The UK’s serviced office sector may be a new asset class now, but when Giles Fuchs and Niki Fuchs started out, it was the uphill task of making corporate sexy.
Office Space in Town (OSiT) is very much a family business. In addition to being run by siblings Giles and Niki Fuchs, the idea was an American import brought across the pond by their father’s visit to New York in the late 1970s. It was their mother who then took the idea forward, opening the UK’s first ever serviced office in 1979.
Location: OSiT HQ at Monument, London. Other serviced office locations across London include Mayfair, Waterloo, Euston Tower, Liverpool Street, St.Pauls and Farringdon
Date Launched: 14 May 2009
Number of employees: Around 50 employees
What does your business do?
Office Space in Town (OSiT) provides boutique serviced offices across central London, as well as in Northampton, Cardiff and Edinburgh.
OSiT’s office buildings are all located in commercial properties in excess of 25,000 square feet and within a four minute walk of a tube station or rail links across the capital, and each has been meticulously designed according to themes ranging from Alice in Wonderland to Monopoly, with the most recently completed building in Monument designed in collaboration with Sunseeker featuring a sleek, nautical interior, complete with a 10 metre white boat shaped reception desk, suspended propellers, and boat hulls, while also providing stunning views along the Thames.
How did you know there was a market for it?
The majority of conventional office leases can be as long as 25 years. That’s simply not practical for small businesses and startups or even large corporates who may only want a temporary presence in a given location.
We saw a clear need for a new business model that would provide more flexible work space arrangements catering for the changing needs of businesses. It doesn’t suit all businesses to be tied in to a long lease agreement. The popularity and remarkable growth of the serviced office sector is testament to why such a model was needed. In the UK – and in particular, London the serviced office industry has grown by a staggering 67 per cent in the last 10 years, now accounting for 25 per cent of the sector. This momentum has spread to the UK’s other major cities, with Northampton, Bristol, Aberdeen, and Glasgow all reporting in excess of 15 per cent growth in the number of centers between 2013 and 2014.
How did you raise funding, and why?
Office Space in Town partners with global institutional real estate investors and has financial backing from US-headquartered ForumPartners. Most recently in May, Office Space in Town agreed a deal with Shanghai-based commercial property business Kailong that will see investments into two London-focused property funds, giving them greater firepower to buy more buildings in the capital. KaiLong has taken a majority stake in OSIT’s first fund – LSO I – replacing international investment firm Forum Partners and valuing the vehicle at about £90 million. Kailong’s investment in LSO II values the JV at more than £60 million. Forum Partners remains a backer of the second vehicle.
Describe your business model in brief.
Office Space in Town operates a freehold model, rather than the widely practiced leasehold model. This means that as well as benefiting from the income streams that are derived from the operating business including revenue from both contracted services, such as IT and reception facilities, and variable services including bookable meeting rooms, call charges, secretarial functions etc, the company also benefits from the appreciation of the building as an asset.
Options to take out shorter leases or have break clauses are now more common as the face of corporate UK has changed with evolving work practices, needs and technologies making companies unwilling to over-commit to lengthy contracts. Serviced offices offer services and contractual terms that cannot be matched by conventional commercial accommodation. And although historically serviced offices have been primarily aimed at small businesses, a growing number of large companies are taking advantage of this type of space as they look to reduce their fixed cost base, and respond more swiftly to peaks and troughs in demand for their products.
Serviced offices cater just as widely for medium-sized and mature business much further along their growth journey. On top of this, even large corporates are having to change the way they work – employees are spending more time at the office than ever before – businesses have to strike a work/life balance – that’s why OSiT’s business model is so popular – we provide everything for basic workstations to rooftop cafes and serviced bedrooms.
Our latest building in Monument is symbolic of the next generation of serviced offices and our clients are provided with access to rooftop terrace cafes, bike rooms, beauty treatment rooms, and serviced bedrooms, where demand has been overwhelming.
What was your first big milestone and when did you cross it?
The completion of our high-design serviced office building at 20 St Dunstan’s Hill, Monument, and 10 Brick Street, Mayfair – two of London’s most exclusive and sought-after addresses in 2015.
10 Brick Street draws inspiration from the surrounding elegance of Mayfair, featuring a 1920s Great Gatsby style, complete with Art Deco staircase and glass atrium.
Incorporating a glamorous reception area with bold geometric stripes, bespoke offices, conference rooms, and break-out spaces, it provides exclusive space for businesses between 5 and 15 people. 20 St Dunstan’s Hill, designed in consultation with luxury yacht brand, Sunseeker, offers a nautical interior, complete with a 10 metre boat-shaped reception desk, suspended propellers and boat hulls.
The building incorporates stunning maritime designs, and facilitates a new style of working – providing a beauty treatment room, serviced bedrooms, and a rooftop terrace café/bar with views of the Shard and Tower Bridge. This working hub allows companies from 4-people to 60 to benefit from prime location and a beautiful working environment.
What advice would you give to other entrepreneurs?
Don’t be afraid to be the first to do something. A prime example of how we have taken the serviced office model one step further is our initiative to establish an independent valuation model.
Where do you want to be in five years’ time?
With the London serviced office market continuing to experience strong levels of demand, we are still actively pursuing opportunities to acquire buildings in the Capital to expand our existing portfolio. OSiT currently has 6 serviced offices and our aim is to have ten in central London within the next five years.
We are also looking to replicate the serviced office model into a new market: hotels. Our first hotel forms part of our development at Monument, and opened last November. It offers rooms at competitive prices and provides options to those working late to also have a place to rest and recharge their batteries.