Serviced Office Guide Hong Kong
Oct 2022 | LAST UPDATED
SNAPSHOT
“Serviced Offices”, “Business Centres” or “Co-working“, are flexible workspace solutions that offer an immediate occupation solution and are readily available. Typically these providers can accommodate a range of office sizes, from 1 to 200+ headcount, with use of shared services including meeting rooms, reception area, server room and breakout facilities.
1. UNDERSTANDING THE BENEFITS OF SERVICED OFFICES
Whether you are an international MNC or an individual entrepreneur, some of the potential benefits with flexible workplace are specified below.
LARGE CORPORATES
Financial Performance
- Improved financial performance through cost-savings, reduced capital expenditure, better risk mitigation and lower vacancy rates.
- The heightened ability to free up capital for investment in value-generating assets and initiatives.
- Greater business agility, enabling customers to scale up and down in response to market changes.
- Opportunities to outsource non-core functions so customers can concentrate on the value-adding elements of their business.
Employee benefits
- Employee wellbeing and personal satisfaction can increase, fewer hours spent commuting, greater independence and flexibility can mean more productive workers.
- Attracting and retaining the best talent, through providing inspiring workspaces in places where people want to work or with communities they want to work with.
Small and midsize enterprises
- The ability to operate from high-quality sites.
- The opportunity to take on locations cost-effectively to be close to clients.
- A choice of workspace experiences to match your own corporate image and aspirations.
- Business service and support, with no requirement to employ non-core staff.
- Access to the latest technology, with 24/7 technical support and a business-class infrastructure.
- The availability of meeting spaces and business communial areas.
Startups
- Cost-effective, fully equipped spaces.
- Flexible leases, with minimal lead times and no set-up costs.
- Reliable service support that frees entrepreneurs to concentrate on getting their venture off the ground.
- Access to virtual office services that give you the freedom to work wherever you need to.
- Constant innovation and R&D from a committed flexible workspace provider.
- The chance to brainstorm with and learn from other, sometimes more established, businesses.
2. SERVICED OFFICE VS TRADITIONAL OFFICE?
For companies considering an office for the first time, it often requires a six month approach to focus on business strategy, understanding medium-term growth plans and where the business is best located. It is recommended that businesses consider temporary offices, so that they can evaluate likely business growth requirements before taking on a traditional lease.
Capital Expenditure
- Traditional offices require a commitment to larger initial capital expenditure (i.e. office design & interior fit out). There are also reinstatement obligations upon the expiry of the lease.
- Companies can limit their initial capital outlay through flexible workspace solutions, although usually at a higher cost-per-square foot than leasing your own space
Commitment Term
- Traditional offices typically require a minimum lease term of 2-3 years.
- Serviced office space commitments last anywhere between 3 - 12 months and can provide solutions for those companies looking to set up quickly or need a short-term commitment that can also support scale (particularly for high growth industries where headcount projections are constantly changing).
Speed
- Agreement of the terms are documented by way of a “Service Agreement” which sets out all the pertinent terms and conditions of the license and is signed by both the provider and the occupier.
- Service Agreements are typically condensed into a digestible 2 - 5 page document, which compared to traditional lease agreements, can span 100 pages, notwithstanding various legal documentations that accompany the lease.
The Bottom Line
- Traditional offices are in the medium to long term (2-5+ years) more cost effective per head than serviced office or co-working solutions.
- Initial capital expenditure is much higher with a traditional lease, but is amortised over the lease term.
- The flexibility serviced offices offer can often be priceless and can provide cost effective solutions for individuals/ small companies or businesses that are undergoing rapid growth with volatile or uncertain headcount projections.
- When negotiated well, serviced offices can also provide an effective medium term solution through cutomised or managed office solutions.
Through SAVVI's Tenants Network, access to and listing of fitted spaces provides further opportunity to minimise fit-out CAPEX and reinstatement obligations.
