Choosing the right office space is a significant decision for any business. With workspace costs averaging around 20% of annual overheads, your office should work as hard as you do. At first glance, most offices feature four walls and essential amenities, making them seem quite similar. However, the key distinctions often lie in the terms and conditions of the leases you encounter.

Understanding the differences between leasehold, serviced, and coworking spaces can greatly impact your business—being locked into a lengthy lease could determine whether your company merely survives or truly thrives. This guide aims to clarify these differences and assist you in making a well-informed decision about your next workspace.

Serviced Offices vs Leasehold: Finding Your Perfect Workspace.

Coworking centres like WeWork have seen increased demand since the rise of hybrid working.

Coworking Spaces: Affordable Flexibility for Startups

According to the 2021 Census figures, 54.7 million people aged 16 and over in the UK are freelancers and digital nomads. Based on this data, approximately 7.4 million individuals are freelancing in the UK. So what is the concept of a coworking space, and how does it fit in? Toworking has evolved in recent years and has become a cornerstone for many entrepreneurs eager to establish their businesses. Coworking spaces have become a lifeline for many small businesses and digital nomads who thrive in a bustling environment, while other remote workers prefer tranquillity.

But why rent a coworking space instead of an office? Coworking spaces are considered by many to be the entry-level option to having access to a physical office space on flexible terms. They achieve this by allowing members to only pay for what they need and when it’s needed. Instead of investing capital or reserving funds for a longer-term commitment, revenue can be focused on growing your business. Great if you have a short-term project or intend to scale the business. Shared workspaces, like WeWork, provide tenants access to desks, meeting rooms, and even social activities—all for a nominal fee.

The Advantages of Coworking Spaces:

Affordability: Coworking spaces are often the most budget-friendly option. With utilities, furniture, and IT equipment included, startups can save significantly. Coworking spaces are considered the most cost-effective solution for startup businesses. Members are not bound by long-term leases, and they can start from a few hundred pounds per month. 

Flexibility: Contracts are highly adaptable, allowing you to rent a desk for a day, week, or month, depending on your needs. Many coworking spaces are open 24/7. Meaning they offer flexibility in terms of work hours and location. 

Networking Opportunities: Coworking spaces are a great place to meet other businesses and freelancers in a professional setting. From networking with members within the informal break-out areas, an event laid (film nights with pizza and breakfast events are common) all provide ample opportunity to connect with like-minded professionals.

Hassle-Free Management: Cleaning, recycling, and other services are taken care of by the operator, leaving you free to focus on your work. If you are tired of complaining about tidying up the office and removing coffee cups at the end of the day, coworking spaces could be the answer! Many provide a full cleaning service, including everything from replenishing snacks, teas and coffee stations to ensuring the space is clean and tidy.

Wellness and Work-Life Balance:  Coworking spaces are popular for startups, SMEs and corporate companies who want access to a professional working space away from home. Great for occasional use and helping to reduce loneliness, they provide separation from your home office and a chance to expand your network with like-minded professionals. Think of them as Work From Home Plus (WFT+).

Coworking Spaces Aren’t Everyone’s Cup of Tea

What are the disadvantages of coworking spaces? Let’s go through them…

Privacy Issues: Shared spaces make confidentiality challenging. Choosing a dedicated desk near a wall or window might help, but if you want to hold a meeting, you might be better off hiring a meeting room. Meeting rooms are sometimes included on a per-credit basis or an hourly charge, but it’s important to factor these in if privacy is important as they can add to your costs.

Limited Branding: Without your own office, branding opportunities might be reserved for your own branded coffee cup, which can impact if you are looking to promote your brand or leave a lasting first impression for a visiting client.

Potential Overcrowding: Coworking spaces can quickly become messy and noisy, except on Mondays and Fridays when many people work from home. This can be problematic, especially if you have important clients visiting your business. When choosing a coworking space, it’s essential to pay attention to the cleanliness of the kitchen and restrooms during your visit. Want a pro tip? Of course you do! Schedule your tour during lunchtime. This is when the communal areas are the busiest, giving you a clearer idea of how well the space is maintained by the onsite community team.

Onsite Security: Some users of coworking spaces have commented that sharing the same workspace with different individuals and companies increases security risks. However, many established coworking spaces have strong security measures. They use CCTV, secure access, physical security, and protocols to protect sensitive information, such as network security.

The Definition of a Serviced Office: Convenience with Flexibility

Many serviced offices offer a personalised welcome and reception services.

What is the difference between a serviced office and a co-working space? Serviced office spaces in London are fully equipped workspaces available on short—to medium-term leases. They are advertised as being a license agreement rather than a lease. They offer a turnkey solution, enabling businesses to move in and start operating immediately.

