Should You Lease an Office or Rent a Furnished One in Kingston?

If your team is one to eight people and you need space in Kingston soon, a furnished office on a short agreement will often cost less in year one than a conventional lease, because you skip the fit-out, the furniture, the utility accounts and the five-year commitment. A conventional lease starts to win when your team is larger, your plans are fixed for five years or more, and you want to design the space yourself. The rest of this post shows how to run the numbers for your own situation, so you are comparing the full cost of each option and not just the rent on the listing. Our own furnished offices, KEILTY Workspace at 863 Princess Street, are opening soon, and we use their published rates as the example. Call 613-545-3322 for the current move-in date.

The short version.

• A listing's rent per square foot is only part of a conventional lease; additional rent, fit-out, furniture, utilities and internet sit on top of it.
• A furnished office bundles those costs into one monthly fee, so the fair comparison is your all-in monthly cost under each option.
• The biggest difference is often commitment, since a conventional office lease runs for years while a furnished office agreement can run month to month after a short minimum.
• Growing teams, teams between leases and firms testing Kingston can use a furnished office first and sign a longer lease once the headcount settles.

What are you really paying for with a conventional office lease?

A conventional office lease is priced per square foot, per year. The number on the listing is the net rent. On a net lease, you also pay additional rent: your share of the building's property taxes, insurance and common area maintenance. Landlords sometimes call this TMI. It is quoted separately and it can move from year to year as the building's costs change.

Then there are the costs that never appear on the listing:

• Fit-out. Walls, doors, flooring, lighting, network cabling and a kitchenette. A landlord may contribute an allowance on a longer term, but anything above the allowance is yours.
• Furniture and equipment. Desks, chairs, meeting table, storage, printer and phones.
• Utilities and services. Hydro for your suite in many buildings, internet, cleaning inside your suite, and your own tenant insurance.
• Professional fees. Having a lawyer review a multi-year lease is money well spent, and it is still a cost.
• Your time. Someone on your team manages the build, the move, the contractors and the utility accounts.

None of this makes a conventional lease a bad choice. For an established firm with a stable headcount, a long lease gives you control over the space and a known base rent for years. It simply means the rent on the listing is the start of the calculation, not the end of it.

What does a furnished office include?

A furnished private office is a lockable office inside a shared, professionally run suite. You pay one monthly fee, and the operator provides the furniture, the internet, the utilities, the common areas and the building relationship. You bring your laptop.

At KEILTY Workspace, our furnished offices at 863 Princess Street, Suite 301 include furniture, high-speed Wi-Fi, heat, hydro and air conditioning, weekly cleaning of the common areas, reception and mail handling, a shared kitchen, 24/7 fob access, four meeting room hours a month and one free on-site parking space per office. Our published rates run from $455 a month for a compact single-person office to $1,830 a month for a corner office that fits three or four people, all plus HST. The current rates are listed on our furnished offices in Kingston page.

What you give up is control over the layout. You cannot move walls, and you share the kitchen, the meeting room and the reception area with other members. For a team of one to eight people, that trade can be worth making, using a team suite of two or more adjoining offices, which suits teams of about 3 to 12 and starts with a two-office suite priced for 2 to 4 people.

How do you compare the two on a monthly basis?

Convert both options into one number: your all-in cost per month over the period you actually expect to need the space. Here is the arithmetic for a conventional lease.

1. Add the net rent per square foot to the additional rent per square foot, multiply the total by the suite's rentable square feet, then divide by 12. That is your monthly occupancy cost.
2. Add your monthly estimates for suite hydro, internet, in-suite cleaning and tenant insurance.
3. Take your fit-out cost (after any landlord allowance) plus furniture and equipment, and spread it over the number of months you expect to stay, so divide by 36 for three years and by 60 for a five-year term.
4. Add the three lines together.

For a furnished office, the calculation is shorter: the monthly fee, plus any extra services you would buy, such as additional meeting room time or coffee service.

Now run a worked illustration. The figures below are round numbers chosen to show the method; they are not a quote for any building, and you should replace every one with the numbers from the listings and quotes in front of you. Say a two-person firm looks at a 600 square foot suite at $15 net plus $13 additional rent. That is $28 a square foot, or $16,800 a year, which is $1,400 a month before anything else. Add $250 a month for hydro, internet, cleaning and insurance. On a five-year term, add $30,000 of fit-out and furniture spread over 60 months, which is $500 a month. The all-in figure is about $2,150 a month, and the firm has committed for the full five years. Spread the same $30,000 over the 36 months of a three-year term and it is $833 a month, which puts the all-in figure at about $2,483.