3. THE 6 FLEXIBLE WORKSPACE TYPES
Flexible workplace covers an increasingly wide spectrum from traditional serviced office operators to co-working spaces, while embracing both managed and virtual offices. As the sector has evolved, increasingly hybrid business models are emerging. This is in response to the demands of the customer and to improve profitability of the operation.
Virtual Office
Use of an address and certain business functions, without physically occupying the space
Membership
Touch down space on fixed monthly or annual fee, combining the costs of desk space, business rates, access to services and sometimes events.
Co-Working
Guaranteed workspace in a shared area - no fixed desk. Resources and services are pooled, both for efficiency and to encourage collaboration. Learn more from our co-working expert guide here.
Dedicated Desk(s)
A defined workspace in a shared area but is often located in close proximity to the co-working space to reap the benefits.
Serviced Office
Exclusive access to a private and secure area, often with seperate facilities.
Managed Space
Tailored workspace solution procured and managed by single supplier from start to finish.
4. SERVICED OFFICES MARKET IN HONG KONG
Hong Kong is home to some of the most expensive office space in the world. Despite being an established market, the growth levels in flexible work space in the city remain one of the highest in Asia.
Over 100 business centres / co-working are identified in Hong Kong. The top 60 centres occupy over 1 million square feet out of a total 90 million square feet of available office space.
5. SERVICED OFFICE PRICES IN HONG KONG
With the abundance of flexible work space providers across Hong Kong, each with their unique offering, here below is a filtered list of some of the most established providers in the core business district, providing a one stop shop portfolio service, allowing both established and small businesses to get started with ease now and into the future.
Grade AAA - HK$7,000-10,000 / PERSON
Grade AA - HK$6,000-8,000 / PERSON
Grade A - HK$4,000-7,000 / PERSON
6. NEGOTIATING SERVICED OFFICES IN HONG KONG
Price is often worked out on a per workstation (or per person), per month basis. The price you will pay varies greatly and depending on a number of factors. See some of the key price differentials & factors below.
Supply & Demand
- Demand in the area, reputation, location or iconic property.
- Availability in the area or centre.
- Size of requirement availability for a one-person office to and one hundred headcount will limit the choice of centres.
- Amenities if you have specific requirements for amenities, there may be limited availability of offices that can meet all your needs.
- Incentives when a centre has just launched with high vacancy.
Timing
- National holidays and festivals can often impact demand and rents, particularly during quiet periods during Christmas or Chinese New Year.
- Contract length can increase the level of security for the operator or landlord, providing further room to negotiate.
- How soon you can sign may provide further incentives by the provider.
- Market turnover for the flexible office market moves much more quickly than traditional leases. Be prepared to cover the market to ensure you have a viable shortlist to move forward on.
Location & Amenities
- Position within the property will ultimately reflect on the price including view, aspect, or floor level.
- Interior design for providers vary for their clientele or target industry. Premium office suites and furnishings will command a higher rent.
- Proximity to public transport
Space Utilisation
- High density options fitting more desks into the workspace will reduce the cost per person – though the price of the room will remain the same.
- Office modifications fundamental changes to the layout of your space, like installing new partition walls, will raise the overall cost you pay, as your landlord will need to make the changes for you.
- Meeting rooms some agreements include an allocation of meeting room time per month; however, this cost will be affected by the level of demand for the available meeting room(s).
- Telecoms and IT the price will vary dependent on the selected package; some clients have very basic telecoms and IT requirements whereas others require more complex, dedicated telecoms and IT support.
FLEXIBLE WORKSPACE INCOME STREAMS
SEARCH WITH SAVVI
SAVVI works with all flexible workspace operators, providing you full market coverage and a single point of contact to support your business going forward. Enjoy exclusive off-market corporate rates negotiated by industry specialists.
We create and source differentiated opportunities and deliver scalable bespoke real estate solutions from small to large real estate proposals with institutional grade expertise.