Cost Comparisons - Serviced Offices Vs Traditional Offices

"The popularity of serviced offices can be attributed to the tremendous levels of flexibility provided and to just how easy they are to occupy. In many cases they are also substantially cheaper than conventional space."

Cost Comparisons

With serviced offices, you only pay for the space you need and the services you use. Unlike conventional leases with their inherent hidden taxes and costs, all fixed costs of your serviced office are covered in a monthly payment to the business centre management.

Whilst costs may look high initially, the rent you pay includes almost all of the hidden costs that you would normally expect to pay on top of rent in a traditional office. There are no additional costs for business rates, light & power, security, cleaning, building & plant maintenance, insurance, etc. Neither are there charges for furnishings which are normally the latest workstations with chairs, filing systems and tables for conference / meeting rooms, and all Central Offices locations are fully fitted out with CAT5e / CAT6 cabling (including WEP / WPA-encrypted high-speed wireless LAN functionality) for integrated voice and data networking. In addition, traditional cost per sq. ft. can be misleading because you find you need far less sq. ft. per person in a serviced office than in a traditional office. This is particularly true when rates quoted for Central Offices excludes common areas like meeting rooms, common corridors and the pantry, which needs to be factored separately in traditional leases.

78% Cost Savings For Serviced Offices

Independent studies by the Chartered Institute of Purchasing (CIPS) in UK in 2001, 2002 and 2004 showed that serviced offices can provide cost savings of up to 78% when compared to a conventional lease option. Equivalent savings have also been found for other countries like Singapore (see below). A Central Offices serviced office thus provides speed, convenience and also significant cost savings over time.

Comparison of Traditional Leases and Serviced Offices in Singapore

	Traditional Lease Option	Serviced Office
A) One-Off Start Up Costs	S$	S$
- Agents/Surveyor/Legal Fees	~ 1,500	Inclusive in Rent
- Fitting Out (Carpets, Partitions)	~ 5,000	Inclusive in Rent
- Air-Con Upgrades	~ 5,000	Inclusive in Rent
- Mechanical & Electrical Works	~ 5,000	Inclusive in Rent
- Furniture & Equipment	~ 10,000	Inclusive in Rent
- CAT 5e Cabling	~ 2,000	Inclusive in Rent
- PBX & Telephone Systems	~ 5,000	Inclusive in Rent
- Connection & Lease Terms with National Telecom Operators	~ 1,000	Inclusive in Rent
- Staff Recruitment Fees	~ 1,000	Inclusive in Rent
- Removal Fees	~ 2,000	Inclusive in Rent
- Management Time to Oversee All Above Processes	Up to 6 months	Not Required
Total	>S$37,500	S$0

B) Monthly Recurrent Costs	S$	S$
- Rent (2-3 persons)	1,500-2,500	1,000-4,000
- Rates & Service Charges	~ 250	Inclusive in Rent
- Building Insurance Fees	~ 200	Inclusive in Rent
- Property Taxes / Stamp Duties	~ 500	Inclusive in Rent
- Light, Water & Cleaning Costs	~ 500	Inclusive in Rent
- Accountancy & Admin Costs	~ 300	Inclusive in Rent
- Building & Equipment Maintenance Costs	~ 200	Inclusive in Rent
- Furniture & Equipment Depreciation Costs	~ 1,000	Inclusive in Rent
- Dilapidations Provision	~ 500	Inclusive in Rent
- Security Staff	~ 500	Inclusive in Rent
- Receptionist's Salary	~ 1,200	Inclusive in Rent
- Secretary's Salary	~ 1,500	Inclusive in Rent
- Pantry Expenses	~ 100	Inclusive in Rent
Total	S$8,250-S$9,250	S$1,000-S$4,000

C) Miscellaneous	S$	S$
- Lease Commitment	Minimum 2-3 years	1 month
- Lease Security Deposit	3-6 months (exclude penalty for early termination)	1 month (no break clause penalties)
- Expansion/Downsizing Options	None	Fully Flexible
- Networking with Companies	None	Related Businesses
- Professionally Trained Bilingual Staff	Training Needs to be Provided	Fully-Trained Professionals
- Latest Office Technology	Additional Investment	Inclusive in Rent
- Money-Back Guarantee	None	Yes

Total Cost Incurred in 1st Month of Business	>S$45,000	S$1,000-S$4,000