In 2006, Instant Offices saw a market for office space that was neither leased nor fully serviced and set about launching managed offices. Noella Pio Kivlehan meets the pair who are driving it.
There is no receptionist at Instant Offices. Instead the human meeter-and-greeter has been replaced by a hard-to-spot telephone which visitors use to announce their presence.
Is it a way to save money? No, this is the modern way of doing things, assures Patrick Elliott, Instant Offices’ chief executive, who has been in the job for two months. However, he concedes that there could be a bigger sign indicating the phone at the company’s headquarters in London’s Paddington Basin.
Doing things the modern way is what Instant Offices is all about. Established in 1999, the 85-strong company globally is primarily a serviced office provider, with some 5,500 centres listed on its website. But in 2006 it diversified into managed offices: a different animal than serviced.
Bridging the gap
Essentially, managed offices bridges the gap between fully serviced offices and conventional leased office space by bringing to the market fully equipped offices on flexible terms.
“What we are offering is the total outsourcing of office provision, allowing the client to focus on their core business. It is a full turnkey package that includes all the costs of setting up and running an office, as well as providing the up-front capital and all project management throughout the occupation,” says Seb Royle, managing director, managed offices at Instant.
“We provide a fixed cost to the occupier by agreeing an all-inclusive price for the whole contract term. We sign a lease with the landlord and then sign a lease agreement with the client. We only take on the space on the back of the client’s requirements, so charging is more competitive, allowing us to keep the price as low as possible.”
The fees are index-linked, with rent reviews built in. “This is so that the client knows exactly how much their office will cost in total, every year of occupation,” says Elliott.
Clients so far attracted to the managed offices concept include the Metropolitan Police, Serco, Network Rail and CB&I. Landlords include Land Securities and Great Portland Estates.
“Running a managed site is not as straightforward as it looks,” says Elliott, who believes companies need years of experience to tackle the sector. “Our experience in this market allows us to negotiate the best deals across the array of suppliers involved in setting up and running offices. With more than 250,000 sq ft currently under our management, we can gain significant economies.”
Elliott adds that the money to fund the business comes from working capital. “We have no outside capital. We have no debt,” he says.
Unique offering
Instant Offices claims to be the only company offering this unique service. “There is no one doing exactly what we do. No one offers exactly this type of service,” says Elliott. But, as assured as they are of their originality, neither man expects to keep the managed office market to themselves forever.
“I fully expect more competitors to emerge,” says Elliot.
Despite having interests in the US, where it has a sales team, Royle says the managed concept works best in the UK.
“The lease structures over here are traditionally more rigid than elsewhere, and we can provide the flexibility around this,” he says. Occupiers can stay from as little as one year to 10 years.
However, with more than 95% of the company’s managed offices in London – there is one office in York – it could be argued that managed offices only really work in the capital, and during tough economic times, when there is more stock available.
Elliott says it is difficult to draw any conclusions, particularly in relation to the ongoing economic woes.
“It is very hard to say whether [the downturn] has given us an advantage because we haven’t operated during a downturn before,” he says. “But the behaviour it drives among occupiers, such as their unwillingness to commit to long-term offices and having more of a focus on costs, does mean that managed and serviced offices will be more attractive.”
As for being primarily London-centric, Elliott says: “You could say that we are in London mainly because that is where the most buoyant market is. But we are looking at a number of different offices for management in other markets around the world.”
Not only cheaper premises
Royle is quick to add that Instant Offices is not just going for cheaper premises.
“Some of our most recent acquisitions have been in the West End, where space is at a premium. We will go where the space is, because we are driven by the client’s requirements.”
Although it is now a success, mistakes were made when Instant Offices first started the managed side.
“One of the biggest lessons was that the original model was focused on the building rather than on the client,” says Royle. “We should have been asking ‘what does the client want?’ Essentially, we were trying to force the building on the client, whereas the building is just part of the solution.”
And lessons continue to be learnt. Although there is still no receptionist at the Instant Offices building, there is now a much larger “telephone here for assistance” sign.
CV: Patrick Elliott
Patrick Elliot joined Instant Offices in August 2011 as chief executive.
Prior to that Elliot was a member of the senior leadership team at international service company Serco, where he was responsible for bidding for and operating large outsourcing contracts, including business support services such as Business Link in London, and key elements of the Barclays Cycle Hire scheme. He also sat on the board of Serco Europe, which provides services to many European agencies.
Before Serco, Elliott was a vice-president at SAIC, a large US multinational provider of outsourcing and consultancy services. He joined SAIC following its acquisition of Opta.
