Do you think Office Rental market viable?

[Isoquinoline]

In the past I've expressed that I wanted to start a private office rental business opposite to the co-working space models that's followed and scattered all across London however I've been turned down and told that the market is completely saturated and a tremendous amount of capital is needed just to enter and while I do agree I've also been told it's not worth it as many who've poured a lot of money into it haven't been able to make it a viable proposition

Thoughts?

 

[fisicx]

Whoever advised you against this idea is correct.

 

[Mark T Jones]

Given the level of knowledge and insight you currently have, the advice is correct.

If you do a lot of research you might find a niche or an angle that you can make profitable

 

[Shopclicks]

There is room for this model but not in major cities. You need to move to a small town to make it work. I'm involved in a project like this in a town with a population of 9000.

A lot of country towns have empty office space which can be repurposed. You run each office space like an Airbnb and it can be very lucrative. The key is finding the right offices in the right town.

 

[Mark T Jones]

There is room for this model but not in major cities. You need to move to a small town to make it work. I'm involved in a project like this in a town with a population of 9000.

A lot of country towns have empty office space which can be repurposed. You run each office space like an Airbnb and it can be very lucrative. The key is finding the right offices in the right town.

It's more a question of knowing your market and offering than pure geography

A customer of mine has opened 3 big serviced offices in London within 24 months - usually gets 85% occupancy within 6 months (that's pretty good in industry terms)

London is, of course, a big place with a lot of demographics

 

[Shopclicks]

It's more a question of knowing your market and offering than pure geography

I believe that for someone starting out in this sector, geography is the most important consideration. Obviously marketing and management are also important. But without the right location. none of it will work. I can only speak to my experience.

A well established coworking space constantly gets requests for a private office which they cannot provide.
So we go looking for offices above shops on the high street. We find 4 empty offices in a building above a shop which are suitable.
The lease terms are negotiated with the landlord for £x per month inclusive of all utilities and subject to the entire interior repainted.
The plan is to rent out 3 offices and a meeting room. (Two x 2 desk offices + one x 1 desk office + an 8 person meeting room with conference table).
All of the office furniture is purchased from Facebook marketplace. The rooms are all very smartly dressed. There is a kitchenette and two toilets. Access is with the use of lock boxes for external doors and key access to the offices. A cleaner is organised for between bookings.
Everything is provided so all the client needs to bring is their laptop.

Website listings are created with Single day (one office only), Weekly & Monthly rental options for each office. Plus half day & full day meeting room hire options.

There has been an issue getting Fast Fibre into the building which should be remedied next week. This has delayed the official launch. We have created a buzz around the town with a 'coming soon' press release and numerous social media posts.

There have been several phone and website enquiries mainly from larger companies who require a presence in the area. The booking pages are currently hidden on the website.

The first paying client (organised with a face to face meeting) is already working in one of the two desk offices. They have booked two months. The amount paid for their office per month is greater than the cost of the lease on all four rooms.

We already have plans to find another group of offices to repurpose.

 

[Paul Kelly ICHYB]

I have also looked at this to the extent of converting containers and using some meanwhile space - the opportunities are still there.

HOWEVER, there is a lot of competition and you need to be different and have access to a potential source of clients or be prepared to spend loads of money on marketing.

 

[JEREMY HAWKE]

This enterprise reminds me of the vehicle rental business
In a very similar way most companies dont run this as a single business they are part of other businesses with other business activity's

An example here in the South West Office rental sector is often on an industrial estate where the owners are renting out large industrial units and other properties

 

[Shopclicks]

HOWEVER, there is a lot of competition and you need to be different and have access to a potential source of clients or be prepared to spend loads of money on marketing.

It's all local marketing and consequently cheap in a small town. A mix of co-working and private office space helps.

 

[Shopclicks]

In a very similar way most companies dont run this as a single business they are part of other businesses with other business activity's

All inclusive pricing, no contract or lease, make the offices available on a daily, weekly or monthly rental. It's Airbnb for offices.

