What is a serviced office and should you lease one in 2023?

A serviced office (also known as a managed office or business centre) is a type of modern workspace for businesses to lease. Unlike traditional office space, serviced offices are owned and managed by a facility management company, removing the burden for SMEs.

Particularly post-pandemic, the serviced office has become a popular choice amongst small business owners and sole traders. Given the turmoil of the current economy, and as the return to work debate rages on, firms are increasingly prioritising flexible, move-in ready office space.

The benefits are obvious. Managers want short-term, flexible rental contracts that they can easily pause. Plus, global office providers like Regus allow remote or hybrid employees or companies to hot desk and work from a number of global, premier locations.

But what are the typical features you can expect from a serviced office, and why should you choose one for your next workspace? This expert guide will explain the pros and cons of serviced offices so you can make an informed and confident decision about whether they’re right for your company.

What is a serviced office?

A serviced office is a type of office space that comes fully furnished and equipped for the business to use. That means all maintenance, cleaning services and amenities are taken care of, whether the business is leasing a serviced office over an entire building, one floor, or even just a desk.

As the service office is owned by a facility management company, all utilities such as energy, water, WiFi, and telecom services are also taken care of by the provider. Crucially, that also means energy costs, which have skyrocketed to unaffordable rates for many SMEs over the past two years.

Because of this major draw, serviced offices are favoured by smaller firms that lack the resources to run certain aspects of an office (ie. reception desk). Other in-house facilities and services provided by a serviced office include:

• Meeting rooms
• Reception team
• Cleaning staff
• Mail and call handling
• Employee perks
• Flexible lease arrangements for short-term contracts

Who are the top serviced office providers in the UK?

One of the best-known serviced office providers is Regus, which has 297 locations in the UK.

As serviced offices become more popular, there is a growing mix of large-scale and independent providers across the UK. As a result, prices have become more competitive, as providers attempt to attract new leasers with low-cost, flexible packages.

Here are some of the best-known and most widely available options, plus the average cost for full-time serviced office space in Manchester:

• Regus – pricing starts from £425 per person, per month
• The Office Group – pricing starts from £800 per person, per month
• Spaces – pricing starts from £260 per person, per mont

Both Regus and Spaces are owned by IWG plc, the world’s largest provider of serviced offices. The trade association that represents the serviced office sector, The Business Centre Association (BCA), is a helpful resource, providing a national listing of UK serviced offices.

Should I sign with WeWork for a serviced office?

It would be remiss of us to talk about flexible office space without mentioning the titans themselves: WeWork. The company all but founded the coworking sector when its modern-looking, bean-bag laden offices sprang onto the scene in 2010.

WeWork in 2023 is a different story, however. The brand is in deep financial trouble and has warned it may struggle to stay afloat this year. In August, WeWork admitted to “substantial doubts” over its ability to stay afloat, causing shares to drop significantly.

The company is still offering competitive deals, and its property portfolio means it’s well located for practically every startup. However, we would recommend you think carefully before signing a contract with WeWork this year – particularly for long-term membership.

Serviced offices in 2023

The first serviced office spaces appeared in the 1960s in the US, where legal attorneys would work together in a pre-furnished space to share secretarial services. Since then, serviced offices have become a mainstay for entrepreneurs and businesses. But it’s in recent years that their popularity has truly soared.

During COVID, when various national and regional lockdowns put the brakes on business activities, the majority of office employees shifted to at-home working. Now, with the return to work debate having been decisively won by employees, companies have been forced to admit that remote and hybrid working is here to stay.

What is hybrid coworking?

In today’s hybrid working world many companies, rather than spend thousands on underutilised office space, have turned to flexible office providers as a way to downsize their workspace.

As a result, operators like Regus now permit SMEs to purchase part-time serviced office plans. This means the business owner can pay to access Regus for just 10 or five days a month. Hybrid workers will find this a much more useful option over paying full price for a space you’ll only be using for one day a week.

Here’s what that looks like for firms (using Regus’ hybrid pricing plans as an example):

On average, hybrid coworking is estimated to save small businesses just under £20,000 per year compared to leasing a traditional office.

Impact on employee engagement

Let’s not forget that the switch to a serviced office will also come with other, indirect benefits, like improved employee engagement and lowered staff attrition rate.

As employees increasingly seek out jobs with better work-life balance, providing the option to work from home will also enable firms to cultivate a supportive organisational culture.

Most serviced office providers also come with free perks and social events, such as yoga classes. As a result, companies investing in modern, flexible workspace can consider the move as leading to an improved recruitment strategy.

Serviced office costs

Serviced office providers will typically charge a monthly fee per desk on a pay-as-you-go basis. The amount the member pays will usually depend on:

• The size and quality of the space
• The services and facilities on offer to your business
• The city or town in which the building is located
• Whether or not the space is in a desirable part of town (for example near transport centres or cultural hubs)

Where is the cheapest location for a serviced office?

Location is one of the biggest influencing factors on serviced office costs. Here is the average cost of a serviced office Regus membership* in:

• Birmingham – From £135 per user, per month
• Manchester – From £135 per user, per month
• Glasgow – From £129, per user, per month
• Greater London – From £199 per user, per month
• Central London – From £209 per user, per month

Don’t let Regus’ cheaper costs fool you when it comes to the capital, however. London is the most expensive city for serviced offices, in general, ranging from an average monthly fee of £600 to over £750 in Central London. That’s why many firms opt for cheap coworking space in London instead of a private serviced office.

