What costs you’ll need to consider for commercial premises

Premises and services all-in-one sounds good, but can you afford it?

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With serviced offices, you pay for the space you need and the services you use. All fixed costs of your serviced office are covered in a monthly payment to the business centre management.

As well as the services you opt for, the licence fee will usually include electricity, water rates, heating and air conditioning, general building maintenance, refurbishment and cleaning as well as a contribution to business rates.

Serviced offices are typically defined by the number of people they can accommodate. For instance, a one person office is usually about 100 square feet in size, and a two person office around 120-150 square feet.

Prices vary considerably, depending on quality and services offered. The location of a business centre and the position of an office within the city centre will also determine its cost. To a certain extent you will also pay for the image. If you want to look like you have top of the range offices in prime areas, that is what you must to pay for.

Space saving

So, will a serviced office be cheaper than conventional office space for your business? The Chartered Institute of Purchasing and Supply (CIPS) studied this question.

The terms of conventional office leases were compared to those of the largest international serviced office provider, Regus. Standard office expenses, such as electricity, furniture, building services, provision of meeting rooms and telephones, were also built into the comparison, as well as the number of employees accommodated (up to 60) and the length of accommodation (up to three years).

The survey found that serviced offices can offer substantial short and medium term cost savings over conventional leases. In a high cost area such as London, for instance, a company of five people using a serviced office for three months would save 33% of the cost of a conventional office lease. If the company stayed, they would make a saving of 21% over six months and 11% over a year.

And if you’re looking at setting up office in a lower cost city centre like Birmingham, with a larger number of people and for longer time periods, you could save even more. Typical savings in a serviced office are 66% when accommodating 10 people for three months and 44% for a year.

Compare the costs

So will a serviced office be cheaper than conventional letting for you? MWB Business Exchange, operating at the higher end of the serviced office market, believe taking on a serviced office can save your business money. In Holborn, in London’s West End for example, a serviced office can offer a 36% saving over conventional office space in the same area.

Here’s their cost comparison between conventional office space of 1000 sq ft with two offices, reception, meeting room and kitchen with a five person MWB shared office.

Conventional office space £ per monthMWB Business Exchange £ per month
Building costs3,367Incl.
Capital costs1,000Incl.
Revenue costs9554,400
Staff costs1,600Incl.
Average cost per person1,384880

But remember, although serviced offices are very good for start-ups, small businesses and fast growth companies where you can’t layout big cash sums at first, if your company is going to grow to a significant size, you could find that serviced accommodation becomes expensive.

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