The evolving role of the Service Office Provider.

The role of the Serviced Office provider has evolved from the initial version of providers. They were primarily landlords or building owners whom had agreed to cater to large MNC (Multi National Corporations) that had financial strategies and business strategies that ranged from lowering their initial investment, especially in countries that were very volatile. Another would be that they could exit quickly without too heavy losses.

The initial versions were catered for single company occupancy. The focus then was reducing complexity for the tenant with compensation that was higher. The initial model was very lucrative for the owners with some contracts being that they were paid up front for the entire tenancy. Hence they then could reinvest for another property.

As time went along more smaller companies sent representatives out and the need for a shared version of this facility arose. Hotels initially were the hosts for these outfits that were either smaller or temporary in nature. The hotels provided a mixed residence and business centre facility for them. But as the numbers arose and the hotels rates for services raised alternative operators. These version were very staid and rigid. A lots of structure was adhered to just as in a normal office. In a sense they were very classy in their delivery.

As economies exploded in a positive way, more people ventured into business. As such the demand for office space grew. But not everyone had the expertise to build and run one. This opened up the market for more enterprising entrepreneurs whom then built and ran it as a business.

Today serviced offices have evolved to incubators, entrepreneur encouragement/development centers and more. The flavor of operator basically is in two forms, corporations (Big and also smaller ones) and owner operators. The theme these various operator have been described a little bit in an earlier post that we did. But one very useful delivery these new breed of operators bring is their skills from their earlier working life. That is processes, contacts, mentoring and idea building/developments, introduction to funding with much more over and above just space, service and technology.

This is another element that could go into your evaluation of your choice of Serviced Office operator for your business.

One point to note is that not all of these operators own their premise anymore, but the demand is such that even with rented premise, they are operating this business. One of their current revenue streams are providing consultancy to property investors to convert their premise for providing their tenants with full service premise. Property investors are beginning to realise the competition for tenants in the unimproved property rental market is currently soft. Due to the high demand of rental rates, deposits, difficult owners and business environment that is challenging for the potential tenants whom need to keep a higher fluid cash flow level. Those whom have excess would be investing into the property for their own business use and more.

Going the Serviced Office way, deposits are lower (less months required), termination, resizing is more flexible with shorter duration of notice and more business support is available for purchase by the business owner.

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