tl:dr (too long, didn’t read)
If you’re looking for office space, you’ll have decisions to make. But before you start looking for that killer workspace with a roof terrace and workout studio, you need to know whether a leased or flexible office is best for your business.
At a glance –
– Control vs flexibility
– Does your business need room to grow or a space to brand?
– Leases are complex legal documents that give you exclusive possession and control
– Licences are flexible and easy to use giving you room to grow
We spend a third of our lives at work and our office space is important. It sets the company culture and it can have a huge impact on our happiness and productivity. It is, therefore, important to understand the difference between a co working licence and a lease and which one is right for you.
Are leases and licenses similar?
A lease and a licence are both contractual agreements between your business and the property owner that enable you to use an office.
They differ in several fundamental ways:
– Length of contract
– Use of the property
Committing to the right space for your business right now means making the right choice as to whether to lease or licence your new office.
What is a lease?
A lease will:
– Commit you to a space for the long haul
– Give you full and exclusive occupancy
– Put you in control of paying rent and business rates
A lease is a complex legal document that can’t be broken easily. Unless you have a clause built in during the negotiations, you’ll have to wait for the lease to expire before you can move on. Negotiating a lease can take several months because of the rights and responsibilities it gives you. But you will have exclusive access to design your space to reflect your company culture.
So what are the benefits and disadvantages of a lease for your business?
Best for: established businesses with a fixed workforce and a big budget.
On the positive side:
– Your business has long term security in return for a fixed rent over a long period of time
– You’ll have the opportunity to fully brand your office
– Commit to the long term and your office will be more cost-effective and can even earn you an income if you sublet space
On the negative side:
– The timeline to moving in can take up to 12 months
– There can be some big upfront costs associated with negotiating your contract and fitting out your office
– You’ll need to manage and budget for every aspect of running your office from cleaners to business rates
What is a license?
A licence will:
– Let you occupy a space for a short length of time
– Allow you to move in quickly
– Let your business be more flexible
A licence agreement is short and quick to draw up. There’s no long term commitment and you can usually terminate the agreement with a month’s notice. Serviced offices are usually occupied on a licence agreement because it’s quick and inexpensive to set up. You’ll sign a standard agreement to occupy the office space for the length of the licence.
So is a licence agreement the way forward for your business?
Best for: startups and SMEs who need flexible space to allow for rapid growth and a business address that they couldn’t afford on a lease agreement.
On the positive side:
– you have the flexibility to add more space, hire in extra services and rooms on a pay as you use basis, or leave at short notice when you decide to move your business on to the next level
– Costs are all-inclusive and make it much easier to budget your monthly outgoings
– Flexible offices often provide high-quality creative spaces that encourage networking and collaboration – just right for attracting and retaining talent
– The timeline to moving in can be as little as 1 week because the licence requires no negotiation
On the negative side:
– You won’t be able to make changes to the space and you don’t have the same rights as a leaseholder. Your landlord could serve notice at any time.
So, licensed or leased?
Whether a licence or a lease is right for your business will depend on timing, cost and the level of security you need in your new space. For a company with a long term strategy and goals that include branding your space and having exclusive occupancy, leases offer the level of control you need.
If you’re a lean and agile startup or scaleup looking for a great business address and the flexibility to grow and contract, a short term licence fits the bill.
Find the right office for you, Properly.
Whatever your business, Properly can help you find the perfect office space. Whether leasing or licencing is right for your next office, we can help you make it happen so why not get in touch to talk over your options and start moving today.