The same two people in a KEILTY Workspace window office pay $725 a month plus HST, with parking for one car included. Two people who want more room could take a large office at $1,035 a month. Note what the 600 square feet is carrying: at 300 square feet each it is roughly double a normal space plan, and that suite holds its own kitchenette and meeting space, which the furnished office provides in the shared areas. Both sides of this comparison are before HST. The illustration is not the point. The point is that the costs outside the rent can add a large share on top of the listing figure, so compare all-in numbers only.

Which costs are easy to miss when you compare?

Four items catch people out.

• Additional rent that rises. Property taxes and building operating costs change. Ask the landlord for the current year's estimate and the last few years' actuals.
• Parking. Ask whether parking is included in the lease or charged separately, because downtown parking adds up. Price one or two spaces for every person who drives.
• Meeting space. A conventional suite big enough for a boardroom costs rent every day of the year, even if you meet clients twice a month. A shared meeting room booked by the hour can be cheaper.
• The empty-desk cost. A lease sized for the team you plan to have in three years means you pay for empty desks today. A furnished office lets you pay for the team you have now and add an office when you hire.

How much does the commitment matter?

Often more than the rent. A conventional office lease runs for a fixed term of several years, and that commitment is yours unless you assign, sublet or negotiate your way out. Landlords will also look at your financial statements and may ask for a personal covenant from the owners of a small company. If the business moves, shrinks or is sold, you may be negotiating a sublease or an assignment.

A furnished office agreement is shorter and simpler. At KEILTY Workspace the minimum is three months, then month to month on 30 days' notice, with a deposit of one month's fee, and the current terms are set out on our furnished offices page. That flexibility has real value if your headcount is uncertain, if you are waiting for a longer-term space to be ready, or if you are testing Kingston as a new market.

When does a conventional lease make more sense?

Choose a conventional lease when most of these are true:

• Your team is larger than about eight people, or you need a specific layout such as a lab, a clinic, a retail counter or a secure records room.
• Your headcount and location are settled for five years or more.
• You want your own signage, your own entrance and full control over how the space looks and runs.
• You have the capital, or a landlord allowance, to fund the fit-out and furniture.

KEILTY also manages conventional office space for lease. If your needs fit that list, see our office space for lease page and tell us what you need.

When does a furnished office make more sense?

A furnished office tends to fit when:

• Your team is one to eight people and you want a private, client-ready office without a build-out.
• You need space soon and do not want to wait for a build-out.
• Your plans for the next year or two are uncertain, or you expect to grow.
• You are a regional or satellite team that needs a local base in Kingston.
• You are between leases and need somewhere professional to work while your permanent space is prepared.

Teams that need two or more offices side by side can take a team suite, which is priced at the combined rate of the offices less 10%.

What should you ask before you sign either one?

Whichever route you take, ask these questions in writing and keep the answers with the agreement.

• What is the total monthly cost, including every fee, plus HST?
• How long is the minimum commitment, and how much notice does each side need to give to end it?
• How much is the deposit, and how and when is it returned or applied?
• How does the fee change each year?
• Is parking included, and how many spaces?
• What are the access hours, and when is the space staffed?
• Can you use the address for your business registration and your website?
• Who do you call when something breaks, and how fast do they respond?

Our rates, inclusions, parking and access are published on our furnished offices page, and you can see the monthly total, HST, the deposit and the annual fee increase for any office on our get started form before you commit to anything.

What do businesses ask about leasing versus renting a furnished office?

Is a furnished office cheaper than leasing an office in Kingston?

For a team of one to eight people it is often cheaper in the first year or two, because the monthly fee includes furniture, internet, utilities and common areas that a conventional lease leaves to you. For a larger team with settled plans over five years or more, a conventional lease can cost less per person.

What is additional rent on an office lease?

Additional rent is the tenant's share of the building's property taxes, insurance and common area maintenance, charged on top of the net rent on a net lease. It is quoted per square foot per year and can change as the building's costs change.

How long is a furnished office agreement at KEILTY Workspace?

The minimum term, the notice period and the deposit are published on our furnished offices page.

Can I move from a furnished office to a conventional lease later?

Yes. A furnished office works well while your headcount settles, and you can sign a longer lease when you are ready. Because KEILTY also manages conventional office space for lease, we can talk through both options with you.

Want to see the offices for yourself? Book a tour of KEILTY Workspace at 863 Princess Street on our furnished offices page, or call 613-545-3322. A.J. Keilty returns every enquiry within 20 minutes during business hours.