December 19, 2001—The economic benefits of serviced offices have changed says international operator Regus. They are now more cost-effective for longer periods, for larger numbers of people and for more locations.
The claims are backed by a new report from the Chartered Institute of Purchasing & Supply (CIPS) based on figures supplied by Regus. The survey updates similar research carried out five years ago. It shows that, whereas in 1996 a ten person serviced office in the City of London, occupied for 36 months, would be 6% more expensive than a conventional lease, those same ten people would today make a 10% saving by using a serviced office.
More significantly, says Regus, a serviced office for 40 people in London today would be 3% cheaper than taking a conventional lease, compared with being some 47% more expensive five years ago.
Although rising rents will have helped to make the case for wider use of serviced offices, changes to the companys pricing model have also shifted the comparison in favour of Regus.
Regus reported a 10.6m operating loss for the three months to September. The company has responded to the downturn by reassessing its business model and pricing. Previously customers paid the same amount per workstation regardless of how long they sign-up for. Now Regus is discounting prices for longer-term contracts. Last month, chairman George Gray said the new strategy was yielding benefits, with the third quarter seeing substantial increase in the number of workstations occupied.
“Our research clearly demonstrates that serviced office space has now become a truly cost effective option in all scenarios,” comments Carolyn Munton, CIPS director of marketing & communications. “Whereas five years ago our research revealed it was only really cost-effective in relatively low cost areas, such as Birmingham, or for short periods of time, this new research proves it can now achieve worthwhile long-term savings too.”
The report takes into account all occupancy costs, such as rent, furniture, office equipment, electricity and cleaning. Term periods of between 1and 36 months and numbers of people between 1 and 60 were used as the basic criteria for evaluating cost.
Findings show that serviced office accommodation can provide savings over traditional occupancy methods in all scenarios, with average savings of up to 78% being achieved across the eight locations surveyed. Actual savings vary depending on location, length of occupancy and the number of people to be accommodated, but the survey highlights savings of between 2% and 62% in a high cost area such as the City of London, while savings of between 14% and 91% can be achieved in a lower cost area, such as central Birmingham.
Copies of the True Cost of the Flexible Office report can be downloaded from Regus.
Reprinted with permission; copyright 2001 i-FM
