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December 12, 2023
Joe Averill
6 minutes
One of the first questions any business will ask when looking for a new office is, “What’s the difference between a serviced office vs a managed office vs an office lease?”. But is it as easy as answering a few quick questions?
You may have seen flowcharts or even quizzes to help you decide what works best - touching on issues such as
These may be important issues to consider, but they’re far from the only ones. The decision on what type of office to select is a little more complicated than that!
➡️ Before You Jump In, How About a “Test-And-See” Approach?
➡️ What Are Serviced Offices, Managed Offices and Office Leases?
➡️ An At-A-Glance Comparison of Different Office Spaces
➡️ The Pros and Cons of Serviced Offices vs Managed Offices vs Leased Offices
➡️ Final Thoughts
Although we hope this blog can steer you in the right direction regarding what type of office space will work best for your business, it’s not always that simple. Especially if you’re still trying to establish the best hybrid working model for your business.
Many start-ups are using serviced offices to test what works best for their company in a hybrid world. They monitor desks, meeting rooms and other space zones’ usage to establish key trends such as
➡️ when employees come into the office
➡️ whether they’re at maximum capacity in certain space areas
➡️ if they can cut back on space/desks
➡️ which amenities their staff value and actually use
Discover the latest workspace strategies used by high-growth firms in our eBook: Transform your startup workspace into an asset that drives collaboration and culture.
Serviced offices offer businesses a “plug and go” set-up, all for an all-in cost each month. They provide the support staff, digital connectivity, fit-out and building amenities. The terms can be extremely flexible, with terms typically available from one to 12 months (and some providers even offer daily passes). You pay per desk, not per square foot.
A managed office is a middle-ground between the short-term flexibility of serviced office and a longer-term lease option. Contracts are usually a minimum term of 12 months and you pay for the total amount of space you use, not per desk. But you can usually access communal spaces for an extra cost, which then lowers the amount of space you need.
And managed offices are also a hybrid in terms of set-up. You get to define exactly what you need - from the number of desks and meeting rooms, even down to the specifications. They provide the fit-out, which you can often negotiate to be paid back over the tenancy instead of upfront.
Office leases require a long-term commitment - usually for three to ten years, although break clauses can provide some more flexibility. In return for the commitment, you can expect the lowest cost per square footage*. You’ll need to install and pay for your own digital infrastructure and fit-out, but the upshot is that you can customise and brand the space however you want - even down to the reception area.
*(But remember, the cost per square foot isn’t the only thing that contributes to your overall cost. And if you’re a scaling business, cash flow can be critical. We cover all the issues you need to consider when deciding between different workspace options in our blog: )
Many fast-growth firms prefer the flexibility and sense of community provided in serviced offices, but that’s not a priority for all. And a lot will depend on the operator and location you pick.
But here’s a quick glance at how each office space option may meet your key criteria.
✅ Flexibility - Serviced offices easily come out top for flexibility - and some providers even offer daily passes or flexible day bundles. (Although that often comes with a trade-off on spaces.) Serviced offices are therefore usually the most popular option for fast-growth firms with changing needs.
✅ A ready-made community - Serviced office providers are often a hub of like-minded fast-growth businesses. And the best landlords run a mix of social and business-focused events to help their tenants grow their business - from how to secure Series B funding to industry-specific workshops led by scaleup founders.
✅ Plug and go - Simply turn up, plug in your laptop and off you go! No need to worry about the hassle of setting up internet or phone lines.
✅ Shared services - Today’s modern serviced offices offer a wealth of shared services, such as meeting rooms, reception areas, kitchens - and even gyms or pop-up gigs! All within one price - meaning it’s sometimes a cost-effective option if you want plenty of extra amenities.
✅ Professional image -Serviced office providers choose their locations and buildings wisely. They also decorate them with a professional wow factor their target businesses will love - and their employees and clients.
