The Serviced Office Option

Serviced Office Group Plc, now the second-largest serviced office provider in the UK after Regus, since its purchase of rival Avanta in July of this year, has reported higher revenues for the first half of this year, although its profits were damaged by opening a new location. 

Serviced Office Group Plc opened its new office in King William Street, which is located in the City, earlier this year, and this has affected its accounts in terms of a £1 million loss. This is not a surprise: when acquiring a new property serviced office companies expect to see a loss as they have many costs to begin with – just as their own tenants do – such as leasing a space, funding a deposit as well as an extensive fit-out.  Another issue is the fact that, even though rent-free periods are offered to its tenants, the serviced office company still has to account for its own rent in its income statements. 

The company also has a property at 7 Hanover Square, which it will have to vacate in July 2014. This will affect its vacancy rates but it will receive a compensation payment of £450,000. 

Serviced Office Group is continuing to focus on Central London, which is the most profitable location within the office market. It is able to focus on Central London by raising funds from selling its other freehold properties. 

As Serviced Office Group grows, it will expect its financial results to be rather volatile, but it will hope to see its new strategy working very well in the long term. 

Jo Robinson of MPSO noted, “Serviced offices are a great quick term fix; they are especially useful for start-up companies as they don’t require any kind of deposit – you pay per desk and have the flexibility to leave if necessary, usually with a one- to three-month notice period. However, they can be an expensive solution, so if you can tie yourself into a longer lease and if your future is relatively stable, then a conventional lease is the way to head.” 

Here at Morgan Pryce we have our own serviced office department whose staff can introduce you to available options in the market through all serviced office companies. 

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.