Is a Leased Office Worth It? A Guide for Growing Businesses

For many growing businesses, signing a traditional office lease feels like a milestone - a sign that you have arrived, that you are serious and that you are putting down roots. And for the right business at the right stage, a leased office genuinely is the best option. But it is not the right choice for everyone, and the decision deserves careful thought. Here is an honest guide.

What a leased office actually involves

A leased office means signing a direct agreement with a landlord, typically for a term of 5 to 10 years. You take responsibility for the space - including rates, service charges, maintenance obligations and, at the end of the lease, returning it to its original condition. In most cases you will also need to fit the space out yourself, which requires significant upfront investment.

In return, you get complete control over your environment. You can design and configure the space exactly as you want, brand it to reflect your business and build a workplace that is genuinely your own.

The financial case for leasing

For large teams - typically 50 people or more - a leased office can be significantly more cost effective per desk than a serviced or managed alternative. Once you have absorbed the upfront costs, the ongoing rent per square foot in a leased building is often lower than the equivalent all-inclusive rate in a serviced building.

Over a long lease term, those savings compound. For a stable, established business with a clear picture of its long-term space requirements, the financial case for leasing can be compelling.

The risks to consider carefully

The commitment is the biggest risk. A 10-year lease is a long time - longer than many businesses have been trading. If your team grows faster than expected and you outgrow the space, or if the business contracts and you need less space, you are still liable for the rent. Breaking a lease early is expensive and complicated.

The upfront costs are also substantial. Fit-out, legal fees, stamp duty on longer leases and the first few months rent paid in advance can add up to a significant cash outlay before you have even moved in.

When a leased office makes sense

A leased office is worth serious consideration if your business is well established with a stable and predictable headcount, if you have a clear picture of your space requirements for the next five to ten years, if you have the capital to absorb upfront costs and if control over your environment is a genuine strategic priority.

It is less suitable for businesses that are growing fast, that have variable headcount or that value the flexibility to move or scale without penalty.

Getting the right advice

The decision between a leased, managed or serviced office is one of the most significant your business will make. At Scope Office Search we provide honest, independent advice on the right type of office for your specific situation, search the full market and negotiate the best possible terms - completely free of charge. Get in touch today and we will help you make the right call.