Flexible spaces have recently become popular options for tenants who traditionally occupied leased office space. These are seen as particularly good choices for new and smaller businesses looking to occupy their first premises. This page provides an overview of flexspace functionalities and discusses which options could be suited to certain tenants’ needs.
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Flexible office space refers to a workspace arrangement which offers increased flexibility to the tenant. Individual desks or small offices are acquired in a workplace that is furnished and ready for occupation, except for IT equipment and phones which are supplied by the tenants themselves.
This type of space is particularly popular amongst smaller tenants and start-ups because it provides access to office space without the initial capital expenditure of a traditional lease.
However, the operational expenditure will often be higher in a flexible space than during a traditional lease for the equivalent sized space. Occupancy costs will generally be charged as an all-inclusive monthly cost per desk or per office that incorporates the use of the facilities, amenities, furniture and utilities together.
Flexible working is a term that covers a number of flexible arrangements, most of which are usually agreed as a contract or licence.
Co-working spaces combine a number of desirable workplace amenities and offers them to both individuals and larger companies alike. The core values of co-working spaces tend to be the notion of community and, consequently, the promotion of collaboration. Generally, this will be fuelled by large open-plan floor places, community events and communal breakout/café areas for members.
The term “co-working” tends to be synonymous with a professional creative atmosphere that is also far more relaxed than it’s serviced office counterpart.
Co-working is divided into three key areas and these options are generally targeted at three different types of user:
Hot desking gives access to communal desks to use with your own laptop, and within co-working spaces, this will generally be the most cost-effective option. It gives freelancers and individuals access to an office environment and networking opportunities.
Some co-working operators, often for an additional fee, will give access to other venues they manage.
For an increased price, tenants can rent a fixed or permanent desk as an individual, or a small number of adjacent desks for their team. As well as the same benefits received by those who are hot-desking, the permanent desk user has a guaranteed desk each day and, usually, a permanent desk pedestal for secure storage.
Whilst benefitting from the same amenities as a hot-desk and permanent desk, private offices allow for a lockable, fully-furnished, private environment for businesses. A business effectively gains their own space without the upfront expenditure required for solicitors or the fit-out in traditional leased space.
Serviced offices offer private office space. These are fully furnished offices which have more flexible terms than traditional leases.
They can be perceived as being closer to a more traditional working environment compared to co-working space. Whilst breakout areas are still shared, the notion of a collaborative community is less apparent.
The variety of amenities provided by a serviced office or co-working space will vary between each operator and each location. Here is a list of some of the amenities or facilities that are frequently feature within flexible agreements:
Different businesses will have different requirements; here are the key considerations:
Where a business is located is important for staff and visiting clients, so proximity to transport links is an important consideration when choosing flexible offices. Alternatively, if a flexible office provider can offer access to multiple locations, being able to work or meet in different locations could be an advantage.
The choice will come down to individual working habits and preference, size of team and budget.
Some flexible spaces operate foster a relaxed, community atmosphere; however, some businesses may prefer the more traditional atmosphere offered by serviced offices.
Many flexible spaces create environments that particularly suit specific types of companies. Many co-working operators, for example, create workplaces that may suit tech or creative start-ups and they build a culture around this appeal.
If there is uncertainty about future growth plans, taking flexible space may be a practical solution so that there isn’t a commitment to a long lease. Flexible space providers also tend to be accommodating if growing businesses require additional space/desks within their site.
Agreeing a licence for flexible workspace takes far less time than a traditional lease which means businesses can move more quickly. The time committed to the space, in theory, can be as little as two weeks so it could serve as a short term stop gap if absolutely necessary.
There are a number of benefits that users of flexible space gain over traditional office tenants:
Flexible or rolling contracts allow for tenants to be reactive to internal or external factors affecting their business, rather than the 5-10+ year leases that lock in tenants until a break notice is reached or an assignee or sublessee is found.
Flexible spaces are perfect for reducing the barriers associated with company growth and flexible space operators will generally encourage business to expand into as much space as they can offer.
Apart from a single upfront deposit payment where required, there is very limited administration surrounding the monthly payments for flexible space. In general, there is an all-inclusive payment that incorporates rent, business rates, service charge and utilities, as well as additional smaller fees linked to things like internet connectivity, phone lines, printing and meeting rooms.
Flexible office operators will offer basic amenities such as WiFi, furniture, meeting rooms and breakout facilities, leaving tenants to focus entirely on their day-to-day work. As well as niche amenities, such as flavoured water and artisan coffee, tenants can generally seek to host networking events, take advantage of comfortable breakout areas and use fitness facilities if available.
Co-working spaces provide freelancers or individuals with a central working environment that benefits from corporate facilities such as hireable meeting rooms.
Flexible workplaces allow individuals or small companies to attain a business address without the associated high upfront and continued occupancy costs.
There are certain aspects of flexible office space that may make it unfeasible for some business occupiers:
Traditional office spaces generally benefit from personalised design showcasing and cultivating company identity. This personalisation is lost within flexible office space, which will usually conform to the operator’s design and branding guidelines.
A lot of flexible space operators invest in and create well-designed communal areas for their tenants, though most private offices will simply consist of four walls and desking, providing limited opportunity for personalisation.
The initial start-up costs at flexible spaces are drastically cheaper than traditionally leased offices. However, due to heightened month-to-month costs of the space actually rented, a traditional lease will usually become better value for money over the long term.
Even though the length of agreement tends to be shorter and for smaller amounts of space, mistakes can still be made, here are some key things to consider before signing:
A solicitor will highlight unusual areas of the agreement and request answers to any questions that are raised. The majority of solicitors will generally review a licence for a far smaller fee than for a full lease.
Deposits are often required for both traditional and flexible agreements. However, in both scenarios, the deposit should be secured in an account specifically designed for holding the deposit.
Generally, the deposit will only be used by the flexible space operator to address any outstanding rental payments or reinstatements. However, it is important to ensure that the permitted use of the deposit and its security are made clear before signing.
Unlike traditional commercial lease negotiations, flexible space contracts don’t generally involve accredited property professionals representing the two parties. However, this could mean that discussions about incentives may be missed during negotiations.
Areas that may be negotiable include rent level, term length, rent-free concessions and access to meeting rooms, although there may be other incentives specific to the tenant or the space. The operator may not agree to all terms, but there is usually some flexibility around the agreement.