Cost analysis

Occupiers are faced with the question of whether to sign for conventional office space or flexible space. Savills Research has developed a model to compare office costs for a company of 50 employees in conventional (using a hypothetical 4,500 sq ft office for 50 employees) and flexible office space (50 licences in a private office).

Savills Research calculates that for a hypothetical office requirement of 50 desks or 4,500 sq ft, it becomes more cost-effective for companies to opt for flex office space over conventional office space for lease agreements shorter than five years. After the five year mark, it becomes more cost-effective for an occupier to choose conventional space. Once all operational costs including rent, service charge, business rates and tenant contribution to fit outs have been amortised over the duration of the lease, a company’s total operational expenditure is fairly even between the two types of agreement.

It should be noted that 50 licences generally means less private office space in sq ft terms, but with access to shared amenity spaces and facilities making office-based working more cost-effective.

During economic downturns, we often see the highest levels of innovation, indicated by higher levels of patents approvals. We anticipate more demand for flex offices from growth companies who are unable to plan for a longer time period and seek both the convenience of a serviced offering and knowledge and expertise from an incubator-style environment.

_{Read the articles within Spotlight: UK Flex Office Perspectives  below.}