The Key Advantages of Serviced Offices:

Scalability: Monthly contracts make it easy to scale up or down. If space isn’t readily available within your building, space might be available nearby within an adjacent building. Some workspace providers have a greater reach and network of buildings (especially in London), so it’s worth noting if you see the team growing within the next 6-12 months.

All-Inclusive Services: Utilities, internet, receptionist services, and maintenance are included in the monthly rental agreement. This is an important factor to consider when comparing options, especially if you’re considering costs and entertaining the idea of leasing space in an older building. It’s wise to understand if the landlord has any works planned to upgrade the air conditioning or refurbish the premises. It is worth noting that, tenants may be asked to contribute to the cost of these works through their service charge.

Quick Setup: Infrastructure is already in place, simplifying your move. Meeting rooms fitted out with the latest tech, tick. No investment is needed on your behalf. Just pick a centre that has the tech and amenities that you need.

Low Initial Costs: Skip the expenses of furnishing and partitioning your office space. Photocopying and printing are often included, so that’s one less expense to factor in buying.

Hassle-Free Management: Providers efficiently manage cleaning, repairs, and utilities, which helps to lessen your administrative responsibilities. We also include ongoing maintenance for your convenience.

Shared Facilities: Amenities like meeting rooms and kitchens are generally included. If a sink gets blocked or the AC decides to pack up in the height of the long British summertime (what’s that!), you’re not lumbered with an expensive bill to repair it.

Free Upgrades Included: Leasing equipment such as photocopiers and coffee machines means you’ll always have the latest kit. You can leave the competition of having the best coffee machine and keeping up with the Joneses to others, allowing you to concentrate on what truly matters—your business.

Considerations for Serviced Offices:

Higher Monthly Costs: Serviced offices come with higher monthly fees than traditional leases, reflecting the all-inclusive nature of their packages, which cover utilities, furniture, and cleaning. While they can be cost-effective for short-term arrangements, businesses looking for long-term solutions may find these costs add up. Companies prioritizing budget predictability might benefit more from exploring leasehold options.

Limited Customisation: Serviced offices are typically pre-furnished and ready to move in, which can restrict personalisation. In contrast to leasehold offices that allow full control over layout and branding, serviced offices often have a uniform aesthetic. This can be a challenge for businesses wanting a workspace that reflects their brand identity or meets specific operational needs, like tailored breakout areas.

Shared Spaces: In a serviced office setup, shared facilities like kitchens, reception areas, and meeting rooms are common. While they encourage networking, they raise concerns about privacy and exclusivity. Sensitive meetings may require the booking of private spaces, and shared environments can lead to distractions and resource competition, which may be a drawback for businesses that prioritize privacy or need exclusive facilities.

Let’s Lease: Not Forgetting Classic Leasehold Office

Leasehold offices tend to offer more sq.ft per person vs paying per desk.

The definition of a leasehold office is to rent a commercial property under a lease agreement, typically for 3, 5, or even 10 years. In recent years, the length of the lease has greatly reduced in the attempt to convince tenants to lease office space, as opposed to renting a serviced office. Although this has reduced since the pandemic, many businesses have been slower to return to leasing office space as some ended up trapped with the commitment of a longer-term lease but unable to access it due to workspace restrictions imposed by Covid. The leasehold option suits businesses looking to create a bespoke workspace. Depending on the level of investment you wish to take, you are responsible for everything from finding the space, appointing a commercial agent, and legal representation to choosing the office fit-out, furniture options and ongoing maintenance of the toilets, air-conditioning system and dilapidations upon exit.

There’s More to Leasing an Office Than Just The Lease

Design Your Own Office: Do you want complete control over your office design? If so, leasing an office allows you to achieve that. Leasehold offices are ideal if you want your workspace to reflect your brand and culture.

Direct Landlord Relationships: Negotiations and agreements are managed directly with the property owner or agent, so play nice!

A Quick Word on Short-Form Leases: A short-form lease is a simplified version of a standard lease agreement that outlines the main terms and conditions between a landlord and tenant. Short-term leases are often utilized to save time and space by omitting detailed provisions. A traditional commercial lease is more extensive and has fixed terms. Generally, they are set periods but often include break clauses or renewal options.

Leasehold Offices: They Do Have Their Advantages:

Cost Efficiency Over Time: Although initial costs may be high, long-term leases often turn out to be more economical. This is particularly true for renting office space in London—and in other locations as well—since maintaining a stable occupancy within a building is more beneficial for office space providers than constantly accommodating new tenants.

Exclusive Use: Experience privacy and complete control over your workspace. This is ideal if you want a personalised reception area to welcome visiting clients.

Customisation: Transform the space to reflect your brand and operational vision. If you desire striking graphics, do it! You have the power to shape your working environment; it’s just a case of having the budget and the right tradespeople to bring your ideas to life.