However, it’s worth noting that these figures can still vary. You might, for example, find an excellently-priced serviced office in Birmingham, whose offering goes above and beyond the city’s average.

*All prices based on a 24-month Regus contract.

Additional serviced office fees

When it comes to the cost of your serviced office, what’s key is understanding which services are included in the agreed monthly fee and which are not.

Typically, a serviced office provider will charge an additional monthly cost for internet access and telephone use, which may cost as much as £35 per desk. They may also charge extra for you to use meeting rooms and printers.

You might also encounter a couple of surprise fees for things you hadn’t really thought about – for example, your provider might charge you to have your business’ name listed at the building’s reception.

To avoid surprises, be sure to ask your provider for a thorough list of all the charges that’ll be coming your way – based on the services you’ll require – before signing an agreement.

Serviced offices vs coworking spaces

When coworking, employees share the office with other businesses. They can sit at any desk they wish (known as ‘hotdesking’).

Coworking spaces are one of the most popular alternatives to leasing a serviced office. The key difference between the two is that, while businesses can occupy a private workspace in a serviced office, all of the areas in a coworking space are shared.

In a coworking office, the layout is kept deliberately open plan. All employees work on the same floor using a ‘hot desk’ arrangement, where no employee has a dedicated desk. Here are three other differences between serviced offices and coworking spaces:

• Coworking encourages a sense of community. Most coworking spaces actively encourage collaboration between its members, and will put on networking events to facilitate this. This isn’t a typical focus in serviced offices – so if you think you’d benefit from working with other entrepreneurs and learning from their ventures, you’d perhaps be better off joining a coworking space.
• Serviced offices provide equipment and devices for you. On the flip side, it’s more likely that renting a private office space in a coworking facility will require you to bring your own furniture and equipment.
• Coworking spaces are, on average, cheaper than serviced offices. The exact price of leasing your office will depend on the quality of the space, but coworking offices do tend to be cheaper than serviced offices. You can even find free coworking space in London (not the case with a serviced office).

In some cases, a workspace can be both a serviced office and a coworking space, as some large-scale providers are known to provide flexible leasing and in-house facilities and services. That includes Regus, which offers both private office and hotdesking plans.

What are the benefits of a serviced office for startups?

Sole-traders, start-ups and small businesses are increasingly choosing serviced offices when moving to a new workspace – but what makes the serviced office a good fit for new and growing enterprises?

1. Serviced offices can accommodate growth

Most serviced office providers will happily facilitate the growth patterns of a startup. Should a company take on a few new hires and realise it needs more space to operate comfortably, serviced office providers will typically let them upgrade their agreement and move to a bigger area in the building (similar for office downsizing).

2. Serviced offices have no set up time

When moving into a serviced office, the desks, tech and phone lines are already set up. Considering that most startups and small businesses can’t afford to miss a single phone call for fear of losing a potential client, this immediacy is certainly reassuring and minimises one of the biggest stresses of an office move.

3. Serviced offices look more professional

You might still be in your first month of operation, but a serviced office will help you to look like a professional business to your clients, with a manned reception desk and mail handling.

4. Serviced offices can offer flexible lease agreements

As we’ve touched on above, most serviced offices come with flexible or hybrid payment plans, so you won’t be tied into a long-term contract. This is especially helpful for small businesses, who have smaller cash reserves and are more likely to deal with fluctuating cash flow.

5. Serviced offices come with employee perks

Alongside these valuable benefits, it’s worth noting that many serviced offices also house a range of other perks to promote its members’ wellbeing. These can include:

• Free tea and coffee-making facilities
• Fully-stocked kitchens
• Games such as pool tables, table football and table tennis
• Breakout spaces where employees can gather in a more casual setting than a meeting or conference room

Many serviced offices also strive to provide stimulating office spaces with modern layouts, plush furniture and unique design features to negate the sense of monotony that can be intrinsic to the more traditionally bland office environment.

What are the disadvantages of serviced offices?

There are three major disadvantages to a serviced office: many come with limitations on design and branding; sharing your office space might introduce privacy concerns; and some SMEs find the more expensive contracts can impact growth compared to some cheaper, traditional leases.

1. Branding limitations

Because serviced offices are owned and managed by a third-party operator, businesses may have limited control over the design and layout of their own workspace. This could hinder your marketing strategy, as you may struggle to define a space that reflects your branding materials like mission statement or corporate values.

2. Privacy concerns

Members in a serviced office have limited control over who they share the space with. This could lead to distractions and even — in the case of firms that work with confidential information — GDPR concerns. Be sure to evaluate the level of privacy your company requires before committing to a serviced office.

3. Potential impact on growth

Monthly rental fees for serviced offices can sometimes be higher than leasing traditional office space due to the added costs of using bundled services and facilities. It’s important to consider how cost-effective a serviced office plan is for your growth strategy.

Finding a serviced office: what next?

In today’s difficult economic landscape, moving your business into a serviced office could be the most cost-effective solution to your workspace needs – one that avoids the trials and tribulations of traditional property letting.

Serviced offices mean members can get straight down to business while the operator takes care of concerns like handling calls, cleaning, and greeting clients. Plus, there’s plenty of flexibility to be enjoyed if you need to make changes to your lease. In short, they’re perfectly poised to cater to the post-COVID business world and workforce.

Given the current boom in the coworking market, now is a particularly smart time to take advantage and search for the best discounts and deals. For expert help to find the best flexible workspace, fill in the form at the top of this page to receive quotes from coworking spaces near you.