Leased Versus Serviced Office Case Study
To provide a clearer picture of the key cost differences, we compared like-for-like offices in the same building and with similar quality fit-outs. In doing so, we assumed a team of 18 wanted the same-sized office to sit in. However, for the leased option the team wanted a boardroom, a meeting room, and a kitchen included, while for the Serviced office they were happy to use the meeting rooms on a pay-as-you-go basis.
Here is a comprehensive comparison of this case study.
Summary
The like-for-like comparison in the case study examines actual costs of real-world examples within the same building where the leased office is offered to the market by the landlord through their agent and the serviced office by an independent operator.
The Leased Office Term is 3 years while the Serviced Office term is 12 months.
Monthly cost of ownership: All costs and outgoings have been included in the analysis right from the way down to printing and wifi costs. The total monthly cost (Gross Rent + Services + Meeting Rooms + Printing) is $19,079 (Lease option) or $21,526 (Serviced option). When all costs are considered the Lease saves $2,447 /month or 12.8% compared to the Serviced Office.
One-off Costs differ between the two options, with Fitout and make good costs accounting for the greatest difference. These may vary depending on the incentives offered by the Landlord.
Bonds are another big difference between the two with Leases tying up a greater amount of capital, in this example $209,300 versus $7,200 for the Leased and Serviced Offices respectively.
Finally, the length of term and flexibility is perhaps the greatest difference between the two options. While the Serviced Office term considered below is for 12 months the Leased office extends to 3 years. For companies facing less certainty about the future, this is often the greatest consideration when deciding.
Ask yourself these 4 questions to help make the decision between a serviced or leased office.
Case Study: Leased versus Serviced Office for 18 people
| Outgoing | Serviced Office | Leased Office |
|---|---|---|
| Location | Sydney CBD | Sydney CBD |
| Building | A Grade | A Grade |
| Description of private space | A 96 sqm private office. Fully fitted with seating configurations as required for a max of 36 staff. 5 sqm/person is quoted for an occupancy of 18 staff | 90 sqm open plan office with seating capacity for 18. Plus: Private and exclusive use of 10 person boardroom with AV, Kitchen area with seating for 8, 8-person meeting room, 2-seat breakout, and print services area |
| Dedicated Floor Space (The private area of your office Excluding any shared areas and facilities) | 96 sqm | 182 sqm - Half open plan desk space and half meeting rooms + Kitchen |
| Office Seating space per person (Assuming 18 staff and excluding meeting room and kitchen areas) | 5 sqm / person | 5 sqm / person |
| Additional Shared Facility Access | 4-person meeting room (shared), 6-person meeting room (shared), 10-person meeting room (shared), Staffed reception, 2-seat breakout space, dry kitchen with seating for 5, print services area with printer included | None |
| Total Monthly Cost (Gross Rent + Services + Meeting Rooms + Printing) | $21,526 | $19,079 |
| Gross Rent / month (Net Rent + Outgoings) | $17,766 | $18,276 |
| Services (Internet / electricity etc) | N/A | $750 |
| Meeting room costs (Based on 2 hours of meetings per day) | $3,654 | N/A |
| Printing Costs (Based on 50 pages of black and white a day) | $106 | $53 |
| One-off Costs (Set up, Fitout, Make good) | $7,200 | $209,300 |
| Bond/ Bank Guarantee (Held in Trust) | $35,532 | $109,655 |
| Monthly ongoing costs: | ||
| Rent | Included | $1000 / sqm pa |
| Council and Government taxes, Water and Sewage rates, Strata fees, Land tax, Insurances, Property services - eg pest control and security, Property management fees, Maintenance costs (gardening, window cleaning, air-conditioning | Included | $200 / sqm pa |
| Cleaning Tenant and common area | Included | $30 / sqm paa |
| One off Costs: | ||
| Fitout and furnishings / set up cost | $100 / person | $900 / sqm |
| Make Good | $300 / person | $250 / sqm |
| Bond & Bank Guarantee | 2 months Gross Rent | 6 months Gross Rent |
| Services: | ||
| Internet & Wifi & Telcos | Included | $500 / month |
| Gas and Electricity | Included | $250 / month |
| Print / Scan facilities | ~$0.10 / sheet | ~$0.05 / sheet |
| Meeting room access (averaged across meeting room sizes) | $87 / hour | N/A |
| Reception services | Included | N/A |
| Other Considerations (Insurance requirements) | Base legal requirements for your company | $20m Public Liability + Plate Glass |
Source: Rubberdesk case study taken from pricing as of September 2021 based on actual market prices.
Case Study Notes
Leased Office
- Leased options give unlimited access to meeting rooms.
- Customers of Serviced Offices can bring their own printer if they foresee heavy usage.
- Leased options often provide incentives that act as contributions towards the fit out of an office.
- Return the Bond or Bank Guarantee if there is no break to the contract.
Serviced Office
- Serviced offices give options for dedicated meeting rooms which may be preferable to Pay as You Go options.
- Return the Bond or Bank Guarantee if there is no break to the contract.
Summary - Leased or Serviced Office?
The truth is, one option is not always better than the other. However, there are circumstances where one option will likely be a preference. And if there isn’t a clear winner then you should consider both options.
Using the chart below, ask yourself these 4 questions to help make the decision between a serviced or leased office.
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