Size of Space: Leased offices typically offer more space than serviced offices, averaging around 100–150 square feet per employee. In contrast, serviced offices generally provide less room, averaging 35–50 square feet per employee. This difference arises because serviced offices share amenities in an all-inclusive manner, eliminating the need to incorporate these features into each workspace.

Things to Consider for Leasehold Office Space:

Upfront Costs: Leasing office space often involves significant initial expenses beyond the monthly rent. Businesses must budget for furniture, fit-outs, IT infrastructure, and possibly renovations to tailor the space to their needs. Additionally, deposits and legal fees can add to the upfront financial burden, making it essential to assess overall affordability before committing.

Maintenance Responsibilities: Unlike serviced offices, where upkeep is often included, leasehold agreements typically place the responsibility for repairs and maintenance on the tenant. This includes handling utilities, structural repairs, and general wear and tear, which can result in unforeseen expenses. Tenants must also manage regular cleaning and compliance with building regulations, adding to the workload and operational costs.

Long-Term Commitment: Leasehold agreements often require tenants to commit to terms ranging from five to ten years or more. While this can provide stability, it may not suit businesses with fluctuating headcounts, evolving operational needs, or plans for expansion. Breaking a lease early can be costly and complicated, so companies with unpredictable growth should weigh the risks carefully.

A Word on Subleasing: The Alternative Option

Subleasing is an increasingly popular option for businesses looking to save costs or secure flexible office space. This arrangement allows you to rent part of a leased office from another tenant, providing opportunities to share expenses and avoid the larger financial commitments of a direct lease. However, it’s essential to approach subleasing with due diligence to ensure it aligns with your business needs and avoids potential complications.

Landlord Approval: Subleasing usually needs written consent from the landlord. Without it, you risk violating the original lease terms. The landlord may review the sublease agreement and assess your business suitability before granting permission.

Lease Restrictions: Not all leases allow subleasing, and some may have restrictions on subtenants or terms. Review the original lease for conditions to avoid legal disputes and ensure compliance with the landlord’s expectations.

Liability: Even while subleasing, the primary tenant is still responsible for the original lease obligations. If the subtenant fails to pay rent or damages the property, the primary tenant must address these issues. If you’re subleasing, have a solid legal agreement to protect yourself from potential risks.

Subleasing can be a practical solution for businesses seeking temporary or smaller spaces without committing to a longer-term lease.

CAT A+ / Managed Offices: The Best of Both Worlds

MetSpace offers a bespoke service and CAT A+ workspaces to rent on flexible terms.

Managed offices, often referred to as CAT A+ spaces, strike the perfect balance between the control of leasehold offices and the convenience of serviced spaces. These offices offer businesses the opportunity to customise their workspace while enjoying the flexibility of shorter-term contracts and hassle-free management. This hybrid approach makes CAT A+ offices a popular choice for companies seeking a personalised yet low-maintenance solution.

Key Features of CAT A+ / Managed Offices:

✔ Customisation: CAT A+ offices offer the advantage of personalizing the space to reflect your brand and business needs. From layout adaptations that promote collaboration to incorporating company colours and logos, these offices allow for a high level of customization. This creates an environment that feels like an extension of your brand without the long-term commitment of a traditional lease.

✔ All-Inclusive Payments: Choose CAT A+ offices for a seamless budgeting experience that streamlines your financial planning. With a single monthly fee that covers rent, utilities, internet, building management, and essential amenities, you gain unparalleled cost transparency. This all-inclusive model not only simplifies your expenses but also frees you from the complexities of managing multiple service providers, allowing you to focus on what truly matters – your business.

✔ No Upfront Costs: One of the key advantages of CAT A+ offices is that providers handle all the setup, including furniture, fit-outs, and IT infrastructure. Businesses can move into a fully operational workspace without incurring the high upfront costs associated with traditional leases. This is particularly appealing for companies looking to scale quickly or preserve cash flow for other priorities.

Why Choose a Managed Office?

Managed offices are ideal for businesses seeking a bespoke workspace without the long-term commitment of a leasehold arrangement. They provide more established businesses with a balance of flexibility and control, making them a popular choice for scaling companies.

Leasehold vs. Serviced Offices: Weigh Your Options and Find Your Perfect Workspace Today

Navigating the differences between leasehold, serviced, and managed offices is crucial for selecting the ideal workspace that meets your specific needs. Each option comes with its own set of advantages and challenges, making them suitable for various business requirements. By assessing your priorities, budget, and future growth plans, you can choose a workspace that perfectly aligns with your objectives. Whether you seek flexibility, customization, or long-term cost savings, a tailored solution awaits your business.

From small startups to established corporations in search of a new headquarters, we’re dedicated to helping you evaluate your leasehold versus serviced office or co-working possibilities. We’ll take the time to understand your unique needs and preferences. There’s no obligation or fee for the initial consultation, but with the insights you gain, you’ll be empowered to negotiate the best possible terms for your next office space.