With shared flexible office space being a newer commercial real estate option to the Alberta market, and a business Aspen has invested in over the past three years, we wanted to provide a comparison between what a shared flex space provides versus a more traditional office headlease. This comparison has been broken down into the following categories: Lease Term, Office Size, Costs, Space Design and Growth Options.
Commercial Office Headlease:
Lease Term:
A traditional office headlease is usually tied to a term agreement of 1 to 15 years, with the average term falling within 5 years.
Office Size:
In addition to longer terms, most headlease options take up larger footprints; anywhere from a small private suites to multiple floors within the building. These spaces accommodate small, medium, and large-sized companies, and generally have private kitchen, meeting rooms, and offices to accommodate the different departments that make up a company.
Headlease Gross Rents are comprised of Net Rent plus Operating Costs (op costs), and these rates vary by building class (quality and available amenities), and location. In addition to rent and op costs, headlease spaces also need to consider furniture costs, meeting room A/V costs, internet service costs, and coffee/kitchen supply costs to name a few.
With a longer lease commitment comes greater control of the space and could include a Tenant Improvement Allowance (TIA) from the landlord. A TIA is money a landlord provides to the tenant to customize the space. TIA’s vary in amount and are based on class of building, length of term, and net rents.
Space Design & Growth Options:
Leasing a whole floor, or smaller suite on a headlease allows a company to design and configure a fully private space to fit specific business needs and align more closely with the company’s corporate culture and brand. In building out an office space, companies can take ownership of their office and customize it to meet business needs — may that be a company’s boardroom, specialized furniture options, kitchen layouts, or even a unique social area.
Flexible Office Space/Co-working:
Agreement Term:
The unique set-up that a flexible office space has to offer allows for more fluidity within the workplace. As the name implies, flex office spaces allow for a shorter, more flexible term commitment. Typically flex spaces offer month to month, 6 months, or one-year terms.
Office Size:
Most flex/co-working spaces are located on a shared floor with a common kitchen, meeting rooms, and lounge areas. These spaces also include offices that can accommodate 1-3 people up to 25 people in larger suites. Offices range in size from 150 square feet up to 1,500 square feet of usable space.
Cost:
A flexible office agreement can be a more economical way of starting and growing a business. Companies can rent small private office(s), which typically come fully furnished, with access to common meeting rooms, high-speed internet, and professionally managed common spaces. Depending on the size of office and building class small private offices start around $600 + GST on a month-to-month agreement.
Space Design & Growth options:
In most shared offices there are several space options to select from, that often range from a 1-to-3-person private office all the way to 10-to-25-person private suite. The offices also come furnished and are easy to reconfigure. Based on the month-to-month terms, and different size options, companies can grow and move into space as they need it.
The push for more office options has never been higher with an evolving shift in workforce behavior, and the value of offering headlease and flexible office options together continues to be a proven strategy for the future of office space.