Serviced offices is most likely the fastest-growing sector of the European and global property market today with a strong rate of growth, although the global recession has steadied activity over the past few years.
Tony Wordsworth, director of national markets at GVA in Newcastle explained: “Serviced Offices offer a total solution in that they are fully fitted and finished, ready for immediate occupation.
“The operator takes responsibility for all of the services to the building, and in addition provides a range of business services including reception, telephone answering, secretarial support, conference and meeting facilities, video conferencing, and high speed internet access.”
The main benefits of serviced offices include the ability to accommodate immediate requirements for office space in a flexible manner, facilitating fast office set ups and relocations.
This is beneficial to companies needing overspill office space for projects or the need for temporary accommodation during expansion or relocation situations.
Serviced offices and business centres offer real flexibility to businesses allowing internal expansion/contraction when companies encounter frequent changes to their staff turnover.
Wordsworth said: “Flexibility of tenure together with minimal outlay costs for fitting out the office are a good proposition for new business start-ups or companies with a limited history of trading.
“The space is normally occupied by way of a licence agreement allowing speedy occupation and minimising legal costs.
“Office occupiers have had the benefit of access to serviced offices and managed business space across the region over the past two decades. Initially the office space was created on easy in/easy out flexible lease terms which proved advantageous to new and expanding smaller companies who could grow within business centres and benefit from shared facilities and on site management.
“Often this space was carved out from existing vacant buildings such as Churchill House or by subdivision of larger vacant floor plates including Regus in Rotterdam House and the City Executive Centres within Cuthbert House, Newcastle.”
Wordsworth said the concept has also moved “out of town” to major office parks as is evidenced by Regus at Doxford Park and Team Valley as well as the CBX – Cobalt Business Exchange at Cobalt Park, North Tyneside.
The CBX has been developed within the former Siemens/Atmel building adjacent to the A19 offering a range of fully fitted office suites which has secured a high level of occupancy.
More recently at Gateway West Business Centre, Newburn Riverside Business Space Solutions have extended their business centre which was launched in February 2012. The operator reports continuing strong interest from other companies wishing to occupy the serviced offices.
“There is a feeling within the property industry that when there is a reluctance to take space on a long-term conventional lease in the current economic climate a flexible lease/licence agreement takes away some of the major risks in setting up or growing a business,” said Wordsworth
Neil Osborne, of Storeys Edward Symmons, said: “There has been a surge in the popularity of serviced offices over recent years, as the flexibility offered proves very attractive to tenants who have not been able to plan too far ahead in the tough economic conditions.
“Market leaders, such as Regus, are well established in Newcastle and Sunderland, but can be relatively expensive. This has created opportunities for smaller operators to offer cheaper deals. In some cases, landlords faced with empty offices spotted the gap in the market and converted their empty space to serviced office centres.
“These have let well, though they are clearly much more management intensive for the landlord. Local businesses have also benefitted from this better choice of serviced offices.
Alderman Fenwick’s House, one example Storeys Edward Symmons is marketing, offers good quality office suites over ground and three upper floors in Pilgrim Street in the heart of Newcastle. Here both traditional lease and completely flexible packages, on a serviced basis, are available. Rent and service charge figure (excluding rates) are £14.50 per sq ft. Optional add-ons include hiring meeting rooms at between £50 and £100 per day, including the historic Great Room.
Serviced office accommodation is a vital component of the regional office market giving occupiers flexibility, a known cost base and quality surroundings essential for corporate image says Christine Murdock, marketing manager of Grainger Suite and letting agents are Knight Frank and BNP Paribas Real Estate.
New arrivals at Regent Centre’s Grainger Suite are Checked & Vetted and Compusolve IT Solutions with a further new occupier waiting in the wings, Ireland’s Priority Geotechnical, as part of NewcastleGateshead Initiative’s soft landing programme that has been developed to help businesses get off to the best start in NewcastleGateshead and realise ambitions for growth.
Grainger Suite’s recently-opened third phase is bringing a further 4,000 sq ft of office space. Grainger Suite is experiencing over 90% occupancy levels.
“In no particular order occupiers require car parking on-site, parking for their visitors, as well as a range of other transport options such as Metro connections and regional bus services,” said Murdock.
“With rolling three-month rental agreements occupiers are unfettered by traditional leases which gives start-up businesses a clear horizon and cost base so that they have several options from a space perspective as their businesses develop.”