If you’re building a startup, freelancing, or running a lean business in Singapore, you’re probably weighing your options: Do you need a virtual office address, or is it better to commit to a physical office space?
While most startups and small businesses gravitate to a virtual office in Singapore, the answer isn’t one-size-fits-all. It depends on your specific needs and what best fits your business operations. It will depend on whether a business can be run primarily from a residential address or if a company will need the more robust amenities of a commercial space, for example.
Below, we break down the key differences between a virtual and physical office, who they suit, and how to pick what’s best for you.
A virtual office and a physical office are two options that businesses, from small businesses to SMEs, can choose from when it comes to deciding on an office setup. However, they are completely different in terms of the services they offer to founders.
A virtual office gives you a professional business address without the daily presence of a physical space.
At Parkway Suites, for instance, virtual office packages give you access to our address at 60 Paya Lebar Road, along with mail handling and forwarding services.
A physical office means renting or leasing dedicated space. You have a traditional office setup: furniture, utilities (Wi-Fi, cleaning, electricity), and full-time access. Companies can manage and adapt the physical office as they see fit, giving them operational flexibility.
However, leasing an office space comes at a higher cost.
In addition to the lease, companies typically need to renovate the space before they can go about their business operations, as well as acquire on-site equipment, such as computer units, before using it as their base of operations.
Agreements on leasing a physical office space will vary from building to building, however.
A virtual office is the natural choice for startups due to its low cost and flexible solutions. However, there might be instances where a traditional office would better suit a business as opposed to a virtual office solution.
Determining whether a virtual office or a traditional office would be better is not an objective definition. Factors would be nuanced and case-to-case, involving factors such as how much capital the startup has raised or if the startup operates in such a way that doesn’t make remote work possible.
Understanding the most critical differences between a virtual office and a physical office is detrimental to making that business decision. The biggest differences between them involve the following:
The company’s work layout and setup refer to the structure, environment, and arrangements a business establishes for how its employees work. It covers where work happens (onsite, remote, hybrid), what tools and systems teams use, and the policies or norms that shape day-to-day operations.
A virtual office does not give employers a dedicated workspace they can walk into every day. Startups operate remotely and rely on a commercial address for company registration and representation.
The virtual office’s layout is entirely external to the business’s daily routine. Employers might be working from home, a café, or a coworking space, while the provider supplies the business address that appears on registration documents and marketing material (e.g., company website). If employers need to meet clients, they’ll have to book coworking space through their virtual office provider.
This setup keeps things flexible and low-commitment.
A physical office, on the other hand, provides companies with a private space where their team can gather. The space is entirely theirs for their business operations, so they may renovate it to better reflect their brand and work culture.
This setup is imperative if a company needs to collaborate in person or handle work that requires a controlled environment. A physical layout also gives the team a predictable place to work every day, which can support focus and routine.
An arrangement with the provider refers to the contract between a founder and an office provider, as well as the policies that govern how the office service is used. This area outlines which benefits and amenities founders are entitled to and restricted from.
A virtual office arrangement revolves around service provision rather than tenancy. Startups subscribe to a virtual office plan or package as opposed to leasing a space.
This grants access to a business address, mail handling, mail forwarding, and other administrative services. Companies do not have to deal with fit-outs, furnishing, facility upkeep, or office reinstatement. The office plan subscription renews monthly or annually, and companies upgrade only when they need more services.
A physical office arrangement involves renting or leasing commercial space. Even in serviced offices, where furniture and utilities are provided, the agreement still involves the exclusive use of a dedicated space. Companies are committed to a room or a building floor.
The arrangement will usually depend on the building or landlord. In some cases, the provider manages the space. However, in other cases, the tenant is responsible for the management and upkeep of the physical space, requiring them to hire housekeeping.
The services which founders are provided with will differ depending on when they lease space in a commercial building or subscribe to a virtual office’s rental plan.
Virtual office services focus on administrative needs and corporate compliance. Companies receive a registered office address, mail alerts, and mail forwarding, among other services. This setup suits companies that want strong business credibility without the cost of daily office usage.
Physical offices deliver the space and building amenities that come standard with the tenancy (e.g., office gym). This gives the company a dedicated physical space that allows the team to work on-site or host client meetings. This suits companies that rely on teamwork, walk-in clients, or whose services and operations require a structured workplace environment.
