Victoria House, Bloomsbury Square, London, WC1B 4DA
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1st July 2021 | 6 min read
In the third part of our guide laying out the process of searching for workspace, we explore how to go about your search for an office.
Your office search: The options
Having identified and understood the key requirements of your business it’s time to begin the search for office space. There are several routes to take, but maybe one of the most straightforward is to directly contact landlords, office space operators or the agents working on behalf of them. For example, you can email, call or fill in a contact form on the website for LABS’ offices which will put you in direct contact with LABS’ sales teams.
You can also appoint an acquisition agent/broker to conduct the search and negotiate a deal on your behalf. An agent will have access to a central property portal potentially allowing for a more conclusive search and perhaps off-market opportunities, Ed Nicholson, Head of Office Leasing London for LabTech, says.
There are also several online platforms where you can browse and compare available office space, including Hubble and Knight Frank. These websites can show you a range of shared offices, coworking spaces and serviced office space in the location you are interested in. Make sure though, that you fully understand the contract and fee arrangements involved and that you find a broker that will take the time to fully understand your office needs.
To make an informed decision, however, you will also need to visit in person the offices you are interested in. Georgina Willoughby, Landlord Partnerships Lead at Hubble, recommends going to these viewings with questions prepared and a plan to rate the offices as you go around them, as well as to take plenty of photos. “It’s all too easy for different spaces to blur into one,” she says.
“Once you’ve done all of your viewings, we’d recommend debriefing with all key decision makers, so you can analyse the financials and establish whether or not each space meets all of the company’s needs. A scoring system is a great way to ensure that a fair and transparent decision is made.”
This will enable you to narrow down your list of offices. Amanda Lim, Partner and Head of Flexible Office Solutions at Knight Frank, then suggests going on multiple viewings “to really get a feel for an office and its surrounding area. It’s worth inviting different people from the business to view the space, too, so you can get a mix of opinions.”
As previously explained in the first part of our series, you will pay more for greater flexibility per square foot than with a traditional type of lease, which usually come with a minimum lease length of three to five years and can incur penalties for exercising early lease break options.
The higher price of a flexible office contract ensures fewer up-front costs, the fit-out of the space handled on your behalf and a straightforward move in, Georgina explains. “Flexible office contracts do actually have one major financial benefit. They allow you to maintain a more regular and predictable cash flow, as rent is paid in an all-inclusive monthly fee that covers everything and you don’t have to shoulder the hefty upfront costs typical to leased offices. You’ll also save organisational time cost in the long-term, as the office providers (like LABS) will handle the general running of the space on your behalf, so you don’t have to worry about it.”
Amanda points out that the amount and type of space you opt for will influence the cost too. “A lot of the time, businesses think they need to have a private meeting room, which can be expensive, but when it comes down to it, private meeting rooms are rarely used to their full capacity; they’re used for phone calls or quick 1-2-1 chats that could have been had in other parts of the building, like a café or a breakout space.
“With this in mind, it might be cheaper to rent a meeting room when you truly need it, on an hourly basis. You can always start small and grow. Alternatively, if you’re a project team and you know for a fact that you’ll need meeting room space regularly, then go for it.”
She adds: “Everyone always has a list of 20 things they think they need, but I’d recommend challenging that list and separating out what’s a ‘nice to have’ and what’s a ‘must have’. What are the three things you genuinely can’t compromise on?”
However, Ed flags that if you forgo a meeting room in your own space and then meeting room usage by the business will have to be monitored as while you are likely to be given a certain amount of free access through a credit system if you opt for flex or serviced office space there could be additional costs if you do have heavy meeting room usage.
There are many other things to keep in mind too when searching for and shortlisting offices such as that you may need to agree on how the space is returned to the landlord upon the lease expiration date. Usually, the requirement is to surrender it in a similar condition to which it was taken, Ed says.
You should also confirm what access and security provisions there are for a building, including if it is open 24/7; how old the existing mechanical, electrics and plant is and whether its life expectancy will meet the length of your occupation; if the office can handle the power and data requirements of your business or if enhancements can be made, as well as whether the offices you are inspecting reflect what environmental, social, and corporate governance aspects are important to your business.
Also, you should take into consideration when choosing office space any rent-free packages being offered. A rent-free period is generally granted to allow for the fit-out of the space, if necessary.
Financially, you should also be aware that during negotiations to lease office space you could be asked for your business’ audited accounts from the previous three years so that the landlord or lessor can assess the ‘covenant’ strength, which is essentially your financial credibility as an occupier.
Ed explains: “The ‘profits test’ is an industry benchmark test (net profit must exceed the annual rent by three times for three consecutive years) and the landlord or lessor may insist on some form of surety in the form of a rental deposit and/or guarantor if this is not met.”
He adds that if taking a traditional lease rent reviews will be structured into the lease every five years when your passing rent is reviewed against comparable market evidence.
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