serviced offices
Discussion
I've just aquired an office block. It basically consists of 2 seperate buildings, 1 is to be used as HQ for one of my businesses, the other however is not required.
My thinking initially was to just make it open plan & rent it out. Its about 12m x 6m, 2 storey high. However doing it this way I'd be likely to make £10/m2.
I'm now thinking of making into smaller offices, say 5m x 4m, have 6 of them, a reception area, toilets & kitchen & renting them out seperately this way. Financially it seems a no-brainer, however what do people expect serviced units to have & typically what sort of terms do people rent them for ?
It has car parking for 12 vehicles easily (probably more).
It also has a large (7m x 7m) room linking the 2 rooms. Ideal for a meeting room/conference area.
What do your reckon ?
My thinking initially was to just make it open plan & rent it out. Its about 12m x 6m, 2 storey high. However doing it this way I'd be likely to make £10/m2.
I'm now thinking of making into smaller offices, say 5m x 4m, have 6 of them, a reception area, toilets & kitchen & renting them out seperately this way. Financially it seems a no-brainer, however what do people expect serviced units to have & typically what sort of terms do people rent them for ?
It has car parking for 12 vehicles easily (probably more).
It also has a large (7m x 7m) room linking the 2 rooms. Ideal for a meeting room/conference area.
What do your reckon ?
Never fails to amaze me how much people pay for small takes of property, although I suspect much of it is because they are advertised as being £x per week.
Not a clue what people expect and I think requirements vary from business to business. Most will expect some sort of furniture, some will expect telepnony services others won't same with secretarial support.
I also think there is significant demand in most areas just for a single office so that people don't have to work from home. What I have never worked out is how landlords advertise the single offices.
I'd intially try letting it as a single office, without the elements that make it serviced and see how it goes.
Not a clue what people expect and I think requirements vary from business to business. Most will expect some sort of furniture, some will expect telepnony services others won't same with secretarial support.
I also think there is significant demand in most areas just for a single office so that people don't have to work from home. What I have never worked out is how landlords advertise the single offices.
I'd intially try letting it as a single office, without the elements that make it serviced and see how it goes.
Will probably go down the non-serviced route.
Basically I intend to set up the 6 offices each having phone/fax/broadband into them.
I'm not really interested in charging extra for car parking, conference room use, etc & therefore will just charge a monthly rent which means you basically get an office, 2 car parking spaces & use of conference room, etc as & when you require it.
Unsure on rent as yet but would suspect that people would pay £500/month just to have a more 'proffessional' setup than trading from home. I know I would have done when I started, or when I got going a bit.
Basically I intend to set up the 6 offices each having phone/fax/broadband into them.
I'm not really interested in charging extra for car parking, conference room use, etc & therefore will just charge a monthly rent which means you basically get an office, 2 car parking spaces & use of conference room, etc as & when you require it.
Unsure on rent as yet but would suspect that people would pay £500/month just to have a more 'proffessional' setup than trading from home. I know I would have done when I started, or when I got going a bit.
For an office that size Regus would charge about £1300.00 pcm.
However they are mostly in good location, impressive reception area, fully furnished, AC etc.
So it you were to go the whole hog you could charge a lot more I would think.
You need to consider who would be interested. The size your making them is a lot bigger than 1 person would expect. So you could make more smaller offices for ex-home workers or attract 2/4 people companies in the size you are talking about.
You could also contract out the phone answering service and secretarial work to reduce your overhead but still offering full service.
However they are mostly in good location, impressive reception area, fully furnished, AC etc.
So it you were to go the whole hog you could charge a lot more I would think.
You need to consider who would be interested. The size your making them is a lot bigger than 1 person would expect. So you could make more smaller offices for ex-home workers or attract 2/4 people companies in the size you are talking about.
You could also contract out the phone answering service and secretarial work to reduce your overhead but still offering full service.
Yeah, the more I think about it I suspect a couple of people per office. Going rate in area for a fully serviced office is around £6/sq ft.
They will be getting air conditioned, have enough parking for 2 places per office (my parking is covered elsewhere) so think maybe £750-850 per office. Just seems a lot but suppose its not for what you get & the more proffessinal outlook to clients.
I need to do a lot more homework.
At £750/office I'd be making enough to but that DB9 I've always wanted
although I suspect the wife will have something to say about that
They will be getting air conditioned, have enough parking for 2 places per office (my parking is covered elsewhere) so think maybe £750-850 per office. Just seems a lot but suppose its not for what you get & the more proffessinal outlook to clients.
