Coworking vs Serviced vs Managed vs Leased Offices: A Comprehensive Guide

Navigating through all the available office space options can be overwhelming. Our guide simplifies this task by breaking down the differences and similarities between coworking, serviced, managed, and leased offices. It addresses pressing inquiries and provides insights into cost implications, services included, and the flexibility of each option. Ideal for businesses evaluating their office needs, this guide helps navigate through the choices on offer to find the best fit.

What is a Coworking Space?

Historically, coworking offices or coworking spaces represent an arrangement where individuals from various backgrounds—from startups to large enterprises—work alongside each other in a shared, well-equipped communal environment. Essential features such as meeting rooms, work lounges, kitchen facilities, and Wi-Fi are included in the cost of the rent. Furthermore, coworking spaces offer exceptional flexibility, making it easy to upsize or downsize a team as needed.

Desks in these spaces are available in two main forms:  

Hot desks, which allow you to choose a different seating location each day, 

Fixed or dedicated desks, which you can rent for personal use over a set period 

While these desks are often available on longer-term contracts, they can also be rented under monthly rolling agreements. 

More recently, the term "coworking space" has evolved to define a flexible office building. Companies like WeWork are recognized as coworking operators. In this context, coworking space has become more synonymous with serviced offices, as detailed in the definition below. 

Work.life, 174 Hammersmith, W6

Well-established companies including Instagram, Uber, and Spotify have originated from coworking spaces. The primary advantage of coworking spaces is their cost efficiency. They eliminate the operational costs associated with long-term lease commitments, office utilities, and furniture expenses. Even large companies like American Express and Atlassian opt to work from coworking spaces to reduce their overhead costs. 

What is a Serviced Office?

A serviced office is fully owned and managed by a facilities management firm, allowing for immediate move-in. These spaces typically offer private offices equipped with furniture. Like coworking spaces, they provide shared access to breakout areas, kitchens, gyms, meeting rooms, wellness rooms, and even game rooms within the building.

Beyond, The Bower, 207 Old Street, EC1 (On Offer: 6 Months Rent Free)

The USP of Serviced Offices 

The major benefit of a serviced office is its hassle-free rental process. You pay a set monthly fee per workstation, which covers all utilities, bills, and day-to-day maintenance, while the on-site team ensures high standards of facility upkeep. Serviced offices are ideal for fast-growing businesses that prefer not to manage facility setup. They attract a variety of business sizes, including large companies like Netflix, Oracle, and Michael Page. 

What is a Managed office?

A managed office is a self-contained space that may include exclusive use of a kitchen, meeting room, and breakout area. This type of office is leased at an inclusive rate covering fit-out, furniture, service charge, rates, and internet. 

Managed offices can be pre-fitted or offered as a blank canvas, allowing tenants to influence the design and fit-out. They generally require a minimum lease duration of at least 12 months, with industry averages extending up to three years or more. 

Landmark, 99 Bishopsgate, EC2

Types of Managed Office Space

Fully Fitted, Self-contained Space: This category is closer to serviced office space, offering pre-fitted accommodations with many of the same benefits. 

Leased Space on a Managed Basis: This option may come fitted or unfitted and is typically available on a leased basis, but can also include services like fit-out, furniture, and IT on a managed basis, often under a short-form lease rather than a full FRI lease. 

Managed offices are becoming increasingly popular for companies seeking private space with flexible contract terms, including everything to avoid heavy upfront costs. They are generally suited for more established companies ranging from 20-200 people.

What is a Leasehold office?

A leasehold office, also known as a leased office, traditional office, FR&I Lease, or DIY Lease, involves renting a property from a commercial landlord, typically for a minimum term of three to five years. Unlike managed and serviced offices, tenants receive the space in 'CAT-A' condition, meaning it is essentially a blank canvas requiring a complete fit-out at their own expense, which can range from £60 to £110 per square foot, including the cost of furniture. 

An FR&I Lease—standing for "fully repairing and insuring"—requires the tenant to pay a service charge to maintain the building and manage the upkeep of any equipment within their space, such as air conditioning, burglar alarms, and fire safety systems.

Ideal For: 

Businesses that have larger team sizes 

Businesses that require specialised fitouts like showrooms or laboratories 

Businesses that desire to design their office space from scratch (common among creative professions) 

Businesses that are capable of making long-term commitments of five years or more 

The contractual period for a leased office space typically ranges from three to fifteen years, with some landlords offering as short as a two-year lease. However, if extensive fitouts are necessary, shorter leases may not be practical for most tenants. When negotiating a lease agreement, multiple legal considerations must be managed. Therefore, tenants should instruct a solicitor to negotiate their lease terms, separate from their agent who handles the headline commercial terms. 

The Paper Exchange, Chichester Street, Belfast, BT1

Differences: 

Coworking vs. Serviced Offices

Serviced vs. Managed Offices

Managed vs. Leased Offices

Coworking vs. Serviced vs. Managed vs. Leased Offices

There are multiple reasons why a business can opt for either of these offices and to give a comprehensive look into what are the advantages and disadvantages of each of these types, we have summarised them for you below.

