Serviced offices have changed the way businesses occupy space.
For start-ups, smaller teams and businesses entering a new market, they solve an important problem: they are quick, flexible and require relatively little upfront commitment. A company can move in, connect its laptops and start operating almost immediately.
But there comes a point when that flexibility can start working against the business. We recently spoke to clients who had made the transition from serviced accommodation into their own leased office and asked two simple questions:
- What was the reason for the move?
- What’s the biggest impact it’s had on the business?
Five themes came through consistently: cost efficiency, space efficiency, greater control over the workplace, improvements to culture and wellbeing, and a stronger sense of permanence.
Taken together, they point to a broader conclusion. The decision to lease an office is rarely just a property decision. At the right stage of growth, it becomes a strategic business decision.
In this report, we explore each of these five themes in depth – and why a pre-fitted office often doesn’t cut it either.
1. Cost efficiency: when flexibility starts carrying a premium
One of the clearest themes was cost.
The commercial model behind serviced offices makes sense when flexibility is the priority. Businesses effectively pay for convenience: a fitted environment, shorter commitments, shared facilities and services wrapped into an occupational cost.
That proposition can become less compelling as headcount grows and the requirement becomes more predictable. A simple illustration shows why. If serviced accommodation in the City of London costs £800 per desk, a ten-person team costs £8,000 per month. Grow that team to 15 and the cost increases to £12,000. In the West End, the figures grow considerably with the cost of one desk averaging around £1,000 per month.
A fitted out leased office does not operate according to the same per-desk model. If the space already has capacity for those additional five people, growth does not automatically require another five desk memberships.
As one client summarised it:
“As we grew, the numbers stopped making sense. Moving into our own office gave us much more control over what we were actually spending.”
That does not mean leased space is automatically cheaper. Rent is only one part of the calculation and fit-out, service charges, rates, maintenance and eventual lease liabilities all need to be understood.
The important distinction is that a lease allows the business to start optimising its occupational cost around its actual requirements rather than buying flexibility indefinitely. Current market comparisons similarly identify higher flexibility and low initial set-up as the trade-off for the premium associated with serviced space.
2. Space efficiency: paying for the workplace you actually need
The second most prominent theme was closely related: space efficiency.
Serviced and pre-fitted offices must accommodate multiple businesses and working styles. That standardisation is part of what makes the model work.
The problem is that very few established businesses actually operate in a standard way. One organisation may need more meeting rooms because of confidential client conversations. Another may need project areas, recording facilities, trading desks, extensive AV, quiet rooms or significantly more collaborative space.
A customisable leased office allows those requirements to determine the space plan.
“We realised we didn’t necessarily need more space.
We needed to use the space better.”
Good workplace design is not about maximising the number of desks that can physically fit onto a floorplate. It is about understanding how people work and allocating space accordingly.
It also means designing for tomorrow. Test fits and maximum-density planning can establish whether an office can accommodate projected growth before a lease is signed, rather than forcing another move when the business adds its next 10 or 20 employees.
3. Greater control: the workplace starts reflecting the operation
Perhaps the biggest practical difference between serviced and leased accommodation is control.
Moving into a leased office creates the opportunity to design around the organisation itself: departments, workflows, technology, acoustics, meeting patterns, privacy requirements, storage, collaboration and future headcount.
“For the first time, the office was designed around how our business actually operates, rather than us adapting the business around the office.”
This is also where we would distinguish a genuinely bespoke leased office from the growing supply of pre-fitted space.
Pre-fitted offices undoubtedly solve certain problems. They can reduce initial capital expenditure and allow businesses to occupy space considerably faster. The market has moved towards fitted and managed products partly because businesses increasingly value speed and cost certainty.
But there is an unavoidable compromise. A pre-fitted space has been designed before the occupier is known. By definition, it has to work reasonably well for a broad range of businesses rather than exceptionally well for one.
The meeting-room ratio, desk density, breakout areas, acoustics, lighting and departmental adjacencies have already been decided. It may look finished. That does not necessarily mean it is right.
For businesses planning to remain in an office for several years, there is greater value in starting with the operational requirement and designing backwards from it.
4. Morale, culture and wellbeing: creating somewhere that belongs to the business
The fourth theme was less easy to measure but came through strongly in the feedback: people respond differently to a workplace that felt like their own.
“It gives us somewhere that actually feels like our company. We are proud to bring clients in and it makes a noticeable difference to the team.”
This has become particularly important in the hybrid-working era. The office now must compete with the convenience of working from home. Employees increasingly expect workplaces to provide something they cannot replicate remotely: collaboration, social interaction, access to colleagues, better facilities and an environment designed around the work they are there to do.
Recent occupier research similarly points towards experience, amenity and workplace quality becoming increasingly important factors in office selection. A bespoke workplace gives the employer much greater influence over that experience.
Culture cannot be created by interior design. But the physical environment can either reinforce it or obstruct it.
5. Permanence: when an office becomes part of the company’s identity
The final theme was a sense of permanence and stability.
“Moving into the new office felt like we’d reached another stage as a business. We have a proper home rather than somewhere we happen to be working from.”
For businesses regularly hosting clients, recruits, partners or other stakeholders, the office is part of how the organisation presents itself.
For a growing company seeking investment or funding, there can also be value in demonstrating that decisions around property, infrastructure and future headcount have been planned deliberately. An office does not make a company investable, nor should property commitments be taken simply to create an impression. But the workplace can provide tangible evidence of how an organisation sees itself developing.
The same applies to client-facing businesses. Reception experience, meeting facilities, privacy, technology and brand presentation all contribute to the impression created before a meeting has even started.
A serviced office inevitably shares some of that experience with other occupiers. A leased workplace gives the company greater ownership of it.
So, when is the right time to move?
There is no universal headcount at which a serviced office suddenly becomes the wrong choice. The more useful question is whether the business is still benefiting sufficiently from the flexibility it is paying for.
If headcount is becoming more predictable, per-desk costs are increasing, the existing environment is constraining operations or the business needs greater control over its identity and client experience, it may be time to model the alternatives.
And that modelling should go considerably further than comparing a serviced-office fee against headline rent.
At Cityspace, we look at the total operational and financial picture: the building, services, space efficiency, growth capacity, design requirements, adaptation costs, programme and potential property liabilities.
Our client review reinforced something we have seen repeatedly across projects: the strongest argument for moving into a leased office is not simply that you get your own space. It is that, for the first time, the space can be designed around the business rather than the business being forced to work around the space.
If you’d like to know more about how Cityspace can help model different options for your next move, please contact us.