Serviced office vs. Conventional office, what is the most cost-effective option?

Posted by: miquel
Serviced office located on rue marcadet Paris

In 2019 there was an estimated 35,000 flexible workspaces worldwide. By 2022, the number of flexible workspaces is expected to grow at a rate of 6% in the US, and 13% worldwide, annually. 1 This clearly shows the increase in demand for serviced workspaces. With the Covid-19 pandemic, this trend is accelerating as companies increasingly value flexibility.  

Understanding the difference between serviced and conventional workspaces 

Serviced workspaces are fully equipped and managed offices that are rented out to organizations by online office space brokers, such as Flexas. Here they will be referred to as flexible or serviced workspaces. On the other hand, renting a conventional workspace implies committing to a long-term agreement and having a space exclusively for one's business. At Flexas, both serviced and conventional workspaces are offered.  

In this article, we will explore the main benefits of flexible workspaces in comparison to conventional spaces and particularly with regards to costs. 

6 elements to consider when choosing an office space  

1. Flexibility of the agreement 

Serviced office spaces offer many different advantages. First of all, the tenants are not bound to a long-term contract which gives them the possibility to opt out. This allows companies to see if the space is suitable for their needs. 2 On the other hand, conventional offices spaces are more fitting for well-established companies with clearly defined needs that are looking for a long-term office solution. However, given the unpredictability and uncertainty that comes with setting up a new business, monthly contracts can be highly appreciated by new ventures and startups. Indeed, the latter gives enough flexibility to companies who cannot take the risk of engaging in a three- or nine-year contract without knowing if they will be profitable. 3 Hence, monthly contracts with flexible terms are generally more fitting for small or young companies.  

2. Flexibility of the location 

Employees and customers can easily access serviced offices as they are generally situated in tech hubs or in central business. With a large range of locations to pick from, companies can choose which office is most practically situated for them and suits their needs better. In addition, if all employees are not located in the same area or if some need to be in another city for professional or personal reasons, they can easily work from another serviced workspace. Such flexibility allows to reduce transportation costs significantly and save employees precious time. On the other hand, although conventional workplaces can be centrally located, employees have to commute every day to go to their dedicated office.

 

3. Immediacy of the move with turnkey office spaces  

From a financial point of view, serviced work spaces can be very beneficial. Indeed, unlike conventional offices, there is no time during which business activity is stopped while moving as the space comes fully furnished with internet and all the necessary equipment already set up.2 Not only does this allows companies to avoid the costs of having to remodel, renovate and furnish the space, the immediacy of flexible spaces saves time and thus saves rent money. 4 

 

4. No maintenance costs 

In Europe, the annual maintenance cost for general offices ranges from €18 to €27 per m2.5 When renting serviced offices, maintenance is usually included in the rent, allowing companies to, firstly, manage their budget easily as they know in advance what fees will have to be paid and, secondly, to save money hiring maintenance employees such as janitors, cleaners and technicians. 2 It takes approximately three years for those costs to be absorbed. Therefore, if a company knows for sure it will be staying in the same place for a minimum of three years, renting a traditional leased office becomes the most cost-efficient solution. But as this is not often the case, especially during today’s uncertain times, serviced workspaces are generally the best option.  

 

5. Scalability 

Particularly for startups, flexible workspaces can adapt to growth. Indeed, they offer companies the possibility to change their rental agreement in order to accommodate to the growth of the team. Thus, if a company wishes to start by renting only a couple of desks and later on decides to move to a bigger space, it is possible to do so with a serviced work space. 4 The scalability of serviced spaces often translates into fewer square meters of floor space and thus a lower rent as companies can use the exact space they need. This is applicable to larger companies as well, especially during the Covid–19 pandemic, as employees were not allowed to all be present at the office at the same time. In this case, companies renting flexible workspaces were able to reduce the number of workstations used, whereas companies renting out conventional office spaces had to incur the cost of unused offices. Therefore, as companies rent spaces according to the number of workspaces needed, they are able to lower their costs particularly in comparison with renting an entire space in a leased office. 2 

6. Premium services  

Conventional offices give control over how a company structure and manages the space while serviced offices are furnished and managed by a facility management company. Premium services are also included. Indeed, they give employees access to pay as you use facilities, high-quality equipment, catering and often include professional services such as receptionists, administrative staff and IT support. 3 These services can be very valuable for startups or small companies who cannot afford to directly hire this type of personnel. Not only this allows companies to keep their overhead low, it also allows them to save time on those types of tasks and focus on running the business smoothly. Therefore, by giving employees access to well-maintained equipment and premium resources, serviced workspaces foster productivity and reduce costs. 

Find the space that suits your needs, today 

In times of uncertainty such as the Covid-19 pandemic, flexibility, agility and reactivity are increasingly valued. According to Colliers, one of the two main drivers of the demand for flexible offices, in 2020 was managing uncertainty.6 Therefore, it can be said that renting a conventional work space is riskier as it does not allow such adaptability and might lead to costs that could be avoided by renting out flexible work spaces.  

After looking at some advantages of serviced workspaces, it can be said that flexible workspaces allow for a more efficient use of space, better use of resources, reduced energy consumption and rent and increased flexibility.  

However, picking the right type of office whether it be serviced, managed or conventional, comes down to the size and type of organization as well as the current situation. With Flexas and the help of our experts in the Dutch, German, Belgium, French, Swiss, Austrian, Spanish and Italian markets, you will find the space that fits your company’s needs and goals best. Don’t hesitate to get in touch with one of our office specialists and they will be happy to guide you in finding the most suitable office space.  

Sources

1 All Work - Coworking is the new normal, and these stats prove it – March 2021

2 Tech.co - The key benefits of a serviced office and why you need one – August 2014

3  Liquidspace - 6 ways flexible workspaces facilitate the growth of small business – 2021

4 Startups - What is a serviced office? - May 2021

5 UpKeep - How much should I be budgeting on maintenance at my facility? - May 2019

6 Colliers - U.S. Flexible Workspace Report - 2020