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Will Landlords try to Muscle in with Flexible Agreements?

It has struck us on a couple of occasions walking around Liverpool and Manchester that there seem to be an increasing number of boards advertising leasehold offices ‘with flexible terms’.  It made us question whether traditional landlords could soon be muscling in on serviced offices territory with shorter term agreements.

A major advantage of serviced offices is the minimum term of agreements, normally 3 months, versus the shortest lease period is normally 5 years in city centres.  These short term licences are ideal in a huge host of instances, not limited to:

- Businesses relocating
- Expanding companies
- Seasonal business

However, 3 months is usually too short for most with average initial terms in the industry widely thought to be in the region of 8 / 9 months.  But even this figure puts serviced offices way ahead of traditional leased space when it comes to flexibility.

What could happen, particularly now the empty business rates relief has been removed, is traditional landlords look to cut their minimum terms to attract clients who may previously have stayed well clear of anything over 18 months.  It may well be the case that when 12 month requirements come to an agent they won’t be limited strictly to looking for office space in business centres.

It may seem like a good idea for landlords to try and win some of this short term business, but perhaps they are forgetting all of the other aspects that make serviced offices attractive. 

On short term deals in particular, the quick turnaround for IT / Telecoms is ideal for clients is a necessity, there is no need to spend money on furniture, solicitors aren’t required to scrutinise a licence, and there is a fixed price for the full length of their term.  Unless traditional landlords can catch up on those fronts too then there probably is little danger for business centres.

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