A Guide to Renting Office Space

Offices & Commercial Property

 

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At Patmore Commercial, we offer a strictly client-only service, and represent only the tenant, rather than conventional office agents who represent the landlord. As such, we can secure a much better deal for our clients.


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Renting Office Space - a Guide

Acquiring a new office may seem like a relatively simple task, but there are various considerations and pitfalls to avoid. You will probably know roughly how large an office you need and where you want to be located, but finding and arranging the right lease can be more complicated.

Conventional Office Space vs. Serviced Offices

There are two broad kinds of office lease - the Conventional Office Lease, and a Serviced Office Rental Agreement. There are a number of factors which will determine which is right for you, and we explain here all the advantages and disadvantages of each type, and the sort of costs involved, respectively.

  


Conventional Office Space:

Conventional Office Space is likely to be most suitable when your business has a distinct brand or identity, and has reached a certain size (say 10-20 people), or has specific requirements such as a showroom or storage facilities.

With Office Space of this type, it is best to have a good idea of your potential growth over the length of the lease, and to have acquired enough space to accommodate yourself at the outset.

With Conventional Office Space, you are more in control of your office situation, and so though there will substantial initial capital costs in taking out a conventional lease, your monthly outgoings are likely to be lower, over time.

Serviced Offices:

Serviced Offices, or 'Business Centres' provide immediately available, fully-fitted, turn-key office solutions, often with telephone/reception and secretarial services included.

Serviced Offices are ideal if you need an office in weeks rather than months, or require a flexible lease, or even flexible work-space (hot-desking), now being offered as standard at some business centres.

Serviced Office occupants can be anyone, from large, well-known corporates, to small start-ups who require space for anywhere from 1 individual, to 100 or more staff, though obviously only the largest centres could accommodate such numbers.


Advantages of Conventional Offices include:

  • Security of Tenure - commercial leases give the tenant the right to remain in a building indefinitely in most circumstances
  • Transparency of Pricing - with this type of building, you know with a degree of certainty what your on-going costs will be, whereas with Serviced Offices there are sometimes some surprises!
  • The office space and building exteriors can generally be personalised to suit your specific brand or taste
  • There are a greater variety of buildings available, in terms of style, character and location
  • It often projects a better, more professional image to be situated in your own Office Space, rather than the more generic-feeling Serviced Office.

Disadvantages include:

  • The whole process of finding offices, agreeing terms, refurbishing and fitting out can take time and require some capital outlay
  • Expansion space is unlikely within the same building
  • Minimum lease periods can be anywhere from 3 to 15 years
  • Long rental deposits are required for new or un-proven companies
  • There are costs even on terminating the lease, such as Dilapidations Liability.

Advantages of Serviced Offices include:

  • Quick, easy possession, often within 24 hours of viewing
  • Short periods of commitment - from as little as 3 months, less in some cases
  • Expansion possible within the same building, or other similarly-branded buildings in other cities
  • Usually much lower rental deposits or bank guarantees
  • No capital outlay at the start, or Dilapidations Liability at the end of the lease

Disadvantages include:

  • There is a limited pool of supply, as serviced offices represent only a relatively small proportion of the total office market
  • Lease Flexibility often comes at a higher, overall cost, with some centres adding "surprises" to the monthly bill
  • Surprisingly high network or telephone charges in some centres
  • Lack of supply of "funky" or individual style offices
  • Reception staff can be very good, or not so good, depending on your luck in choosing the right building
  • You can rarely add much branding or individualism to Serviced Office premises
  • Criminals often rent Serviced Offices to do some or other scam, and so your address can be unexpectedly black-listed, or even bugged.

Leasing Conventional Offices:

Finding the right building and arranging a conventional lease can be a lengthy process, but the long-term benefits can make it worth the effort.

To help find the right building, it's often prudent to appoint an agent to assist in your search and negotiate the main terms of your lease. The Heads of Terms are then passed to your solicitor who draws up the documentation.

The basic rent on a conventional lease will range from £10.00 to £65.00 per square foot (ft²), depending on location and facilities, and subject to upwards-only rent reviews at the end of each fifth year. Unlike a serviced office, where all the set-up and ongoing costs are rolled into one monthly charge, other running costs must be considered:
  • Business Rates:
    From £2.00-£13.00/ft²
    This level is set by the local authority, based on the rental value of your office multiplied by a percentage set by the national government. You may be able to reduce your liability by instructing a Chartered Surveyor to appeal your rates bill.

  • Service Charges:
    Typically from £4.00-£7.50/ft²
    This is levied by the building owner or his managing agent, and includes the basic running costs of the building such as lift maintenance and the cleaning and maintenance of common parts.

  • Buildings Insurance Costs:
    Around £1.00/ft²
    Of course, the actual cost also depends on the type of business you run, and what the deemed 'threat-level' is upon your company and its activities.

Renting a Serviced Office:

On our website, you can find a full listing of Serviced Offices throughout the UK and key European cities. You can use this to find suitable premises in the city you're interested in and arrange viewings.

The all inclusive cost for serviced offices varies from building to building, but will range from around £300 per person per month to £1,200 per person per month. The rent is sometimes even negotiable, and generally includes;
  • Business Rates
  • Service Charges
  • Electricity
  • Heating
  • Office Furniture
  • Building Insurance
  • Telephone Systems and Maintenance
  • Telephone Answering Services
  • Shared Meeting Rooms
IT Services vary from centre to centre, often it just means you get some sort of structured cabling, but sometimes there may be a small, permanent IT team available to help with more specific IT and Network requirements.

Secretarial Services may or may not be included in a monthly charge, depending on the building, and the type of services offered. Some centres are even known to provide tea and coffee!

After you have found the right office, the building manager will provide a simple Licence Agreement that can be signed with minimal legal advice. As soon as the licence is signed and the first month's rent paid, you can move into your office and start working right away.

Further Reading:




  If you have a question concerning any of the above, and would like some advice or an informal chat, please do not hesitate to Contact us.