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At your service

1 Mar 10

Serviced offices with short leases and flexible space are perfect for start-ups looking for a ready-made ‘home'

by Gary Atkinson

For small enterprises such as start-ups, the thought of forking out for premises and the kit to fill it can be a daunting and expensive prospect. But there is one way of avoiding such an expensive initial outlay – using a serviced office.

These facilities are already kitted-out with everything a business will need. You could turn up on day one with nothing more than a laptop per person if you have embraced the concept of the paperless office.

Also, you’re not locked into a lengthy lease. While it’s typically between five to ten years for a conventional landlord, with a serviced arrangement, a “licence to occupy” typically starts from one month.

Innes Chalmers CA, finance director of Abbey Business Centres, explains: “We ask for just two months rent up front. If you were paying rent of £1m a year to a conventional landlord, you could be expected to pay your bank up to £100,000 a year for a guarantee letter.”

Chalmers also points that most serviced offices are flexible. If your business grows, so can the space.

Comparing the cost of space, the serviced option can appear two-to-three times as expensive as a conventional lease. But then the likes of business rates and utilities are included, as are shared services, such as reception staff, and shared spaces such as toilets and kitchens. Chalmers adds: “Also, many landlords impose expensive service charges which are apportioned out between tenants – your serviced office provider is in a stronger position to negotiate these to a reasonable amount.”

Chalmers admits that serviced offices aren’t for every business. The offices are, however, particularly suited to start-ups and SMEs, which can budget more easily with monthly fees, instead of paying quarterly up front. They are also handy for large companies, for short-term projects, or to maintain the momentum of the business’s growth. For example, Shell recently hired space from Abbey to get an initiative started quickly rather than waiting for appropriate conventional space to become available.

The downside of using some serviced office providers was acutely demonstrated in January, when EasyOffice decided to close its doors in Glasgow, and gave its tenants just ten days to vacate.

The Business Centre Association (BCA), which represents serviced offices (but not EasyOffice) says it works to avoid this type of scenario with its members.

Jennifer Brooke, executive director of the BCA, says: “We give occupiers greater assurance that they will be treated fairly at our member locations through tight adherence to our code of conduct. Insufficient notice, as is the case in the EasyOffice scenario, would fall outside the framework of principles that we endeavour to adopt at all times. Any member that breached the code could be suspended and ultimately have their membership terminated.”

Although there used to be a stigma attached to serviced offices, Chalmers believes this is no longer the case. “Attitudes are changing, particularly for short-term requirements, and the figures stack up,” he says.

He also points out that serviced offices help their occupiers play to their strengths. “A consultant wants to be using as much of his brain power focusing on his service, not on dealing with leaky pipes.”

GARY ATKINSON is an editorial executive with Connect Comunications.

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