Over the past few years, we have seen a significant increase in tenant clients, particularly young or start-up Tech companies, opting for co-working and serviced office space over more traditional lease arrangements.
With the demand for offices-as-a-service solutions higher than ever, landlords are capitalising on the increasing appeal for premises that are ready to go from day one.
Young or start-up companies don’t want the hassle and lengthy time constraints traditional leasing and fit-out arrangements bring and co-working and serviced offices generally provide more modern, collaborative workspaces with all the trimmings to boot. Ready-to-go internet; break-out zones; modern and creative meeting rooms and office designs (complete with ready provided desks and chairs); bicycle storage; showers; gym facilities as well as cleaning and other services are now commonplace offerings within the single monthly/quarterly rent payment. Whilst the costs for serviced office space will inevitably be higher per square foot than traditional leases, young or start-up companies in particular prefer having an all-in-one cost as opposed to bundles of invoices!
Further, serviced offices are appealing to young or start-up companies for their flexibility. Contract terms tend to be a lot shorter – ranging from monthly to two years, rather than five to ten years as with traditional leases, meaning tenants can quickly gain or lose space depending on their requirements. This offers not only flexibility but also a significant saving on capital expenditure: there is no need to spend big on fitting out the premises; no need to tie up funds in rent deposits and a much lower risk of costly reinstatement costs and dilapidations.
For the reasons of speed, cost, ease and convenience it is understandable that young or start-up companies requiring office solutions are drawn towards co-working and serviced offices.
This rise in demand has caused a lot of landlords (and more established tenants looking for modernisation) to adapt from the traditional approach to leasing and office space. An increasing number of landlords are now offering hybrid solutions to tenants: a traditional lease with some of the perks co-working and serviced offices bring. For example, we acted for Ericsson last year taking such a lease of space in Thames Tower, Reading. Whilst Ericsson’s lease is traditional in nature, Thames Tower offers the ability to book and use both the private club room and garden. It also offers additional meeting space to tenants which can be booked out as required; communal break-out zones; catering services; bicycle storage and cleaning services.
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