The serviced office contract structure explained in simple terms!
What is the difference from renting an office and who is suitable for it?

• Update:2023/11/14

If you are thinking of starting a business, you will need an office for your business space. Of course, you could use your home as an office, but that would not be very stylish. You will want to rent a nice office space in case your clients visit you.

This is why rental offices have become so popular in recent years. This is characterized by a contract structure that differs from that of a typical serviced office. But what exactly is the difference? Here is a simple explanation of the contract types of serviced offices!

What is the contract type of serviced office?

When renting an office space, a “real estate lease agreement” is concluded. This is an agreement to lease a completely empty office space for a period of __ years, so the Land and House Lease Law applies. In other words, it is similar to a rental housing (condominium/apartment) contract.

In the case of serviced offices, on the other hand, a “service use contract” or “facility use contract” is concluded. In this case, you rent a space that is already available for use as an office and return it when the contract expires. In essence, it is like an accommodation contract.
In addition, real estate rental contracts are generally annual contracts, such as two years. However, service use contracts and facility use contracts are often for relatively short periods of time, such as monthly or weekly contracts.

Learn the difference between renting an office and leasing an office.

Next, we will discuss the differences between renting an office and leasing an office. There are four main differences.

1. Serviced office has low initial cost!

Most rental offices are leased on an annual basis with a large deposit and key money (about six months to a year’s rent) for a real estate lease contract. In addition, office furniture such as chairs and desks, office automation equipment such as PCs and printers must be furnished, and interior work must also be done, resulting in a huge initial cost.

However, serviced offices are not real estate leases and do not require a large security deposit or key money. Generally, the standard deposit and key money is about three months of the rent, and some offices offer free rent. In addition, serviced offices are pre-furnished with the office furniture and office equipment necessary for business, so there is no need to purchase or install anything. Therefore, the initial cost of renting an office is much lower than renting an office space.

2. Your serviced office is ready for immediate occupancy!

Real estate leasing contracts for serviced offices involve a complex tenant screening process. As a result, it often takes three weeks to a month to move into an office from the time of application for screening. Even after moving in, there is still a lot of work to be done, such as wiring and installing office furniture. Therefore, it takes a considerable amount of time to move into a leased office.

On the other hand, the screening process for moving into a serviced office is often simpler, and you may be able to move in as early as a few days after applying for a screening. In addition, all the necessary facilities for work are provided, so you can start working right away.

3. Serviced offices are located in good locations.

With rental offices, it is not uncommon to find a property in front of a station that is already contracted and has no vacancies. With serviced office space, however, it is relatively easy to find available space because there are many properties in good locations. Therefore, you can set up an office in a good location as a base for your business. However, please note that rent can be expensive for properties in front of train stations.

4. Some of these serviced offices don’t even charge renewal fees!

Both leased and serviced offices have a set contract term. Most serviced offices require a renewal fee when the contract is renewed. The renewal fee is usually equal to one month’s rent.

On the other hand, there are a number of places that do not charge renewal fees for serviced offices because they are not real estate leases. The advantage is that costs can be reduced in this way.

Who is a good candidate for a serviced office?

Renting an office is suitable for people who are just starting out and starting a business. Basically, to start a business, you need to prepare a lot of capital and you need to save money well. This is where serviced offices come in handy. The initial cost is not too much and all the necessary facilities are available. This will save you a lot of money compared to starting an office from scratch. Why not consider using this service?

Summary

This section focuses on the contract types of serviced offices and how they differ from rented offices. Compared to renting an office, the initial cost of renting an office is lower, and since the office is pre-equipped, the cost can be greatly reduced. In addition, the screening process is quick and easy, so you can move in immediately. If you are planning to start a business, please consider renting an office.

If you are looking for an office to rent in Tokyo, consider Tensho Office. Tensho Office has offices in prime locations in Tokyo (Shinjuku, Ikebukuro, Minato-ku, Chiyoda-ku, etc.) with low initial costs. We also offer a full range of services. If you are considering renting an office, please feel free to contact us.