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Office options: traditional, serviced office or coworking

by Prop Office on March 15, 2012 in , ,

Traditionally, a company needed an office for employees to work from, to receive and ship goods and for customers or suppliers to visit for meetings. But is this still the only option for companies? Is it the smartest option?

Empty office space

If you set up a company now perhaps your employees (or contractors/freelancers) work remotely or from another country, collaborating over email/skype/instant messenger. Perhaps you do not deal with physical goods – you simply outsource your logistics, warehousing and delivery to a third party logistics provider. You conduct meetings by phone or video conference with customers over Skype and VOIP.

This is part one of a series of articles exploring different office options available to startup companies or existing companies that are considering a re-evaluation of their coroporate real estate strategy. In this series I will cover Traditional Office space, Serviced offices or Executive Suites and coworking spaces.

Traditional Office space

Traditional space is commonly leased from a landlord for a term of at least 2 years and sometimes up to 9 or 10 years when you include renewal options. It is generally provided in a bareshell condition with no furniture or fittings. It is the tenant’s responsibility to design, plan and construct the interior of the office to fit their business needs. Upon termination of the lease the tenant often must re-instate or demolish their interior and return it to the landlord in the original condition in which they received it.

According to real estate consultancy Highwest Hong Kong the cost per square foot for an average office fitout is HK$555-HK$750. Working from this number a 5,000 sqft space will cost at least HK$2.8million to fitout. For a 3 year lease term this equates to a monthly depreciation expense of HK$77,000.

A traditional office space provides predictable rent, a formal tenant-landlord relationship with specific legal rights, the freedom to design and fitout according to your needs and with renewal rights a long stable place from which to operate from.

In the next article in this series I will look at some more flexible office options including Serviced offices and Coworking.

2 comments

[…] Prop Office on March 23, 2012 in Hong Kong, Serviced Office Previously we looked at traditional office spaces. Serviced offices or Business Centres are one of the alternatives to traditional offices. Read more […]

by Office options: Serviced Office | Prop Office Blog on March 23, 2012 at 9:53 pm. #

[…] Prop Office on May 2, 2012 in Following on from our introduction to traditional office space and serviced office space, we will now look at coworking space […]

by Office options: Coworking | Prop Office Blog on May 2, 2012 at 12:07 pm. #