Both virtual offices and corporate spaces have their fair share of amenities that founders can take advantage of. However, the nature and types of these amenities will differ between the two:
Virtual offices offer amenities on an as-needed basis. You can book coworking spaces, or request additional services such as courier assistance for cheque drop-offs.
These amenities work like add-ons: companies only use them when necessary. The provider maintains the spaces, and employers tap into them during business operations. This keeps overhead low while still providing access to a professional environment (e.g., coworking space) whenever needed.
Physical office amenities will depend on the building or landlord. These amenities range from basic air conditioning to building-level amenities, such as common areas, 24/7 security, lounge areas, a gym, and a reception desk.
Also, with a physical office, employers can furnish their unique workplace amenities. They won’t have to book, queue for, or share these amenities with other companies. However, they would be responsible for these facilities’ upkeep.
Utilities are overhead costs that founders would inevitably have to pay, whether directly or indirectly. How they pay for utilities and how these are factored into the bills they pay differ between a virtual office and physical office, however.
Virtual offices remove the burden of utility management. Startups do not pay for Wi-Fi, electricity, air-conditioning, water, or cleaning. These services are built into the provider’s operational structure. Since startups do not occupy full-time space, utilities remain invisible to them.
Physical offices require regular consumption of utilities.
In a serviced office, the provider includes them in the monthly fee. In a traditional office, employers may need to set them up and maintain them on their own.
Utilities are part of ongoing overhead because the team works on-site and needs the lights on. For many companies, this is worthwhile because the stable work environment improves productivity and workflow consistency. However, for startups, this can be a hefty overhead cost that they’d want to be rid of.
Founders will need to hire staff down the road, especially if they wish to scale operations. However, when it comes to virtual offices and physical offices, the roles they’ll have to hire will differ between the two:
Virtual offices do not require startups to maintain in-house staff. Receptionists or administrative personnel from the provider handle mail and forward it to the subscribing founders.
Employers relying on virtual offices can run a fully remote team, and everyone works from their preferred location. This setup works for freelancers, lean startups, or international companies without employees in Singapore.
Physical offices would require employers to maintain receptionists, customer service, and housekeeping staff, to have the same utility as those relying on virtual office packages. Physical office leases only provide startups with a working space, so these companies would need to hire the earlier-mentioned roles separately.
These physical offices also support on-site teams. Staff work together, interact daily, and make use of the space for meetings and planning.
The cost of partnering with a virtual office compared to leasing a traditional, physical office will be vastly different:
Virtual offices are much more cost-effective. You pay a modest monthly or yearly fee for a virtual address, mail handling, and administrative services. You avoid the high overhead of rent, utilities, furniture, and long leases.
This creates significant cost savings for small businesses, solo founders, and foreign registered companies that only need an office address in Singapore.
Physical offices require higher spending.
In traditional office settings, companies pay for space, utilities, furnishings, and sometimes long-term commitments.
Serviced offices reduce much of the setup cost, but the recurring fee still remains higher than that of a virtual office. This investment makes sense when your business relies heavily on on-site collaboration or when your brand benefits from a full-time physical presence.
With these differences taken into account, it’s evident that the option between a virtual office and a physical office will ultimately depend on the nature and structure of the company.
A virtual office makes sense for:
A physical office works for:
A virtual office provides your startup with a professional address without the associated costs of a traditional physical office. At an entry rate cost, startups can manage business correspondence with government agencies and project professionalism to business partners, all while working from a home office.
Parkway Suites is a strong contender for your business image. With Parkway Suites, you’ll benefit from:
Ready to set up a virtual business address or explore serviced offices? Get in touch with Parkway Suites today.
Yes. A Singapore virtual office can serve as your registered office address, compliant with ACRA requirements. Some providers, like Parkway Suites, also offer ACRA-free mail alerts and official government correspondence management.
Yes. Many providers, including Parkway Suites, offer both virtual office plans and serviced offices, allowing companies to start small and upgrade to a dedicated physical space when needed.
Absolutely. Virtual offices let you use a professional address instead of your residential address, keeping your home office scheme private while maintaining business credibility.
Virtual office providers receive mail at your virtual business address. They can forward it locally or alert you about incoming correspondence, making it easy to manage your business remotely.
