Incentives from Serviced Offices – A Short Sighted Approach?
In our conversations with various serviced office providers over the last few weeks we have come across a common theme – incentives and cost cutting. While many believe it to be a valuable tool for securing new business, is the short term benefit really worth it in the long run?By an incentive we mean short term special offers, the “6 months half price” or “pay nothing for 3 months” type deals, not the actual cheap office space that remains cheap after the incentive period. Fantastic for new clients, but with some of the heavier discounts, simply reducing the potential income of operators and office brokers for no real reason.
What also seems to be happening across the industry is price cutting and a devaluing of serviced offices with the wide spread offering of discounts to compete with some of the more budget operators.
In the last 6 to 12 months we have seen a gradual narrowing of the price range. For example, where serviced offices in city centres used to range from £200 – £600, we are now seeing them available for between £200 and £400 or even lower when incentives are taken into account.
What may be a great deal for those looking for offices at the moment – top spec space at sub £400 per workstation – it is damaging for many of the smaller operators and is devaluing the great value service that comes with renting a serviced office. Associating a value to a product was a ‘hot topic’ at the recent Business Centre Association Conference, but it seems to have had little affect.
Looking 6, 12 or 24 months into the future, what will happen to clients who have signed on fantastic office deals? Will they be prepared to pay the increase as the range in prices becomes more apparent again or will serviced office operators simply look to ‘dump’ the lower paying clients? Will any of the value operators still be operating to be able to offer alternative accommodation to these unfortunate few?
If you’re thinking of signing up to an office and have been lured in by hugely reduced rates, just be sure that you can pay the usual top rates if and when they return, or that you have a fixed manageable increase written in to your contract.
Offices North West believes that the best way for the industry to go is for regular office take up at fair prices that reflect the standard of offices and the service on offer. We are in no doubt that there are still potential clients out there who will pay first class prices for first class facilities to share with clients of a similar mindset.
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[...] comments made in our article on ‘Incentives from Serviced Offices – A Short Sighted Approach?‘ back in July, Grace wrote “all business centre operators should be out there, shouting [...]