Nothing strikes fear into the heart of an FD more than the cost of rents and rates. Real estate is a companies second largest expenditure next to its employees, so finding the right space to retain talent, for longevity, and keep within budget can be an almost impossible feat.
Long gone are the days of 25-year leases with no breaks. Companies seek flexibility to allow them to grow, or indeed downsize, whilst seeking the best environment for their talented teams without having to spend gazillions of non-existent budget on fit out and furnishing.
Whilst flexible office space is nothing new, the emergence of smaller independent operators has been phenomenal. Research by leading brokers *The Instant Group in 2022 stated that flexspace provision in the UK had grown 22% in 12 months and the number of flex spaces will double by 2026 accounting for more than 150m sq. ft of office space in the UK, or a total of 10% of the supply of UK office space.
More companies are adopting flexspace as part of their real estate strategy and therefore are starting to have a deeper understanding of how these spaces not only add to their portfolio, but how they are budgeted versus the traditional office space.
The desire to take shorter term space with costs which are a total inclusion of occupancy is somewhat of a revolution to a high number of organisations. The ability to set costs and take space only that is required, hiring meeting rooms or utilising lounges for free as and when needed is the largest attraction for businesses.
Setting a budget for this space can be simple, with the right support and guidance from the chosen operator it can be beneficial to manage those budgets going forward by understanding your teams potential use of the space. For example, would you need a full-time board room or can you hire one monthly for a fixed, pre agreed fee as and when you need it? Will their standard broadband suffice, or can you upgrade for a fixed fee per month? What are the hidden costs – i.e. does the operator include beverages unlimited? Are there set up fees and what furniture is included for free? I.e., do you need additional pieces? Can you retro bespoke fit your office with the provider and, do you want to? All of these factors play a part in setting your budget.
Who will be using the space and how will they use it?
Your chosen operator will advise on what is included with the office space but only you will know who your team are and how they are likely to utilise the space they are in.
It is essential to understand the intricacies because not all operators offer truly all-inclusive rate. Whilst most will have additional bookable meeting rooms, printing/copying facilities and even admin assistance which can be costed as needed – some will charge for the use of a coffee machine.
Additionally, not all space is equal. One operators “10-person office” could be a third of the size of another’s. Desk sizes vary from 1000mm to 1600mm which impacts the space maximisation and whilst it may look shiny and glossy, what were your first impressions when you got into the space to view?
Gold taps and marble worktops are wonderful, but how you and your team are treated from first visit to move in is essential in understanding how you will be treated once you are well embedded. This also has an impact on your guests and visitors, so often it’s worth looking past the beer tap and funky reception desk, because if your first impression was not one of a red-carpet visit, will your team be happy there long term?
What is the cost of on-demand space?
Every operator is different and therefore costs vary based on location, type of workspace and what kind of usage is required – the more flexibility required often is interpreted into a higher premium cost daily vs weekly vs monthly as an example.
Desk space vs meeting rooms will also offer different price points and major cities like London, Manchester and Birmingham are likely to be higher costs compared to tertiary towns and cities.
Your preferred operator should be able to demonstrate their costs vs a traditional lease and offer you an alterative that is not only cheaper but more space efficient and indeed, more flexible. With terms starting from 3 months to 12 months or even 36 months which, in the core of traditional flex space is a long term but certainly not in standard corporate real estate.
Once you have all these questions answered, it will help you formulate your desired budget and whether the operators you have visited fit within that budget and, of course, expectation of style and space compared to those in which your company has become accustomed to.
There are many online brokers who support and assist organisations of all shapes and sizes but researching your own preferences can also have its advantages. Whilst brokers offer a free service to the end user, negotiation is generally easier when the middle man is removed and the operator is working hip to hip with you on assisting you to find the best space for your teams. The consultative approach is far easier to work with and a deeper understanding of your business needs can be accounted for. Working within your budget, whilst essential, is not always easy – so our advice – shop your chosen marketplace thoroughly, whittle a shortlist and follow your gut. If your operator is willing to work alongside you to find the right solution and your gut tells you it’s a good fit – snap them up. Flexspace can be in short supply, especially in the right location.