Finding the ideal office space is vital for office dynamics

Whoever said moving house was the most stressful experience obviously never moved offices. Or, more precisely, moved their business into an office for the first time. If you are one of the 10,000 women who, according to networking group Prowess.org.uk, set up their own business last year, chances are you started out in the spare room, garage or even garden shed.

Just as there is a ‘crunch point’ when a business turns from being a profitable hobby to a full-time occupation, the transition from spare room to a separate address is similarly daunting. To assume that renting an office is largely similar to renting a flat is not only wrong, but could end up costing you thousands – and even threaten the viability of your business if you make a mistake. Considering that property costs are the second largest overhead for the majority of all UK companies after salaries, it pays to think ahead.

Here is our guide to making the right move.

Size matters
Never mind the metric system – the UK property industry still measures office space in square feet. As a general rule of thumb, you will need a minimum of 100sq ft for each person you employ. This allows space for a desk, workstation and a small amount of storage. A 200sq ft office suitable for two people is roughly the size of a single garage, and a 1,000sq ft office suitable for 10 people the size of the six-yard box on a football pitch.

Counting the costs
The cost of rent is also calculated using square feet. A rental advertised at £15/sq ft means you will pay the landlord £15 per square foot of office space you occupy per year. This is generally charged in quarterly instalments, which you pay in advance and can be a large lump sum for a small business to find, especially when you consider the hidden costs.

In a conventional business lease, the rent does not usually include business rates [box out- What is a business rate?], utility bills or service charges. The latter is charged by the landlord for managing and maintaining the “common parts” of the property. Be warned – it will be higher in older properties, and those with air conditioning or lifts, which require expensive maintenance contracts.

Location, location, location
Like everything in life, you get what you pay for. In big cities, proximity of access to public transport is key, and in outlying locations, parking provision is often the clincher. Do not be swayed simply by your own needs (i.e. ‘it is around the corner from my house’). Think carefully – where are your competitors based? Where are your prospective clients based? If you are hiring staff, consider not just the transport links, but also the local amenities. Is there a coffee shop, and sandwich bar, or a pub? Will it be safe for female staff in particular to walk from the office to the station if they work late?

If you share the building with other companies, take a critical look at how common areas like reception, entrance hall and so on are maintained. Your clients will not be impressed with dying plants and piles of post gathering dust. However, sharing can be an added benefit if neighbouring firms ‘fit’ with your line of business – you could end up winning some work, or forging a new partnership.

Now you have an idea in mind of where you want to be based, how much space you need, and how much you can realistically afford, it is time to move to the next level – finding a landlord. So much emphasis is placed on finding the right property, that the crucial relationship with your landlord is often neglected. And if you are a small, growing business, you need your landlord to be as flexible as possible.

Unlike leasing a flat, standard commercial property leases are much longer – 10 years or more for a large office – and very tricky to get out of once you have signed on the dotted line. Predicting the growth needs of your business is notoriously hard. If your business thrives, you may need space for 20 people. And if it does not grow as quickly as expected, you are paying for space you do not need.

Serviced space
The concept of the ‘serviced office’ established popularity with small businesses for this very reason. A cross between an office and a hotel, businesses can rent anything from a small room to a whole floor and pay rent on a monthly basis. Although the rent is typically 15-20% higher than renting a conventional office, it includes everything, and there are no hidden extras. Serviced office space comes ready-wired, complete with IT and office furniture in most cases, and phone lines.

‘If you’re a business of less than 10 people, it is never going to be cheaper or sensible to lease a conventional office,’ argues Robert Hamilton, managing director of Instant Offices, which lists tens of thousands of serviced offices across the UK on its website. ‘You can go and see a suite, and be working there the next day,’ he says. ‘There is no lengthy legal process – just a one page document usually – and no lengthy commitment. The landlord won’t spend weeks assessing your credit worthiness.’

For those in search of more conventional office space, one of the UK’s biggest small business landlords is Workspace Group. Owning thousands of office suites, studios and industrial units within the M25 area, it offers flexible leasing deals, has a clever ‘Space Matchmaker’ tool on its website – plus the added security of being listed on the Stock Market. Another major small business landlord worth checking out is Spacia. Responsible for leasing out more than 8,000 properties across the UK, it too offers flexible deals for smaller users, and has a great internet search tool.

A guiding hand
Whether you find yourself negotiating with an established company, or a private landlord, consider taking professional advice. ‘Most people confuse chartered surveyors with estate agents, which is wrong,’ says Lillian Chandler, director of one of the UK’s largest property services companies, Jones Lang LaSalle. ‘People find it hard to see the value of a surveyor, because they don’t understand what we do. But if you’re looking for an office, workshop or retail unit, this is our market place, and we are trained to give you the best professional advice.’

Chandler emphasises that it’s not just about finding a premises, but negotiating the complex legal points where a surveyor justifies their fee - which is typically 7% of the annual rent of the property you lease. ‘When drawing up a lease with a landlord, a chartered surveyor can negotiate on your behalf,’ she explains. ‘They could maximise your flexibility by writing in a provision to sub-lease your property if it outgrows your needs, for example. Above all, they will save you time – liaising with the landlord, lawyers and fit-out companies while you get on with what you’re best at – running your own business.’

Moving up
Interior designer Birgit Klein founded her own business two years ago. ‘I started off at home, as I wanted to be competitive with my fees,’ she says. ‘However, because of the market I’m in – designing high-end residential interiors – I couldn’t really have meetings at home with clients, suppliers and builders.’

Asking around in her West London neighbourhood, Brigit heard of an office she could rent in a converted residential building, sharing with other small businesses. ‘Not only was it expensive, I wasted loads of time,’ she recalls. ‘Once I’d moved in, I had to sort everything out myself, like internet access and BT lines.’

Determined to move somewhere more suitable, Brigit was put off taking a conventional office lease, as it was a large financial undertaking, and she was nervous about committing to a 10- or 15-year lease. After a chat with a friend who happened to be a chartered surveyor, she cottoned on to the serviced office concept.

‘I am now renting a serviced office in Chelsea Harbour and I’m very happy here,’ she says. ‘Yes, it is more expensive to rent than a normal office, but you get more than just the office. I don’t have to worry about post, deliveries, the phone lines, and there’s even an IT helper on call for computer problems.’

‘If I move again in the future, I will definitely take professional advice.’
What is a business rate?
National Non-Domestic Rates (NNDR), or Business rates, are set by the government and collected by the local council on their behalf. They are calculated by multiplying a property’s Rateable Value (worked out by an officer from the Valuation Office Agency) by the non-domestic multiplier – the rate in the pound that is set annually by the Government. The provisional rate for 2008/9 is 45.8p for small businesses. Generally business rates are payable on most commercial property, such as shops, offices, factories and restaurants.