Managed, Serviced and Traditional Offices – What Do They Mean?

Historically, office space acquisition and management was quite a straightforward process. One needed to find a building, sign a lease, do the fit-out and continue running the business.

Such an approach can still work for some companies. However, it is no longer the only way to have a credible and professional office environment.

The modern business has more options than ever. It can choose a traditional lease and build the office around its specific needs. The company can go for a managed office and get privacy and customization without managing every aspect of the operation personally. Alternatively, one can take a serviced office that is ready to use immediately, with a single monthly payment and no need for commitment.

Apart from the price tag, such an office decision affects cash flow, flexibility, team culture, client experience, recruitment and reaction capabilities of the business to the changes.

Workplace is not only the place where the team sits between 9 AM and 5 PM. It is the operational tool that can help the business to flourish and can become a source of problems for many years if it is chosen badly. Thus, it is vital to understand the difference between serviced, managed and traditional office space models.

What do the three options actually mean?

The terms may confuse because providers do not use the same language. Flexible office might be either serviced, managed or both. The point here is not in the term, but in the content.

Serviced offices

Serviced offices represent a plug-and-play office solution.

The company gets a private office, a suite or a number of desks in the professionally-managed building. Usually, such an office comes furnished and operates immediately after taking possession of the space. Internet connection, utilities, cleaning, reception services, access to the meeting rooms and amenities for all tenants are already included in one monthly fee.

The agreement with the service provider is usually the licence and not a commercial lease. As a result, the commitment to the office is usually shorter. Under some conditions, a company can start using a serviced office almost immediately.

This solution is perfect for start-ups, project teams, businesses entering a new market or the growing ones that are not willing to spend months arranging the fit-out, utilities and office furniture.

On the other hand, there is less control over the building as a whole.

Lobby, common areas and overall experience of the guests belong to the office operator, not to the tenant. The tenant gets its private office but is still a part of the whole environment.

Managed offices

Managed office is the middle way.

The company gets a private workspace that can be designed according to its wishes. At the same time, the operator is still in charge of the facilities of the office. The business has its own branding, private meeting rooms, kitchenette, etc., however, it does not have to organize all services and suppliers separately.

Such an approach can work great for businesses that have outgrown a simple serviced office arrangement but are not yet ready to take all responsibilities of the traditional lease.

Usually, a managed office looks more like «your own office» compared to a serviced office. However, it can be tailored specifically for the team work style, client experience and corporate culture of the company. Moreover, the costs are usually predictable unlike a traditional lease as many operational expenses are included into the monthly payment.

The commitment to the office usually lies somewhere between the short-term serviced office licence and a multi-year traditional lease. Managed offices are suitable for businesses that want to have stability in the office and do not want to commit to the property decision that might not work well for them in three or five years.

Traditional offices

The traditional office is what comes to mind when people hear about commercial property.

The business signs a direct lease on a property that is usually a basic shell office or the office of a higher level. Usually, the business is responsible for the whole fit-out procedure, including design work, partitioning, furniture, cabling, meeting rooms, kitchenette, IT infrastructure, access control and branding.

The benefits of such a model are obvious. The tenant gets maximum control over the building that can be used in accordance with the specific needs of the business.

However, such an office brings many risks and responsibilities. Traditional lease usually involves a longer commitment, more complicated legal procedures and bigger upfront investments. The company needs to know all about rent, service charges, business rates, insurance, fit-out expenses, utilities, maintenance, dilapidations, etc.

It does not mean that a traditional lease is a bad decision.

It is only important to understand whether this model suits the business or not.

Financial aspects go beyond the price tag

Rent is the first figure that the companies compare.

At the same time, it is not the most complete one. Rent might look lower in a traditional office. However, it is only a starting point.

Besides the rent, businesses should consider business rates, service charges, insurance, utilities, internet, cleaning, repairs, maintenance, furniture and expenses related to the management of these services.

Then comes the fit-out.

Even a basic shell office may require the considerable investment to turn it into a functional one. The company may need to hire designers, contractors, to buy desks, meeting room furniture, soundproofing materials, cables, light and IT equipment, and create branding elements.

Such a fit-out process can take time and resources from other important things.

It does not mean that every business should try to avoid upfront expenses. Sometimes, it is the right decision.

If the business plans to stay in the same building for a long period, it may decide that spending money on making the workspace according to its specific requirements is worth the investment.

However, it is important to distinguish between low monthly rent and low cost of occupation.

The predictability of expenses is one of the benefits of serviced and managed offices. More expenses are included into one monthly payment and there is no chance to get an unexpected repair bill, delayed broadband installation or increased service providers’ prices.

Thus, the monthly payments are more predictable.

For a business focused on cash flow, such predictability becomes very important.

It is not about «the cheapest office», but about «what does this office require us to pay for».

The flexibility is the necessity, not the luxury

One of the biggest differences between the office models is the difference in the contractual terms.

A traditional lease involves a long-term commitment. Lease terms differ, but usually, a business commits to staying in the building for several years under the contract that cannot be just abandoned if something changes.

It is a reasonable decision for a business with a stable number of employees, clear plans and good reason to stay in one location. For businesses that hire employees rapidly, enter new markets, reorganize or understand what hybrid working really means it might not be so reasonable.

Serviced office can be more flexible in this case.

Most service providers offer short-term agreements and flexible opportunities for expansion or reduction of the occupied space. The company is able to add desks in case of new teams appearance, enlarge the office in case of the increased headcount or reduce its size in case of a project ending.

It is necessary because forecasts are not guarantees.

A company might forecast that it will grow from twenty to forty employees during a year. It can happen. However, it may not. A traditional lease obliges the business to decide whether to pay for extra space or risk outgrowing a building before the lease finishes.

