Serviced office discounts

October 7th, 2008 | by Simon Rattray
office space

Today I spoke to a friend whose company rents serviced office space in Manchester.

They have recently renewed their license agreement after negotiating a lower price.  The office is in a prime location in the city and consists of around 15 workstations.  From the Office space serviced office serviced officesserviced office provider perspective, this was clearly one tenant they would want to hold on to.

Without getting specific figures, he intimated that the costs of the rent (service charge) had nearly halved from what it was when the signed the original license agreement.  Of course it doesn’t help the provider that there has been a series of aggressive cost cutting measures occurring in Office space Manchester serviced officesManchester, notably by Your Space and MLS Business centres.

For a requirement of that size, it is apparent that the provider was keen to retain the tenant, particularly as they are growing at very fast rate and will almost certainly need more workstations in the very near future.

The question that arises is to what extent will serviced office providers go to retain a tenant?  How much will they be prepared to discount before they see the client go to a rival provider?

Aside from this, it would also be interesting to know what the retention rate is like in the industry as a whole?

Apart from monetary incentives, what else can providers do to hold on to tenants.  Perhaps offer free meeting room hours for example?

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  1. 6 Responses to “Serviced office discounts”

  2. By Tom Pervis on Oct 7, 2008 | Reply

    I still dont think that as an industry we are doing enough to keep clients. In and around the Birmingham area, there seems to be a real merry-go-round of businesses switching between serviced office companies.

  3. By Claire Adams on Oct 7, 2008 | Reply

    There are so many things that could be offered that would not cost us money such as meeting room hours, simply using the free time that there is.

    I saw the messages yesterday about brainstorming - i am sure that we could all come up with some great ideas about this

  4. By Paul Reardon on Oct 7, 2008 | Reply

    I believe Regus at Peter House have made significant savings in staffing and facilities and have been able to offer significant savings to entice people to stay, similar to the above story.

    As a StoneMartin centre, prices were around £500 per workstation but once this changed hands it was immediately advertised at £260 per workstation. If I was a current customer then I’d want the new rate too!

    However, if Regus had kept up the service levels and brought in their unique offering regarding the world network then I think they could have kept rates up.

    We had an average client stay of 23 months in my previous centre because we understood what each client needed in terms of office space and service. We launched some add-ons but we found doing the basics and getting those right was the key to retention.

  5. By Jon Wright on Oct 7, 2008 | Reply

    I think that they are just going to get cheaper and cheaper across the board, not just in Manchester - or the UK for that matter.

    Jon

  6. By SJR on Oct 7, 2008 | Reply

    Do you think there will be more placements from traditional agents, eg JLL, CBRE etc? as leases become less attractive?

  7. By James Jones on Oct 7, 2008 | Reply

    I think traditional agents will start to diversify - or suffer near death for the next 2 years.

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