The Pros and Cons 

Coworking Spaces:

Advantages: 

• No operational costs. 
• Ability to scale up or down depending on team size and needs. 
• Opportunities to connect with other professionals and businesses. 
• Easy to transition from and cost-effective if uncertain future space needs. 
• Access to high-quality printers, Wi-Fi, and meeting areas without additional costs. 

Disadvantages: 

• Open spaces that may lack privacy for sensitive work. 
• No ability to customise space for company branding. 
• Shared environments can be noisy and disruptive. 
• Lack of exclusivity to own brand identity.

Serviced Office Spaces:

Advantages: 

• Ready-to-use which saves time and upfront costs for furniture and equipment. 
• Short term leases. 
• Access to business services such as reception, mail handling, and maintenance. 
• Maintains a corporate image that can impress clients and partners. 
• Opportunities for interacting with other businesses. 
• No burden of maintenance, repairs and facility management. 

Disadvantages: 

• Limited ability to customise and brand the office. 
• Restrictions on scaling up the space quickly within the same facility. 
• Office layouts can be generic and may not fit all types of business needs. 
• Reduced privacy because of shared workspaces.

Managed Office Spaces:

Advantages: 

• Bespoke office space layouts, customised as per own needs. 
• Ease in scalability and expansion of business. 
• Own brand identity attached to the office. 
• Opportunities for interacting with other businesses. 
• No burden of maintenance, repairs and facility management. 

Disadvantages: 

• Delayed move-in times because of fit out and equipment set up. 
• Longer leases in comparison to serviced offices.

Leased Office Spaces:

Advantages: 

• High level of choice in the set-up and design of the office space. 
• A rent-free period at the start of the lease (0.5 - 2 years)
• No burden of unexpected hidden costs from the provider. 
• Exclusive rights to the property. 
• Rent reviews every 5 years, cost certain for a 5 year period.  
• Full protection under UK property law.  

Disadvantages: 

• High up-front costs (fit out, agent fee, legal fees) 
• No additional inclusions such as maintenance or repairs in cost of rent. 
• Responsible for ongoing running costs and repairs. 
• Need to return the unit back to its original state upon expiry of the lease. 
• Sourcing of fit-out and equipment by the tenant.  
• Longer lease periods, difficult to shrink or grow team sizes.

FAQs:

Do you pay business rates in serviced offices? 

Yes, but the cost of business rates is included in the monthly rent you pay to the provider. 

What is included in a serviced office? 

In a serviced office, you can typically expect a good provider to include the rent, wifi, meeting rooms, heating and other utilities, furniture, service charge, business rates, cleaning and security. 

Do serviced offices offer 24/7 access? 

Yes, most providers of serviced offices offer 24/7 access to their buildings. 

How flexible are the lease terms for each office type? 

For a coworking space, you can move out with just a day's notice. For a serviced office, the minimum contract period is usually at least one year. Managed office spaces typically have lease terms of 2-5 years, while leased office spaces usually require commitments of more than five years, though these can sometimes be negotiated. 

What is the difference between a serviced office and a coworking space? 

In a serviced office, you operate out of a private office with shared communal areas such as breakout and meeting rooms but in a coworking space, you do not get a private office space. You can only access desks, pods and communal areas. 

What are the three main types of offices? 

The three main types are serviced, managed and leased. 

What is the disadvantage of coworking? 

Some big disadvantages of coworking spaces is that you do not get enough privacy, no dedicated space for your own office and expansion would be difficult/costlier. 

Are coworking spaces more cost-effective than managed offices? 

If you are a 2-person team with no need for a dedicated office space then yes. However, if you are looking for an office which can house multiple team members then it would be more cost-efficient if you opted for a managed office space.  

What type of companies are best suited for serviced offices? 

Companies which are smaller in size and cannot be bothered to bring in an office manager to deal with all the admin involved in setting up an office space are best suited for serviced offices. 

How do amenities differ across serviced, managed, and coworking spaces? 

The amenities are largely the same in all the three types of offices. However, depending upon the provider, there might be variations on what you can access in a coworking space as there may be charges attached to certain amenities which may not be included in your membership. 

How quickly can I move into a serviced office? 

You can move into your office the next day of signing a contract. 

Are there any hidden costs associated with leased offices? 

There would be no ‘hidden cost’ as such, however the prices you would see online or quoted by an agent would only account for rent, rates and service charge. A tenant needs to think about all other costs associated such as utilities, internet, cleaning, consumable items like tea/ coffee, fit out, SDLT, fit out, deposit. This list is not exhaustive.  

What kind of businesses use coworking spaces? 

All kinds of businesses can use coworking spaces as long as their operations are suitable for  

Do serviced offices come with IT support? 

A good provider will always include Wi-Fi in the cost of rent but any IT support that is within the operational management of the business will not be incurred by the provider. 

How does booking meeting rooms work in a coworking space and serviced offices?

Usually, providers have an online portal or an app via which you can book an available meeting room in the premises, in some cases a tenant may be granted a limited number of credits to use against booking meeting rooms.