly protected from long-term liability for a whole host of expenses and escapes many start up costs (furnishing, wiring, etc) altogether.
Serviced office rental is one of the few economic sectors to have boomed in the recession and it is not hard to see why. With venture capital investment in UK start-ups falling by around 15% in the first half of 2013, the overwhelming majority of new businesses find funding a challenge. Many need the flexibility of short-term leases in well-serviced buildings in order to maintain cash flow and stay viable. As long as serviced office providers keep an eye on the market and spot any return to long-term investment in traditional office space quickly (and act upon it), then this is one aspect of austerity Britain that seems to bring benefits all round for provider and consumer.
AUTHOR BIO:
Orlagh Maccarrick is an experienced writer on business and economic matters, such as the rise in professional serviced office rental and has contributed to many high profile publications.
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Category: Business
