But what is a serviced office…

Basically, it’s everything you want from an executive office, only with less costs involved.

Serviced Offices are a total office solution, offering fully-fitted and furnished spaces, ready for immediate occupation. The Serviced Office Operator, like Westend on Sixth Business Suites for example, takes care for all of the services to the building, and in addition provides a range of business services including reception, secretarial support, conference and meeting facilities, video conferencing, networking and high speed internet access.

Whilst at first glance costs may seem high, the rent that you pay includes almost all of the costs that you would normally expect to pay in addition to renting a conventional office. There are no additional costs for body corporate rates, heating/air conditioning, lighting and power, security, cleaning, building maintenance, elevators or insurance etc, and in some cases like at Westend on Sixth Business Suites, rent also includes the costs, for telephone/internet usage and meeting rooms and even functions and morning tea.

Another great cost saver of using Serviced Offices is the savings on furnishings, which can be a significant cost for any occupier. Furniture, which is normally the latest workstations with chairs, filing systems and tables for meeting rooms are all included in the serviced office rent; and most serviced offices are fully fitted with high-speed internet and wire-less internet options.

The typically short-term lease or contract, is also a major difference between serviced offices and traditional offices, which is one of the main reasons for deciding to use them. A serviced office lease may be as short as 3 months, or more typically 6 or12 months, giving many businesses the flexibility to shrink or expand as their business requires. A very different scenario from the long-term lease normally associated with a traditional office.

One of the fastest growing and most ingenious sectors of the global property market today, the serviced office industry has been nothing less than explosive in the past few years. The European business model has made it’s way to Australia where the popularity has been growing increasingly for businesses in Brisbane and on the Gold Coast.

Industry Trends

As outlined in a market research report by industrial research company IBISWorld, the shortage of prime property in resource rich states of Western Australia and Queensland is expected to drive demand for serviced office space.

The article states that, the flexibility of serviced offices has galvanised their position in the office property market. Catering to clients looking for prestigious locations minus the hassle of locking into a 10-year contract.

As corporate activity surged, the dearth of office property vacancies was a boom for industry participants. However, this boom was short lived as the financial crisis swept through the country. As businesses scrambled to salvage their operations, firms scaled down their workforce and delayed projects. Across Australia, as tens of thousands of Australian workers were made redundant, the need for additional floor space declined dramatically.

The drop in revenue in 2007-08 and 2008-09 resulted in 0.9% annualised growth over the five years through 2012-13. Compounding the severity of the situation is the high office property vacancy rates in Melbourne and Sydney. As business confidence is expected to remain flat in 2012-13, industry revenue is projected to grow 2.2% in 2012-13 from the previous year to $520.3 million.

As economic growth is expected to return to historical trends, IBISWorld forecasts that industry revenue will grow an annualised 4.7% to $656 million. The shortage of prime property in resource rich states of Western Australia and Queensland is expected to drive demand for serviced office space; however, the elevated number of vacancies in Melbourne and Sydney will depress overall industry revenue growth. Thus, in 2013-14 industry revenue is only forecast to grow 3.2%. Beyond this, technological developments and changing workplace cultures are anticipated to enhance demand for mobile workplaces. As more corporations move towards increasing workforce flexibility, industry participants are best positioned to offer such solutions.

Read more about IBISWorld‘s findings