✅ Better cash flow - The pay-as-you go model is very attractive to growing businesses, freeing up capital for growth and hiring plans.
✅ Business support - No need to worry about organising the post or milk run - they take care of all business support.
❌ High square footage cost - Like with anything, you pay more for flexibility. But you may find it’s offset by the savings of shared resources and set-up costs.
❌ Limited customisation - You’ll be able to put your brand name on the walls, etc, but further branding is much more limited. And what you see if what you get in terms of the furnishings and decor, which are unlikely to be “on brand”. (Although they often meet the latest trends!)
❌ Limited control - You have hardly any control over the working environment or how and when you can access the building and its amenities.
❌ The building sets the culture - Serviced offices have their own culture so you’ll need to find a place that fits with your own.
✅ A ready-made community - Managed office providers also offer the community elements you get within serviced offices.
✅ Choose your layout and space features - You get to choose the design and layout of your office space - from dictating the coworking areas, the number of meeting rooms you need and even whether you need quiet zones or phone/zoom booths.
✅ Better branding - Fill the space with furnishings and decor that reflect your brand and culture.
✅ Cost-effective - You pay per square foot, not per desk. And as you’re locked in for longer, the overall cost per square foot is usually lower than with serviced offices.
✅ Flexibility - Managed offices still offer flexible lease options such as the option to rent shared spaces, meaning they’re still a good option if you have fluctuating needs.
❌ Cashflow - You’ll need to find 2-3 amount of months’ rent upfront, compared with the pay-as-you-go model of services offices. Whilst not a deal-breaker for all, it’s something to consider.
❌ Maintenance - You’re responsible for the upkeep and maintenance of your office space, so you need to factor in the extra costs and time this takes to manage.
❌ Less shared services - As a general rule, most managed offices don’t offer as many shared services of amenities as serviced offices e.g. gyms, event space, additional meeting and breakout areas.
❌ No business support services - Expect to make your own teas and coffees - and remember to bring in the biscuits!
✅ Create your own culture - Select the amenities, building and workspace that reflect your business culture. If your culture dictates a gaming room or a fully dedicated yoga room, the choice is yours!
✅ Control over access and amenities - Leases offer the most control of all three office options. Choose when to open and shut the doors to your offices and amenities.
✅ Branding - Branding’s not limited to your office space itself - you can put your brand front and centre from the minute anyone walks through the door.
✅ Long-term stability - You have peace of mind knowing that you have a permanent base to call home for the foreseeable future.
✅ The lowest cost per square foot: Leased offices can be more cost-effective than serviced or managed offices over the long term, especially for larger businesses.
❌ Limited flexibility - The longer lease commitments of 3+ years can limit your ability to flex and adapt to changing needs. This is one of the biggest concerns for fast-growth firms.
❌ Less community - There are no ready-made events you can join in the building. You’ll have to network in the normal sense and find local events.
❌ Setup - You’ll have to set up facilities such as the internet, phone lines, and meeting rooms, which can be time-consuming and resource-intensive.
❌ Maintenance - You’ll be responsible for the upkeep and maintenance of your office space. Again, this is extra time and expense.
When you consider the pros and cons of each office space option, it’s not surprising that most fast-growth firms opt for either serviced offices or managed offices. As I said, though, there’s no one-size-fits-all approach. Your goals and values will dictate what criteria are most important.
But there is one common trend we see when working with fast-growth businesses.
They want a place that their employees are excited to come to.
A place where you can hear the chatter of culture and ideas forming.
Not the sound of silence reverberating around the office as we all adapt to a hybrid world.
We’re working with fast-growth companies that are attempting to do just that - and some who are smashing it. So we’ve put together a guide to help you build a thriving workspace.
Just click on the image link or download it here: Transform your startup workspace into an asset that drives collaboration and culture
It includes what we’re seeing working on the ground and contains exclusive insights from leading startup and scaleup founders.
Want to find your next leased, managed or serviced office space to rent? Book a call with our team today.
