The hidden costs of renting office space

Renting office space can appear cost-efficient, especially when compared to serviced offices or co-working spaces, but the enticing monthly per square foot charges are frequently just the start of the costs.

The true cost of office rental includes a long list of recurring and one-off costs, charges, and fees. Your rent may be the biggest component, but you’ll find you are paying related invoices before you step foot in your office, and even after you have left it. Anticipating these costs can help you budget and may also highlight that other options offer you better value for money.

Upfront costs

Be ready for some legal fees before you even occupy an office. You might think office rental is simple and straightforward, but many have made that mistake and paid the price following disputes or just because they weren’t aware of additional charges.

Like any legal agreement, seek professional advice first. Then you can be confident that the lease terms you are signing are what you expect.

Fitting out your office

Most rented offices are unfurnished. That gives you flexibility, but also increases your costs.

Furnishings

At a minimum, you are likely to need desks and chairs for your workspace. But most offices need more. You might also need furniture for waiting rooms, meeting rooms, and staff rest areas and facilities.

IT and equipment

You will need to pay for the equipment that you will use, like computers and servers. You might also have to cover the cost of fit-out and installation, like cabling and networking, and potentially extra measures, such as additional security and ongoing IT support.

Decor

Rental units will typically be decorated neutrally, but few businesses want an entirely neutral office space. Whether it’s logos, displays, or just pictures to create some visual interest, you’ll have to spend more money to make it feel like your office.

Service charges

You are very likely to have to pay a service charge to cover the costs that are shared between all the occupants of the building. These charges may cover:

• Cleaning and maintenance of communal areas, like external doors or shared corridors.
• Staffing and running costs of a shared reception.
• An element to cover the long-term maintenance of the building, even if that maintenance doesn’t take place while you occupy the space.

Although you get these benefits at a fraction of their cost, the charges can quickly mount, especially if they include expensive items like multiple staff or facilities like lifts.

Other recurrent charges

Your rental, typically based on the area you occupy, will only be one of the bills that you have to pay.

Insurance

Just like your home, you will need adequate insurance for your office contents. The difference is that, unlike your home, you don’t have complete control over your premises and their security. That can mean your business insurance premium is increased to reflect the higher risk.

Utility bills

Bills like water and electricity are usually your responsibility. It’s always a good idea to check what metered connections you have and exactly what is on them. Items like air conditioning units, for example, can be expensive to run.

Taxes and rates

Taxes are a fact of life, and business rates can be a major financial burden. Depending on the valuation of the property, business rates can be eye-watering. And if you are in a Business Improvement District, you’ll face a further levy on those rates to fund work that promotes the wider area.

Lease-specific costs

A leased office cannot, typically, be adapted. Minimal changes, like hanging a picture or putting up a noticeboard, will not require permission. However, more substantial changes like repartitioning spaces or cutting into walls to add power or networking sockets may need landlord approval and attract fees.

These fees, which can range from a token application fee all the way to covering legal costs of a lease amendment, will apply even if your changes enhance the value of the landlord’s property.

General maintenance

You will be responsible for the condition of your office space. Every building will undergo wear and tear, and this will be expected. However, you’re likely to have to cover the repairs of damage to any areas under your control, such as fixtures and fittings.

For longer leases, you may also be required to decorate periodically to maintain standards. This might even include external areas where they form part of your space, like a small yard, parking spaces, and even external walls and windows.

End-of-lease charges

Even leaving your office can be expensive. A lease will generally include a condition that requires you to leave the space in the same state as you found it. This may mean you have to remove any adaptations you made — even if you paid fees to perform them — and return the overall condition to a suitable standard. Failure to do this may result in a breach of your lease and leave the landlord able to take legal action to enforce the terms.

The situation can be even worse if you want to end your lease early. Leases tend to be for fixed periods, and if you are not at a breakpoint, you might find yourself liable for exit fees. Indeed, sometimes the penalties may be greater than the cost of maintaining an empty office until you can end the lease. If you are a growing company or one that might relocate, more flexible options may be better.

Alternatives to traditional leased office space

Co-working and serviced office spaces are a popular option because of the transparency and flexibility they offer. Rather than renting, then watching all the extras mount up, serviced spaces charge a single fee. With predictable costs and no surprises, they are all-inclusive: you get a decorated, furnished office with IT infrastructure in place. Available on flexible terms, your offices can easily grow and change with your business. You might discover that it’s the cheapest way to secure the office space you need.

Explore our spaces to see how they can work for your business. To find out more, and see some of the beautiful offices we have — and the perks they offer — just get in touch.