Stop! You Don't Have to Take a Three Year Lease

Monday, 19th March 2018  |  Articles, How To

The Traditional Leasing Model is Changing

Renting office space as a leaseholder hasn't changed much over the years. After lengthy contract negotiations with landlords, going over fit out costs, bond, inclusions, options and reviewing the agreement clause by clause; Leaseholders commit to a finite and fixed amount of space for years at a time.

Leasing is tough

It's easy to get spooked looking at longterm leases. When you look around at commercial office space you quickly notice a couple of things: there's not much of it out there and it's expensive. Vacancy rates are in the low single digits with many older buildings being repurposed for residential use and the pipeline of new office stock pretty thin which puts Landlords in the driving seat.

Get ready for commitment

Signing a commercial lease is a serious commitment. Not only do you need to ensure you've done the best possible job reviewing the conditions, engaging the right legal team and negotiating the best deal. You also need to be sure that you've got your business plans spot on.

What will your business look like in two years time? How many staff will you have? Where will your customers be? How much space will you need?

It's not surprising that with the challenges faced by modern businesses, the property market has evolved to provide solutions for businesses that want to focus on their core business and not worry about office space.

Help has arrived

Coworking and shared office spaces arrived to fill the gaps of the traditional long-term lease model. In fact what used to be considered an alternative is now very much the norm.

So, what are the alternatives to taking a long-term lease and how do they work?


Coworking Offices

Coworking is the term given to a work environment, typically an office, where businesses and individuals from different companies work under one roof. Typically sharing common facilities, lounges and kitchens, meeting rooms and even internet and printing.

Headlease holders earn by renting out space

Coworking spaces are operated by the head lease holder or owner of the building who has taken the capital commitment and risk on renting and fitting out the space. They aim to turn a profit by renting it out in smaller parcels at a higher rate per square foot than they pay.

Often the offices are fitted out to a very high spec to attract and accomodate businesses of all sizes. They offer part time or dedicated permanent desks in open plan shared areas, and dedicated private offices accomodating individuals through to teams of a hundred or more people.

Tenants are referred to as Members, and typically sign up for anywhere from one month a year.

Coworking is big business

Today there are nearly 20,000 coworking centres around the world and some of the big operators are multi-billion dollar companies. WeWork is only eight years old and already valued at over $US20 billion!

Who uses Coworking?

Companies of all sizes use Coworking including behemoths such as Microsoft. In fact, WeWork says that companies with more than 1,000 employees are one of its fastest growing segments and account for over 20% of its membership.

For businesses sharing space in Coworking spaces there are plenty of benefits.

1) Fitted out spaces often in central locations 2) Good quality fit outs with great shared facilities 3) Flexible options and room to grow 4) Shorter duration contracts of 3-6 months and beyond 5) Vibrant office space with many businesses sharing the common areas

But Coworking spaces aren't for everyone, and unless carefully curated, they can feel like a hotel in the sense that you have no control over who else is staying. That's one of the key reasons businesses decide to move on - not knowing who is going to site next to you and the transience of people in some spaces.


Shared Offices

Shared offices are spaces where one business, the Host, runs their normal business from there and are either the owner or have taken the head lease on the property. With permission from their landlord to licence spare office space they're not using they rent to other businesses, their Guests. Typically businesses rent offices by month on a rolling license or 6-12 months sublease and earn Hosts an average of $510 per desk per month.

Hosts tend to offer their unused and spare office space for rent which helps them pay the rent, and keep an office that might otherwise be too large for them.

With outgoings included in the monthly rent, including internet and cleaning, Guests also have access to meeting rooms on a fair usage basis. In fact shared offices look a lot like Serviced offices or Coworking spaces.

Sharing an office provides all the pluses of Coworking and some additional benefits:

1. Location, Location, Location

Since any business with spare office space can be a shared office; the choice of where to set up your business is better than ever. A marketplace such as Rubberdesk provides the platform to find, enquire and book an office exactly where you want it.

2. Like minded businesses sharing space

Businesses that share office space are in control over who they rent it to. And the question most asked is "What does the potential Guest do?"

By curating who rents and shares the office, an ecosystem where like minded businesses can flourish.

That's why we created the curated lists of businesses looking to share office space.

Here's a selection of offices for rent perfect for the small business.

Shared Offices perfect for Small Business to rent by the month There are offices for Accountants, Lawyers, Creatives, Freelancers.... you name it there's a place for you.

3. Long term tenants = fewer strangers and more work mates

Typically businesses stay put in a shared office for years at a time and that means that you're not working in a zoo where strangers arrive and depart everyday. It's more like having work mates around you - who you get to know and trust.

How Businesses Rent Office Space Has Changed

The benefits of working in a shared office are tremendous. Whether a dedicated coworking space or an office shared with another business. As flexible as your business is, often more affordable than a long-term lease and with the benefits of surrounding yourself with likeminded businesses to network and collaborate with.

To find out how you can rent out your spare office space or find an office for your business - check out Rubberdesk. With over 7,500 desks available to rent by the month it is the marketplace for office space.

It's no wonder Coworking and Shared Offices hold the future of how we find a place to work.