Hidden Costs of Renting an Office (and How to Avoid Them)
Are you looking to rent a new office that will help take your business to the next level? Whether this is your company's first office or you're looking for a new space that better suits your needs, scouting out new office space is always an exciting time for any company.
However, it can be easy to get lost in all that excitement and completely overlook the additional costs that come with moving to a new office. While the advertised rent price may seem like an affordable offer at first glance, sneaky hidden costs lurking beneath the surface can quickly add up. From utility bills to service fees, the price of an office space can end up being much higher than what you initially anticipated and budgeted for.
To empower you on your office search, we've put together a list of all the hidden costs you'll need to look out for before you rent your new office space in the UK. Plus, we've included our best tips for avoiding these extra costs.
Utilities and services
Utilities can quickly add up and become a substantial add-on to your rent costs, especially during the current cost of living crisis. Heating, electricity, and water bills all fall under this category and are essential to keeping a comfortable office environment. The cost of these bills is dependent on your company's usage and needs as well as the property's location. For instance, utilities for your office space might cost more in bigger cities like London or Manchester compared to smaller cities and towns.
So, how can you avoid these costs? You may be able to cut down on these expenses by choosing an energy-efficient building, negotiating lower rates with your landlord, or choosing a location with a bundled service package.
Furniture and equipment
If your office space comes unfurnished or needs any additional furniture or equipment, you may have to budget for these additional expenses. Desks, ergonomic chairs, computers, and other equipment you may need can quickly become costly. Furniture rental services may be a helpful option to spread out the cost over time, but this will still add to the overall expense.
How can you avoid this expense? Nowadays, many businesses find the convenience of ready-to-use furnished offices much more appealing. These offices often come fully-fitted with state-of-the-art equipment for your workspace, with their costs included in its monthly rate. Usually priced by the desk, fully-furnished serviced offices and semi-serviced offices allow you to only pay for the exact amount of space you need without you having to shell out extra cash for furniture and equipment. You'll also benefit from fully furnished breakout spaces and meeting rooms to help your employees rest and recharge.
Or, if you want to fit out the space with the furniture and equipment of your choice, a great option to reduce this upfront cost is a managed office. With this style of office, you can choose the exact furniture, decor, and layout you want before the start of your tenancy. Then, the cost of this bespoke fit-out is spread across many months of office rent. While you still have to pay for the desks, chairs, beanbags, football table, or whatever else you choose to include, this method of spreading the cost over your tenancy can be beneficial to your budget.
Maintenance and repairs
In an ideal world, nothing would ever go wrong with your office space. But unfortunately that's not the case, and while you're using your office you might run into the occasional hiccup. While the landlord is generally responsible for maintaining the whole building and common areas, you may be responsible for all repairs and maintenance costs for your office.
These maintenance costs can range from small ones like cleaning and light repairs to larger ones such as fixing leaks or a malfunctioning HVAC system. These maintenance rates can add up to as much as 30% of your rent – a pretty hefty price tag – so it's important to factor in potential maintenance and repair costs when budgeting for your new office space to make sure your facilities are always operating smoothly.
If you're worried about the cost or hassle of maintenance and repairs, opting for a non-traditional office such as a coworking space or serviced office is the way to go. In these setups where the office is managed by a vendor who takes care of multiple smaller offices or coworking areas, the vendor is responsible for all maintenance and repairs duties. This is more cost-effective for the vendor – servicing three coffee machines is not much more expensive than servicing just one, for example – and this is reflected in the cheaper rental fees. Plus, the vendor handles all these problems efficiently on your behalf, meaning that issues of this sort are unlikely to have an impact on your team's workflow.
Security and insurance
If you're planning on storing valuable equipment or products in your office, you'll need to make sure that the office space is secure and properly insured. While most landlords carry insurance on the building, some may ask you to share this cost or require you to purchase additional insurance for your own workspace and equipment.
You might also need additional security measures, such as cameras or security guards, to ensure your office is properly protected, which may come at an additional expense. Before renting new office space, make sure you carefully assess the risks associated with your business to determine what level of insurance and security you'll need.
Many modern office spaces offer different amenities like a gym, multiple meeting rooms, and on-site cafés. While they can be appealing, they sometimes come at an additional cost. Access to these facilities may come at an additional cost incorporated into your rent or you may be charged on a per-use basis.
Of course, when looking for a new office space you're probably keen to find a space that excites and inspires you. A great office space can have a wide range of benefits for your business, from boosting employee retention and attracting new candidates to apply for roles to boosting collaboration and workplace culture. For this reason, it's important to carefully consider which amenities you really want and how you will be charged for them.
One of the best ways to get access to great amenities without having to pay through the roof is by opting for a more communally-focused flexible office style such as a coworking space. Known for providing great amenities and a more social work style, coworking tends to include all these amenities in the monthly membership cost so you know what you'll be charged each month.
Taxes and fees
UK business rates are also an essential cost to factor in when looking to rent a new office space. In the UK, companies are required to pay business rates – a local tax paid for any property used for business or a non-domestic purpose. These rates can vary depending on the location of your office (for example, an office space in the centre of London will have different rates to one farther out of the city) and are calculated based on the rental value of the property. To get an estimate for your office, have a look at this business rate calculator from the UK government.
Often, these business rates aren't included in the advertised rental price. You might be eligible for discounts, such as a small business rates relief, so make sure you research any options available to you – especially if you are planning to move to an office in an expensive city like London.
And finally, if you've had a great experience with your chosen office space and choose to renew your lease, make sure you read your lease agreement carefully in case there are any hidden renewal costs. This may include rent increases, lease extension fees, and other fees. By doing so you'll be able to avoid any unexpected expenses.
Minimise hidden costs with your new office space
With so many sneaky hidden costs associated with renting an office, finding your business' new home can feel like navigating a minefield. Especially for an overworked and time-poor business leader, searching for a space that fits your budget and offers all the amenities you want is a real challenge. And it's even trickier when you're searching in a desirable location like London, Edinburgh, Manchester, or Birmingham!
That's where Future Squared comes in. As an office brokerage service specialising in matching businesses with flexible office spaces such as serviced, managed, or coworking office spaces, we help find the perfect options for your budget and negotiate wallet-saving deals. We offer a wide variety of office sizes, types, and lease options to meet every company's unique requirements all around the UK.
Whether you're a tech start-up looking for a new base in trendy East London, or an established business looking for a fresh start in Bristol, we'll be able to find the perfect home base for you and your team. Simply contact us or have a look through our complete portfolio with our office search tool to help you get started on your search.