August 27, 2014 | Sharon Cheong
One of the major concerns of establishing a business is choosing the perfect location for an office space. It is a fact the business location is a key factor to success and overall growth of business operations. Other important considerations in choosing an office space are meeting the requirements and needs of the company, employees, clients, facilities, and provision of essential equipment to complete the services.
Choosing the most suitable and strategic location for any business is quite daunting. Opting between a traditional office space and a serviced office is another primary concern.
Traditional Office Defined
A traditional office is a regular brick and mortar space that is leased from a landlord (or corporation). The lessee or business owner covers all office set up costs. He decides on the physical planning, interior design and maintenance of the office and provides for the office furnishings, equipment and staff. The business owner pays for the utilities and other amenities such as internet and telephone connections incurred by the business office on a monthly basis. This is on top of the office space rental and/or equipment rental as the case may be. The minimum lease agreement is at least a year. Defaulting on this lease agreement has a corresponding penalty.
Serviced Office Explained
Towards the end of the 20th century there was an emergence of an innovative property product called serviced office. It is described as a business space to be rented on a flexible short-term basis. The office space is situated in first class buildings in prime CBD locations. Available in different sizes, the office space is usually fully furnished and equipped with the essentials of a business center. In most cases, support services such as internet and telephone connections are shared with other lessees. The monthly rent is inclusive of all utilities, including office maintenance.
Traditional Office and Serviced Office Compared
A major disadvantage of renting a traditional office is the money and effort the owner has to invest to set the office space: buying the necessary furniture, equipment; and acquisition of other facilities and amenities such as internet and telephone connection, facsimiles, printers, AV room and the likes. The owner is solely responsible for running the office smoothly. He must hire the office staff such as receptionists, maintenance crew, secretaries and so on. All of these entail a huge amount of money, resources, time, and effort on the side of the business owner. This option takes months to set up.
On the other hand, a serviced office or business center comes fully furnished, equipped and staffed to run an office at the least amount of time. In most cases, it is possible to move into a serviced office right after signing the lease contract. The office space is designed for the lessee's convenience. The required office furniture and equipment are set up and ready to use. In most cases, a serviced office comes with a professional staff to handle calls, emails and office cleaning and maintenance. A serviced office is always located in a prime CBD location, and housed in a prestigious building. The service contract is usually flexible as the business owner can choose for how long he would like to rent the serviced office. Added services are customized to meet the schedule and type of the business. The monthly rent usually includes the rent for the office space, staff, utilities and other services.
Based on a price per square foot basis, a serviced office is deemed more costly. But, one should take into consideration that the monthly rent is not just for the office space. Serviced Office rents are inclusive of hidden costs that one has to pay on top of the monthly rent in a traditional office. These “hidden costs” are utility bills, insurance, internet and telephone connections, office space cleaning and maintenance. There are no additional charges for the maintenance and use of office furniture, equipment, conference and AV rooms, Wi-Fi, PBX telephone systems, staff and so on.
Rates for a serviced office often exclude common areas such as corridors, meeting rooms, pantry, restrooms and such. These common spaces could easily take in 40% more space that has to be factored-in in traditional office leasing.
A business owner is tied to a contract with a traditional office leasing. There is no way he could back-out on his lease contract in the event that his business does not kick-off. With a flexible lease contract, opting for a serviced office is more viable for startups and small businesses.
The time, money and effort a business owner is willing to devote in setting up an office and its operations are factors in determining whether it is more practical to go for a traditional office setup or rent a serviced office. If you are looking for an office space for your business in the Philippines, consider all the advantages and disadvantages of a serviced office and a traditional office.
Call Servcorp now for more information.