I need to do a lot more homework.
At £750/office I'd be making enough to but that DB9 I've always wanted
although I suspect the wife will have something to say about that
It's possibly better to charge a bit less to get a better tenant! Or alternatively someone I know tends to charge a high initial rent, but then skip rent reviews.
The theory being its better to keep a good tenant who you know pays the rent on time rather than chaging a full rennt and have them leave and the place sit empty for a coupl of months whilst you seek a new tenant.
After all a tenant paying £600 a month for a full year pays £7,200 is better than one tenant paying £750 for 6 months, then not paying for 2 month before you boot them out. Takes a month to relet when you relet for £800 a month and have 3 months of the year left. You have charged this tenant more but actually only received £6,900 in the year.
The theory being its better to keep a good tenant who you know pays the rent on time rather than chaging a full rennt and have them leave and the place sit empty for a coupl of months whilst you seek a new tenant.
After all a tenant paying £600 a month for a full year pays £7,200 is better than one tenant paying £750 for 6 months, then not paying for 2 month before you boot them out. Takes a month to relet when you relet for £800 a month and have 3 months of the year left. You have charged this tenant more but actually only received £6,900 in the year.
by way of a comparison, I have recently signed up to a serviced office agreement with Lenta Properties. I have a two person office with a monthly charge of £250 per desk (so a three person office would be £750pm etc.) Included is desks and chairs, telephone connection, fax line and all running costs & rates. On top of this I have to pay for ADSL which is about £50pm. The building has ample parking and whilst not in the nicest area, it's right next-door to a station and 5 mins away from two major motorways.
The best bit for me though, is the terms are for 1 month at a time. Therefore if things aren't working out I can leave in a month.
Are there a lot of small businesses in your area?
The best bit for me though, is the terms are for 1 month at a time. Therefore if things aren't working out I can leave in a month.
Are there a lot of small businesses in your area?
I think there are a lot of small business in ALL areas.
The offices will be very nice when done up (expect to complete the refurb around March'07).
Would be looking for min. 6 month contracts, but do understand what has been said about the most money not always being the best option. My view on it is that it will appeal to one or two man bands who aren't often in the office but don't want to miss call (possible business obviously) & also want to have somewhere to be able to bring clients whenever they want. The problem is how much are they willing to pay for this service ?
I know when I started out (and still now to some effect), I would have paid £500/month, probably even the £750 per month as at the end of the day it all comes off the bottom line.
With regards to furniture, it was my intention to get it all furnished to a high standard. Looking into this a bit further shows it may be better to lease the furniture as its tax efficient & doesn't mean having to outlay thousands at the start.
The offices will be very nice when done up (expect to complete the refurb around March'07).
Would be looking for min. 6 month contracts, but do understand what has been said about the most money not always being the best option. My view on it is that it will appeal to one or two man bands who aren't often in the office but don't want to miss call (possible business obviously) & also want to have somewhere to be able to bring clients whenever they want. The problem is how much are they willing to pay for this service ?
I know when I started out (and still now to some effect), I would have paid £500/month, probably even the £750 per month as at the end of the day it all comes off the bottom line.
With regards to furniture, it was my intention to get it all furnished to a high standard. Looking into this a bit further shows it may be better to lease the furniture as its tax efficient & doesn't mean having to outlay thousands at the start.
hobo said:
They will be getting air conditioned, have enough parking for 2 places per office (my parking is covered elsewhere) so think maybe £750-850 per office. Just seems a lot but suppose its not for what you get & the more proffessinal outlook to clients.
I guess a lot depends on the location but we looked in the central / South East and everything seemed stupidly expensive so we're still working at home for now.
Apart from the usual office basics, big issue for us is somewhere to have meetings - we're hiring rooms hotels now and that can be very expensive, but the serviced offices charge quite a bit for meeting rooms and they're often heavily used. Also parking - if we have (say) half a dozen people turning up for a meeting then there needs to be somewhere reasonably convenient (doesn't matter if it costs) to park.
Not too fussed about charging for the meeting rooms costs as long as the initial rental figure was quite good. Suppose companies do charge for this so that they can make the initial rental look cheaper.
As for parking, well, there's parking for around 12 vehicles on site & for around 10 more on street, so that isn't really an issue.
As for parking, well, there's parking for around 12 vehicles on site & for around 10 more on street, so that isn't really an issue.
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