Compare Serviced Offices & the Costs of Leasehold Offices
In order to compare serviced offices, and the overall cost of occupying serviced offices against the cost of leasing offices, which might be considered a more traditional way of renting office space, you first need to establish the sum of both options, also known as the “total occupational cost” or the “total cost of occupancy”.
To establish the total occupational cost of leasehold office space you firstly need to establish the size or area of space you require. You then need to multiply the total size required by the price per square foot or square metre, this will then provide you with the annual rental cost. For example, if you are considering housing 75 staff in serviced offices in Central London, then the leasehold office space you would require might be in the region of 10,000 square feet. If the office building is priced at £18 per square foot, then it will cost you £180,000 per year.
Other occupational costs that need to be calculated also need to be multiplied using the size of the area (EG 5,000 Sq Ft) by the service charge rate and the business rates and these need to be added to the annual rental cost.
In addition to service charge rates, business rates and the annual rental cost, there are numerous other items that need to be factored in, they are;
1 – Capital expenditure on furniture.
2 – Installation of telephone switchboards.
3 – Cabling installation for internet connectivity, network and phone systems, including servers & patch panels etc.
4 – Building works and decoration that will be required to turn the space into the right configuration for your business.
5 – Labour costs for administrative employees, such as office mangers, switchboard operators and receptionists.
6 – Professional fees, such as solicitors’ fees and agents fees.
7 – General costs such as heating, cleaning, electricity and water rates.
8 – Insurance to cover the fabric of the office building structurally (this is sometimes included in the service charge).
9 – You will be responsible for the maintenance and upkeep of the office and for dilapidations at the end of the term.
Once you have calculated all of the above costs and amortized the relevant costs over the approved period of time you will be able to calculate the total cost of occupying your new leasehold office space, and easily compare serviced offices with leasehold office space.
The calculation of serviced office space occupational cost is somewhat similar. You will be provided with a monthly licence fee cost for the office space which will include all of the costs mentioned above. Once you have this cost you will be able to compare the cost of occupying the serviced office option to that of occupying the leasehold offices.
You cannot directly compare the per square foot prices between serviced offices and leasehold offices, as the space you take in serviced offices is always less than that you would take in leasehold offices, the reception areas, meeting rooms, corridors, bathrooms and kitchen areas are all included for your use if occupying a serviced office, even though the core office space (the area that you work in) will remain identical. Therefore to compare the costs you must compare the total occupational cost of each option alone.
More and more businesses, both large and small are increasingly finding that the overall cost of and flexible nature of the occupancy of serviced offices, with much lower initial capital expenditure are the best and most cost effective option for them.