The London office market is no doubt undergoing a rapid evolution where we are seeing businesses adapt to new hybrid models of working from both the office and home.
Occupiers we speak to are increasingly seeking flexibility on the terms of their leases whilst ensuring they are getting value for money. With so many different office products out there, we take a look at three of the most popular models and what they offer.
What are the office options?
There are three main choices when looking for an office to rent in London. These are traditional, serviced or managed offices and each one has its own set of features that lends themselves to the various needs of occupiers regardless of size.
The more conventional approach: traditional leases
Conventional office space is available either directly from a landlord or from tenants via subleases or assignments. Occupiers taking this approach are able to have a presence not only within the space but also in the communal areas of the building, with tenant signage opportunities in the reception area. Tenants have the benefit of their own space which can be fully customisable allowing them to imprint their brand. Whilst typically landlord space has been offered as a blank canvas for tenants to leave their mark, we are now seeing more landlords offering plug and play solutions in which many of the fixtures and infrastructure, such as high speed internet has been set up. These not only provide a more seamless move for tenants but also allow tenants to save on the initial capex outlay to fit out the new office.
Lease length is largely dependant on the size of space you are looking for however, landlords will look to achieve at least three years. On leases of over 10 years, tenants will have security of tenure, giving them the opportunity to renew their lease upon expiry.
We recently secured financial services company FNZ a new office on the tenth floor of 135 Bishopsgate, a property that has been refurbished by the landlord, British Land, and sits within their ever developing Broadgate estate. The benefit of having dedicated office space is the ability to create a presence in London and contribute to the sense of placemaking; be that through interacting with the shops and restaurants in the immediate vicinity or with the other occupiers in the building.
What do serviced offices provide?
Serviced offices provide occupiers with the opportunity to acquire offices on flexible lease terms starting from just one month. Tenants can either work in the shared facilities or have their own dedicated office space. Fully furnished and IT equipped, serviced offices allow tenants to move seamlessly into their new space. There is a single cost to the occupier that includes the rent and maintenance of the office. The services provided include cleaning, internet, security, maintenance, dilapidations and the provision of kitchen goods.
This flexibility enables tenants to grow and shrink as required, allowing them to alter their costs to fit their current business needs. With the numbers of serviced office sites expanding, tenants are able to access numerous sites across the UK with a single membership to one of the providers.
That’s not to say that serviced offices aren’t appropriate for more established businesses; they can provide perfect overflow space or can complement the existing traditional office, giving staff a choice of places to work.
During the pandemic we acquired 120 desks for financial services firm LPP in Storey’s, 1 Finsbury Avenue. Having, initially looked at a new traditional lease, the flexibility that a serviced office could offer in an uncertain time proved to be a more attractive option.
How do managed offices differ to serviced offices?
Essentially, managed offices provide a hybrid solution where traditional meets serviced, allowing occupiers to create their own customised office on a fully serviced basis. With managed offices you can create a space that works for you from fit out to branding, whilst having the benefits of a managed service from the office provider. Leases on managed spaces are typically between one and three years. We recently placed Stock X, a retail technology company, into the second floor of 16 Dufours Place in Soho; a new scheme by Great Portland Estates. The scheme leases space on a floor-by-floor basis and comes equipped with meeting rooms and collaboration space. The office provides access to a workplace app, IT support and cleaning services. Choosing this type of office gives an occupier the ability to establish a presence in the local area while still having an element of flexibility as lease terms are shorter than traditional offices.
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About the author
Charlie Montgomery is a senior surveyor in the London Occupier Advisory team where he provides expert advice to companies located within the capital’s office market. Charlie’s specialist advice includes office acquisitions, lease re-gears, renewals and tenant disposals.
To contact Charlie, email Charles.Montgomery@colliers.com