Managed offices can give a good middle ground. They provide more permanent and customizable solutions than typical serviced offices, but at the same time, they allow more flexibility for negotiations than typical direct lease.

The right model depends on the business’ expectations about its future.

Business with a stable number of employees and long-term local presence might benefit from a traditional lease. On the other hand, growing business with a constantly changing number of employees or a hybrid working pattern might need the flexibility more than the control.

Hidden effort of managing the office

Traditional office gives control, but it also implies many responsibilities.

The internet connection needs to be organized by someone, heating should be repaired somehow, cleaning missed by a cleaning contractor should be taken care of, and broken meeting room screen five minutes before the important client presentation needs to be fixed.

All of these actions are not impossible, but they require time, attention and internal resources.

In a serviced office, most of these issues become a responsibility of the operator.

Building team manages utilities, maintenance, cleaning, reception and common areas. Thus, a business can concentrate on its core activities rather than on the mechanics of the office.

Managed offices offer a similar benefit providing more control over the office itself.

It is easy to underestimate such an advantage unless a business experiences it personally. A person responsible for operations of the office may be quite capable to manage service providers and other office-related things, but it is still important to think whether this is the best use of his/her time.

For the small businesses, the answer may be negative.

The more time and effort are spent on the office management, the less time internal people have to concentrate on clients, recruitment, systems, culture and growth.

Speed and location can give a competitive advantage

Sometimes, the office decision needs to be done quickly.

The business may get a new client and need additional office space. International company may need a London office to establish its presence there. A growing company may want to stop home working but do not want to wait for six months to finalize a lease and fit-out of the office.

These are the cases when serviced office becomes really handy.

It allows the business to quickly create a professional presence in the building without waiting for the fit-out process and without spending lots of time for property searching. Such an office includes meeting rooms, staffed reception, reliable connection and the well-managed office.

Serviced office space in london is a good solution for the businesses that do not want office management to be their priority, but want a professional presence and quick response.

Location is important as well.

Central or conveniently connected office can make recruiting processes easier, reduce the friction for client meetings and create a more comfortable experience for teams coming there once a week. In some industries, the right address is still important. It can influence how the clients see the business before meeting begins.

A flexible office model can become a solution in this case, allowing a business to create a presence in the desired location even without a big investment into office management.

Branding and culture are among the important factors in office decisions

Office space represents the message.

For some businesses, the serviced office represents all they need.

It is clean, professional, well-managed and easy to use. Clients are welcome, the meeting can be held and the employees can work efficiently.

For other businesses, office is part of the brand.

Creative agency may need a space reflecting its unique identity, while law firm may require a more private atmosphere. The company with a strong culture may want its own meeting rooms, its unique visual identity and unique way to welcome guests.

These are the reasons why managed or traditional offices become the better option.

Managed office allows getting a private entrance, a personalized layout, unique design and a high level of control over the office experience. It is more permanent than a serviced office, but does not imply the same level of control over the whole building.

A traditional office goes further in this regard.

It gives the business total control over the environment.

This control can be beneficial when the workspace helps the business to deliver its product, service or client experience. However, it is important to realize whether this control is needed.

Not every business needs the custom-designed office space with branded walls and bespoke furniture.

Sometimes, a well-managed serviced office is enough.

The problem of scaling that most businesses do not plan

Growth creates a challenging question: should we take enough space for our current situation or for our future development?

Taking more space means the unnecessary expense.

Taking too little may imply the outgrowing of the office before the lease expires.

This is one of the main reasons why flexible office space becomes popular.

Serviced office makes it easy to scale or reduce the occupied space according to the changes.

The team can take a bigger suite, add more desks or move to another part of the building without repeating the property search process.

Managed office can also provide the same advantage, especially when a provider has several offices within the same building or portfolio.

Traditional office is less flexible in this regard. It can work great for the businesses with stable office requirements, but cannot be scaled in case of changing directions.

However, the issue is not only about the desks.

Growing company may need more meeting rooms, better collaboration area, secure storage, client areas, rooms for private discussions. The office that is suitable for twenty people may not be suitable for thirty-five ones, even if there are enough desks.

This is why it is important to plan the office space based on work processes, not on the current headcount.

Think about the exit before signing the agreement

Exiting the office is one of the least exciting parts of the office decision-making process, which is exactly why it is usually ignored.

Traditional lease may involve the obligations about the state of the office upon exiting, such as repair, restoration and dilapidations. If the business modified the office space, installed partitions, altered light fixtures or did any other fit-out works, it will have to restore the original state of the office upon leaving.

This procedure can become costly unless it was thought about.

Serviced and managed offices usually involve less exit costs because of the lesser responsibility of the occupier of the office.

Once the agreement is over, the business leaves the office and office operator restores the state of the office for the new tenant.

Again, this fact does not mean that traditional leasing is a wrong decision.

It just means that it is important to understand the full responsibility of the business.

Every company should know about the consequences of the office exit before signing anything.

Selecting the appropriate office model

There is no universal office model that will suit all businesses.

Twelve-person start-up, regional professional services firm, growing tech company and global corporation establishing its first British office have different needs.

Serviced offices are usually the best choice for businesses that need speed, flexibility, predictable costs and professional office without operational efforts.

Managed offices are a good fit for the organizations that need private and branded office space without all responsibility of the traditional lease.

Traditional offices can be appropriate for businesses with stable office requirements, special technical requirements, clear plans and the reason to invest in their environment.

The proper office model is the one that will serve the current business and give enough room for the future one.

Proper office management should not be the limitation to hiring, cash flow and commitment to the past decisions. When used properly, it can become the asset: place where people collaborate, clients feel comfortable and the business has the room to grow.

The question is not which of serviced, managed and traditional office space is «better».

It is about which one gives enough control, flexibility, cost predictability and confidence to move forward for the business.