Office space has traditionally been in high demand in Hong Kong. Despite the global financial crisis in 2008-2009, investors were paying top dollar for Hong Kong office space during 2009-2010. Hong Kong has been ranked as one of the world’s most expensive office markets for tenants. As a result, renting an office space has become one of the top challenges for SMEs and start-ups that are keen to enter the Hong Kong market. With traditional office space commanding soaring rentals and a growing office space shortage, an increasing number of start-ups are exploring the serviced office market as an option. Despite a high rental fee, serviced office suites hold many advantages for start-up enterprises – no capital costs, readily available infrastructure, flexible tenancy period, and a prestigious business address.
This guide provides information on the serviced office market in Hong Kong, including the cost of leasing a serviced office, lease terms, facilities and services offered by serviced offices, etc.
Related Topics:
Guide to Business Districts in Hong Kong
What Type of Office to Rent in Hong Kong?
Serviced Offices: A brief introduction
A serviced office, also known as an ‘executive suite’ or ‘executive space’, is an office or office building that is fully equipped and managed by a facility management company, which then rents individual offices or floors to other companies. Most serviced offices in Hong Kong are located in the business districts of Central, Wan Chai, Causeway Bay, Tsim Sha Tsui, Island East, Admiralty and Sheung Wan. Serviced offices offer flexible lease terms and flexible office sizes that can be changed at any time to suit business needs. Tenants of serviced offices can utilize shared services such as reception services, office equipment, conference rooms etc. The rental fee is usually inclusive of certain basic shared services and tenants need to pay only for additional services used by them.
Serviced Offices: Tenant Profile
- Start up and entrepreneurial companies: Serviced offices are most suitable for start-ups and SMEs who are new to the market and do not want to make a long-term financial commitment with a traditional office lease.
- Interim companies: Companies that are in the process of relocating and are looking for a short-term solutions until they relocate to the new office space usually opt for serviced offices.
- Project-based companies: Serviced offices are a convenient option for companies that require an office space for specific contracts or projects. A typical example would be a film production team.
- New branches of foreign companies: Many international companies set up representative offices to explore business opportunities or wish to have a regional presence by opening a branch office. Serviced offices are best suited for this purpose as the company does not have to make large initial investments and can focus on business operations.
- Client servicing companies: Companies that are in client interfacing industries such as training firms, advertisement agencies, etc. prefer to rent serviced offices as they benefit from a prestigious business address.
Serviced Offices: Pros and Cons
| Benefits | Drawbacks |
|---|---|
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For details on the advantages of serviced offices, please visit Options for renting an office in Hong Kong.
Serviced Offices: Rental Costs
The cost of renting a serviced office in Hong Kong depends on several factors such as the size of the office space, location of the serviced office building and lease duration. For instance, a single-person office will cost less than a large executive office or team office or offices with an open floor plan. Similarly, offices that are located in the prime business districts such as Central, Causeway Bay or Wan Chai cost more than those located in the non-prime districts. Furthermore, offices that are located in Grade A buildings such as Wheelock House, Nexxus Building, Two Exchange Square, etc. command premium rents. The tenancy term is another factor that affects the rental cost of a serviced office. You have the benefit of negotiating the rent for long-term lease durations that are one year and above.
On an average, the monthly rental fee for serviced offices in Hong Kong range from HK$5,000 to HK$11,000 per person per month.
What does the serviced office rental fee include?
The monthly fee for renting a serviced office includes certain basic facilities and services such as:
- Receptionist services;
- Office cleaning services;
- Access control security and alarm security;
- Air-conditioning, heating, and lighting;
- Office furniture; and
- Office maintenance services.
Normally, the rent does not include the following facilities and services:
- Copying and printing services;
- Ad-hoc administrative assistance;
- Mail or message management; and
- Business signage.
The above additional services can be utilized on a pay-per-use basis.
Depending on the business center you choose, the following services and facilities may or may not be included in the monthly rent:
- Local Area Network;
- High speed broadband;
- Telephone line;
- Hiring electronic devices such as computers, LCD projectors etc.;
- Meeting and conference rooms;
- IT support and maintenance; and
- Pantry usage.