 

[officebrokerio]

I am happy to offer insights into your query. I have experience working within the office market on both the fit-out and rental sides of the market. If you look at our website you will notice that we list multiple workspaces within central London. Each listing is provided free of charge, most brokers and agents will offer similar. My advice would be to align your offering with a few brokers that are aspiring/targeting to help your demographics. If you or anyone else has related questions, I'm happy to jump on a call and give insights into the marketplace.

 

[Paul Kelly ICHYB]

Each listing is provided free of charge

So how do you make money?

 

[officebrokerio]

So how do you make money?

It varies depending on the search enquiry. Both agents and brokers exist to save you time and money. If you operate as an agent, you would save the client money by securing an additional rent-free period. Traditional agents tend to charge the client an upfront fee. As a broker, most operate on a no-win, no-fee perspective but charge the space provider a percentage of the total revenue achieved by the incoming rent.

 

[Karimbo]

The big players have scaled this up well.

Sure there might be a market for small businesses to rent out a dissued old council office building subdivided into sections. But most businesses want an office that they'd be proud to bring clients into. The wework and regus offices are the minimum level any respectable business might want. These places have done area surveys have done lead capture and waitlists for in-demand areas and snapped up all the decent places any business would want to operate out of.

You'd need to do some research and see if there is a way to break into this market by sweeping in through a gap neither of these companies have. These are primarily offices. I do wonder if there is a gap for fledgling ecommerce that is too big to operate out of home and needs a share office/warehouse hybrid to pick and pack their orders and store their mechandise.

I know there are makers clubs where different artists/aritsans/makers co-work in a light industrial & office environment. There are 2 near my neck of the woods and they would be too specialist for regus or wework to get into - these are more like associations that are tenant owned.

 

[Paul Kelly ICHYB]

The wework and regus offices are the minimum level any respectable business might want.

Whilst you may correct in that it is what a 'respectable' business wants, however, it is not what they can afford!

Sometimes all they want is somewhere that isn't home. Or that has other people around. And some just can't afford the hundreds of pounds a month that the big guys charge!

 

[Karimbo]

Whilst you may correct in that it is what a 'respectable' business wants, however, it is not what they can afford!

Sometimes all they want is somewhere that isn't home. Or that has other people around. And some just can't afford the hundreds of pounds a month that the big guys charge!

Well the environment in the office should be at least better than at home. I dont really see the point of moving to an office with crappy chairs, old desks, poor heating/cooling, slow internet.

We work isn't that expensive if you just get the space you need. Might be hotdesking, might be a cubicle in fixed desk, might be a room. And it has perks, free unlimited drinks, some of the nicer ones have pool tables and other stuff.

In canary wharf you can get a hotdesking we work access for £150 a month.

 

[Paul Kelly ICHYB]

I dont really see the point of moving to an office with crappy chairs, old desks, poor heating/cooling, slow internet.

How do you equate a non Regus etc space as that?

Some people do not want free coffee, beer & pool - they just do not want to work at home.

Hot desking isn't office space. How much is an equivalent 'permanent' desk in the same place?

 

[Mark T Jones]

How do you equate a non Regus etc space as that?

Some people do not want free coffee, beer & pool - they just do not want to work at home.

Hot desking isn't office space. How much is an equivalent 'permanent' desk in the

Well the environment in the office should be at least better than at home. I dont really see the point of moving to an office with crappy chairs, old desks, poor heating/cooling, slow internet.

We work isn't that expensive if you just get the space you need. Might be hotdesking, might be a cubicle in fixed desk, might be a room. And it has perks, free unlimited drinks, some of the nicer ones have pool tables and other stuff.

In canary wharf you can get a hotdesking we work access for £150 a month.

All of which bois down to - its about knowing your market

 

[Paul Kelly ICHYB]

All of which bois down to - its about knowing your market

I agree, which is why I have done a lot of research!!

 

[fisicx]

Which btings us back to @Isoquinoline. Do your research! Do lots of research! And then do a lot more!

Near where I live they are pulling down office space and building residential or warehousing. 10 miles away they are building new offices.

If you can afford to lease or buy and then refurbish you can afford to spend a few thousand on proper market research.