The average length of a commercial lease for an office space hadn’t changed much over the years. Back in 2003, the average lease length was 5.3 years and in 2013, it was 4.5 years, and it was the business norm to sign into a long-term office lease. However, since the pandemic, things have changed quite considerably. Now, instead of wanting the security that comes with a lengthy office lease, lots of businesses are looking for increased flexibility and they are searching for office spaces with flexible terms.
When choosing a new office, one of the biggest considerations for all business owners is how long they want to be tied to the workspace and many are concerned about making the right decision in this regard. There are pros and cons to both long-term and short-term leases, and several factors will influence which is best for your business both now and in the future. Below we have explored these factors in more detail and looked into how the average commercial office lease length has changed in recent years.
Factors to consider when choosing a lease length
Typically, short-term leases will be anywhere from 3 months to 3 years and long-term leases will range from 3 years to 10 years plus. A few key considerations for all businesses when deciding whether a short or long-term lease is most suitable include;
Generally speaking, the number of employees and the amount of equipment you have will influence which type of lease will be best for you. It isn’t uncommon for large organisations to still opt for long-term leases as it can be more difficult for them to find office space that is big enough to accommodate their team and still meet all of their needs. Moving office space can cause more disruption to day-to-day operations for large businesses too.
On the contrary, short-term leases can work well for small businesses, start-ups and self-employed individuals. It’s relatively easy for them to find a new workspace should they need to and sometimes, when moving to a short-term serviced office, it will also be fully furnished, making it even easier to start operating in a new space straight away.
Future plans and goals
One of the biggest benefits of having a short-term lease is that you have the agility you need to ensure your office space always meets your specific requirements. For small businesses that have changing needs as they grow and expand, having flexible terms is very convenient. Not only can businesses move into a bigger office that accommodates new employees and equipment, but they can move to a new location as well.
This can be equally as advantageous for larger businesses, however, their needs don’t tend to differ as much year after year, so they may prefer to have a long-term lease. Sometimes, stability is more important to them than flexibility, especially when their workspace requirements are unlikely to change as they don’t have plans to expand in the near future.
There’s lots to consider when it comes to budget and often, how much you spend overall on an office will differ depending on whether you have a short-term or long-term lease. Typically, serviced offices with flexible terms will be fully equipped which will significantly reduce the up-front costs associated with renting a workspace. Whereas, traditional commercial offices will require refurbishing before you can move into them.
As far as monthly payments are concerned, you may find that offices with long-term leases are slightly less expensive than other alternatives, yet they don’t usually have all-inclusive costs. This means you will have to pay for things such as service charges, business rates and utility bills on top of your rent, and this can sometimes result in your monthly costs for a traditional office being more expensive than those for a serviced office.
Why have businesses’ needs changed?
The unprecedented times faced by businesses in 2020 and 2021 have led to lots of businesses looking for more flexibility when renting an office space. During the pandemic, organisations of all sizes had to pay for an office that they were unable to use. Many faced times of financial difficulties too and they were tied into a lease that meant they had to continue paying monthly rent for their office space.
To prevent them from having to do this again should another situation out of their control occur in the future, businesses are looking for increased flexibility. Having a short-term lease can provide peace of mind to businesses that struggled during the pandemic and it gives them the opportunity to adapt their workspace in line with their changing needs. Not having to commit to a space for years to come can also prevent concerns should their financial situation change in the future and they won’t be contractually obligated to pay for a space they can no longer afford.
Trying to find the best serviced offices in London?
Regardless of whether you’re looking for a long-term or short-term office solution, when searching for the best serviced offices in London, get in touch with our team at One Avenue today. We provide a selection of serviced offices with a minimum term of 3 months and a maximum term of 5 years, enabling us to meet the needs of all clients and we can help you to find the perfect home for your business.
All of our buildings also offer unrivalled facilities and we break the mould with our high-quality working environments. You will have everything you need on-site to operate efficiently, from meeting rooms to breakout spaces, and we are committed to providing a world-class office experience. Not to mention, our service levels are exemplary and our on-site teams genuinely care about our clients.
When you rent one of our serviced offices in London, our behind-the-scenes facilitators will take care of every aspect of your office move too, taking some pressure off of your shoulders and enabling you to focus on other elements of your business. To find out more about our central London offices, feel free to explore the rest of our website today.
Rob has worked in the serviced office industry for 20 years and had
experience at a number of providers, allowing Rob to have a objective
approach on the market and its trends over time.