The 3 Benefits of Renting Flexible Office Space
Workspaces with flexible lease terms have become all the rage in the last couple of years. Businesses ranging from one-man startups to more established SMEs are reaping benefits that flexible spaces can bring them on multiple fronts. Even big landlords like Lendlease and Capitaland, who are primarily known for a portfolio of “traditional” office spaces in Singapore, have recently launched coworking projects of their own in response to this shift in the real estate market.
What exactly is “flexible space” and what are the key benefits of this relatively new category in the world of workspace? True to its name, a flexible office allows businesses to take more or less space when they scale up or down, respectively. The primary types of flexible space are coworking spaces and serviced offices. We previously discussed the key differences between coworking spaces and serviced offices. In this article, we give an overview of the 3 main benefits of going flexible.
1. Prepare for uncertainty and change
When you rent out a flexible space, you essentially pay for as much as you use. Monthly rental is priced per head, meaning that a coworking or serviced office package is customised according to your stage of growth. This system is especially helpful for SMEs, who can often experience sudden fluctuations in headcount that may impact how much workspace they need at any point in time. On the other hand, traditional office leases are set at a fixed price per square foot over at least 3 years, meaning that they are best only for businesses with stable headcount projections in the long term.
Additionally, for corporates and enterprises, flexible space and long-term space do not have to be mutually exclusive. In what is known as the “core and flex” setup, businesses may take a traditional office lease for their company headquarters (the “core”), while also taking up additional flexible space (the “flex”) in other locations as a way of testing new markets, establishing satellite offices, or connecting specialised teams with more resources and networks. In this way, businesses get the option to experiment and “mix and match” their workspace options for the ultimate flexibility.
2. Keep your overhead costs low
When it comes to leasing a traditional office, several costs come to mind: upfront costs for fitting out the space, maintenance costs, and utility costs — and that’s on top of the hefty time required (typically several months) to get a bare unit into shape. At a flexible space, you don’t have to worry about shouldering these costs. Flexible spaces are fully-fitted with the necessary amenities, including desks, chairs, carpeting, as well as other shared amenities like printing services and a pantry space.
In the Asia Pacific region alone, the average flexible office is 10-30% less costly than a traditional office space — and this difference applies to prime business districts! For a private office for 10 leased out over 3 years, this different could amount to more than $30,000 in cost savings. Although the rent for a flexible office may be more expensive than a traditional office of the same size (on a per-square-foot basis), the total package for a long-term lease may be more expensive overall due to fit-out costs. As of 2018, Singapore has the 4th-highest average office fit-out cost in the region, amounting to approximately SGD $130 per square foot. Given a bare 900-sqft. space – a size suitable for a headcount of 10 – the average total cost for fit-out could be approximately $117,000!
To see a breakdown of a real-life cost comparison, check out our case study on a boutique financial consultancy that moved from a traditional office to a coworking space. In doing so, the company was able to save a great deal on overhead costs and minimize their real estate spend.
3. Attract and retain engaged employees
As shared spaces, many flexible spaces offer private office solutions complemented by hotdesking areas, wide breakout spaces, and facilities that encourage social interaction. Coworking spaces, in particular, are known to stress the importance of fostering a community of like-minded members who can support each other’s growth. Found8, for example, is an established coworking brand in Singapore that strengthens its community of startups through Lunch-and-Learns, innovation talks, and even weekly massage sessions!
These perks of a shared space can go a long way in improving employee satisfaction, and in turn, talent retention. In a 2018 survey of 160,000 employees in Singapore, 67% identified having a pleasant work environment as one of their top criteria for choosing a job. While company culture matters, being a part of an open, community-focused workspace is a great first step. In fact, a study by Steelcase found that the ability to move around a space, choose from different workstations, and interact with others is positively linked with employee engagement.
The world of flexible space is still in its infant stages. While traditional offices still dominate the market, we can expect coworking spaces and serviced offices to continue gaining traction. Every year, the demand for flexible space has been increasing by 10-15% in the Asia Pacific region alone. While startup-oriented brands like WeWork and JustCo have set the initial tone for what this type of space entails, newer operators like Lendlease’s PLQx are starting to offer flexible solutions to more corporate, enterprise clients.
Whether you are a small startup or a fast-growing SME, there are flexible workspace options for everyone. At the end of the day, workspace has become more than just a physical environment – it’s an ecosystem focused on building an engaged network of like-minded people.