Have you ever considered the difference between traditional office space for rent vs. serviced office space? A few weeks ago we put together a little cost comparison table for our potential members, to help them understand some of the hidden costs normally associated with leasing office space. We’ve had quite a bit of feedback since then and so we wanted to break things down in a little more detail to help you understand the differences, when looking for somewhere to work.
We know our concept isn’t perfect for everyone, but we genuinely believe it’s best for most people and after reading this, you’ll probably agree with us.
1. The main number that everyone looks at is the cost for the space.
That makes sense and is a good place to start, but it’s only a starting point because it’s never really the number you pay. Even when a traditional office is advertised for $1000, or $2 / ft. for example, this rarely included the taxes, common area charges, maintenance charges or any of the other ‘hidden’ fees that landlords strip out of the cost to make the main number look better. It’s kind of like buying a car, and then seeing all the dealer fees afterwards, except the numbers are much bigger.
When you add these non-negotiable fees onto the rent, you’re normally around 40% – 60% more than you thought you’d be.
2. The next set of numbers to think about are the running costs.
You probably thought of electricity, but you probably don’t know how much that will be. If it’s a newer property, then they may have energy efficient windows, A/C units etc. and well insulated walls. If it’s an older property (and by older we mean maybe 10 years old or so) it probably won’t. The numbers can vary widely and so you need to budget for those fluctuations (think July / August) etc.
Connected to electricity is Gas, Water, Internet Connectivity, Phones and maybe any additional taxes. With traditional office space, these are all non-negotiable that you’ll have to budget for, and depending on how much you use of each, again these can contribute quite significantly.
3. Last are the flexible numbers.
Is there parking or do you have to pay? How much coffee do you and your team drink each day? Who’s going to clean the toilets and the work space? Do you have enough flexible space for when you need to meet clients in a conference room or will you still need to rent space somewhere else for those larger meetings? Is there furniture provided or will you need to go shopping? Is the space built out in a way you like or do you need to remodel / paint?
With traditional office space, all of these costs will be yours to bear and so you need to budget them out ahead of time so you don’t get the final sticker shock. It’s too late once you’ve signed the lease!
Our comparisons show us that a typical $1,000 office really costs somewhere in the $2,100 – $2,250 range for a typical property not including any major, one time costs such as building out the space or remodeling. This will be based on a typical 3 or 5 year lease term and for a smaller business starting out, this will almost certainly involve you signing a personal guarantee for the rent so even if your business fails, you’ll still be liable for the charges.
This is why we built what we’ve built. Because after learning the hard way what a small business owner faces, we wanted to create something much more accessible, much more enjoyable and much more available to small business owners and solopreneurs, giving them the ability to flex up and down as their business requires, while also providing other support and assistance when needed.