April 08, 20091 comment   Share

The real cost of office space

$600/month in rent. Near the subway line, in a posh building, possibly an A class building. What else could you want, doesn't it sound like a bargain.

First of all let's look at type of office. Is it just a "space" or is it a serviced office.

If it is just a "space" it means you have to turn it into an office and that will cost you. The advantage is that you can design it the way you want to. Let's say you finished the design, all the wires have been laid, everything is ready to go. Now you need to get phone, fax and the internet working. Then you have to start thinking about your utilities bill, the cost of cleaning and a myriad of other small things that will add up (who is stocking the washrooms with supplies?). In very vague terms, if you have an efficient - "green" office with minimal cleaning needs (nobody actually cooks in the kitchen...), just add an even $1500 on top of your monthly rent and you will have your monthly cost of running your office.

A little daunting? How can something that has less than 1 bedroom cost so much? Let's break down the math a little:

• $560 - Cleaning - let's say you have your office cleaned once a week: moped, vacuumed, garbage changed, washrooms, kitchen, everything.
• $480 - Utilities: heating in the winter, air conditioning in the summer, and all those computers that keep on humming will cost you (add another $200 for each server rack)
• $80 - One broadband internet connection
• $80 - A single business line + cost of long distance
• $40 - A fax line
• $260 - Supplies - office supplies and more (coffee, toilet paper, garbage bags, air freshener)

Imagine a receptionist to answer the phone and forward the calls? $1500 - $2000/month.

$200/month for a business line that can support multiple extensions.

So, on top of rent you need a good $4000. If you get a conventional office space, you will end up even paying for a lot of space you don't really want to pay for - like the washrooms. Wouldn't it be nice if someone else would take care of that?

That's when serviced offices come into play. Too many people decry the serviced office as an expensive option. Those people never did the math until the end. First, the cost of sq.ft. If you get 120 sq.ft. of serviced office space you will spend more than if you got 120 sq.ft. of just space at the same location (even the same building). What people tend to forget: if you get an office that is 120 sq.ft. you inevitably will rent at least 200 sq.ft. If you get a serviced office, you also get a kitchen and a boardroom and a reception area you don't pay for - or that is part of the difference in the price.

Let's look at all the math again, now with a serviced office*

• $0 - Braodband internet for your office
• $0 - Business phone line
• $0 - Fax line
• $100 - Supplies (just your personal office supplies + cost of printing)

*Officeexec includes the price of internet and phone in the rent. Some serviced office providers don't. Make sure you find out the exact costs.

So we brought down the cost just $100. So, for your conventional office to make financial sense it needs to be $3900 cheaper than the equivalent serviced office. Most of our offices, even our top offices, cost less than $3900 - we know we are more cost effective. You do the math, and you will see it's true. Too many people shy away from serviced offices, thinking they are too expensive, but the truth is serviced office providers such as Officeexec, where you pay one single rent amount that encompasses everything are truly cheaper alternatives.

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