Indicative price for services/facilities
Tabulated below are indicative prices for various facilities and services offered by serviced offices in Hong Kong. Note that some service providers include some of these services/facilities in their monthly rental fee, without charging extra. Hence, prior to finalizing a service provider you are advised to check the specific services and facilities that are included in the monthly rent and those that are not.
| Service/Facility | Indicative Price |
|---|---|
| Administrative assistance | HK$20.00 – HK$30.00 per 5 minutes. |
| Mail/Postage | Net postage cost + 20%-50% extra. |
| Photocopying services | HK$0.60 – HK$1.00 (B&W). HK$3.00 – HK$5.00 (Color). |
| Laser printing services | HK$0.80 – HK$1.00 (B&W). HK$4.00 – HK$5.00 (Color). |
| Fax services | HK$1.00 – HK$5.00 per page (Incoming). HK$0.80 – HK$5.00 per page (Outgoing). |
| Telephone line | HK$600 – HK$650 (One-time payment for installation). HK$350 -HK$500 per month (monthly rental). |
| Air-conditioning after office hours | HK$180 – HK$450 per hour. |
| Conference room | HK$200 – HK$250 per hour. |
| Additional storage space | HK$2000 per month. |
| Business signage | HK$1,000 per year + one-time payment for plate. |
| Private fax line | HK$650 (One time payment for installation). HK$500 – HK$600 per month (monthly rental). |
| Local or overseas courier service | Net cost + 20% extra. |
| Messenger service | HK$100 – HK$150 per hour. |
Serviced Offices: Security Deposit
A common practice while renting a serviced office in Hong Kong is to pay a rental deposit, usually equivalent to two months rent, at the time of signing the lease agreement. The rental deposit, commonly known as the security deposit, will be returned to you at the end of the lease term, provided there are no payment dues and the leased premise is left in the agreed condition. However, note that in case of premature termination of the lease, you will have to forfeit the security deposit. You are advised to ensure that the tenancy agreement specifies the terms on which the deposit will be refunded.
Serviced Offices: Lease Duration
Unlike renting traditional office space, the advantage of renting serviced offices is that you can control the lease term and opt for a 3-month lease, 6-month lease or a one-year lease. Although most service providers prefer a 6-month lease term, shorter lease terms can also be negotiated. If you intend to draw up a long-term lease, you can negotiate the rent with the service provider. By renting a serviced office you have the freedom to expand or reduce the size of your office space as your needs change. This can be easily achieved by drawing up a new lease with renewed terms. Normally, there is no administrative charge incurred for upgrading to a higher priced package or downgrading to a lower priced one. In case of premature termination of lease, service providers usually demand one month’s rental as damages.
Serviced Offices: Lease Terms
Opposed to complex and intricate lease documents that often involve legal assistance, a serviced office lease is a simple user-friendly two-page document that details the terms and conditions of the lease. Some of the common clauses that are included in a serviced office lease are as follows:
- License: This clause specifies that the licensor gives the licensee (i.e. the tenant) the right to occupy and use the designated space for the licensee’s lawful business purpose.
- Licensee’s representations and warranties: The licensee will represent or warrant to the licensor that the business operations will not contravene any applicable law, enactment, rule, regulation, code of practice or any judgment, decree, authorization or permit to which the Licensee is subject.
- Licensee’s Undertakings: This clause usually specifies the terms and conditions relating to payment of rent, security deposit, use of equipment, lease termination etc. Specifically, the sub clauses include:
- License fee (i.e. rent) and due date for payment.
- Value of security deposit paid and refund terms.
- Lease duration including details such as the date of commencement of lease and date of lease expiry.
- Terms and conditions for pre-mature termination of lease.
- Terms and conditions for use of equipment, services and facilities.
- Terms and conditions for use of premises and general upkeep and maintenance.
- Terms and conditions regarding the pay-per-use facilities and services.
- Terms and conditions governing lease termination.
On a Final Note
Hong Kong’s serviced office market has experienced rapid growth and there are several service providers who offer you this facility. Thus, your choice of a particular vendor will rest upon factors such as your business requirements and budget. It is advisable that you personally visit a few service providers, inspect their proposed office premises and obtain their tariffs before making a decision. Since serviced offices are an expensive option in the long run, it is important that you choose a vendor who best addresses your needs at the most affordable costs.
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