Despite the rise in office take-up in London in Q3, with some 2.7m sq ft of office space let in the last quarter of 2023, many occupiers are still unsure about what their office requirements will be over the coming years.
They remain under immense pressure to provide a high-quality office environment to entice teams back into the office, whilst also ensuring that property costs are kept to a manageable level amid continuingly high inflation.
As businesses establish their post-pandemic office requirements, we are seeing some already commit to new Grade A office space, albeit on a smaller footprints, to meet their new hybrid working patterns. This resulted in lower vacancy rates for Grade A space at the end of 2023 in London, against an overall office vacancy rate of 10%.
However, there remains a significant proportion of businesses who are either in vastly under-utilised leased premises or are bursting at the seams in their current offices. This is leading many companies to reconsider their office requirements in 2024 – whether they have a lease ending in the next 12-18 months, or not.
With this in mind, one of the key questions on the lips of London occupiers in 2024 will be: Is serviced or conventional office space the best option for our business? To help answer the question, London occupier expert, Matt Waite, explores the pros and cons of serviced offices over conventional office leases.
Benefits and drawbacks of the serviced office
Serviced office space comes at a cost premium, but it can provide the perfect solution for those businesses that need flexibility to grow without the long-term commitment of a traditional lease.
Whilst the overall cost is more, it will give your business an element of certainty around what your monthly bills will be, as your start-up and reinstatement costs are averaged out over the period of your stay.
However, whilst serviced offices come in all shapes and sizes, it can be difficult for businesses from certain sectors, such as professional services, to find an option to suit their office culture and corporate identity.