If you're thinking about moving your company from one office to another, you will have many questions. One of the biggest of these is probably "what will it cost?". In addition to your lease and fit-out costs, you should also consider consultancy & legal fees, as well as removal costs. It's important that you consider the end-to-end costs of moving office, otherwise you may run out of project budget.
It's true that moving office is a big investment. Real estate is the second biggest overhead for most companies, only behind staffing costs. In urban centres such as London, real estate is much more expensive than elsewhere in the country due to increased demand and prestige. Relocating your London office will also face other costs that are higher than elsewhere in the country. This is especially true for labour costs and removal services.
Every week, we speak to London-based companies about moving their company from one office to another. Common reasons for this are lease expiry, company growth, or a change in their working model. Based on our 15 years of experience in relocating offices in the UK's capital, this article gives you everything you need to know to set an initial budget for your company's office relocation, including:
- Finding A New Space
- Survey & Legal Costs
- Office Fit out
It’s important that you start your office relocation with a comprehensive planning process. This plan will be your go-to guide over the next 12-18 months, keeping your project on track. It needs to include 5 key items: overall workspace strategy, project objectives, key milestones, new space requirements, and commercial feasibility analysis.
If you already have a fully defined workspace strategy that you are happy with, then there will be no upfront cost to planning your office move. Working with your management team, you will be able to distill your overall strategy into objectives for this specific project. You can then set your key project deadlines, define the specific features your new office will need, and build a business case to get project signoff.
If you need the help of a workplace consultant to help you develop your workspace strategy, this will cost between £1000 and £5000. This will increase or decrease depending on the size of your leadership team, the complexity of your needs, and any extra workshops required to fully define your workspace vision. To learn more, read What does workspace consultancy cost?
Finding a New Space
The cost of your office lease will be your biggest office relocation cost. Office rates are calculated per square foot per year. Depending on your office design, your staff will need around 150 sq/ft per person. To find out how much office space you need, read this article.
The advertised rent cost is different to the cost you actually pay. In addition to the space rental costs, you will also have to pay service charges to the landlord. This covers utilities and common services, from electricity to receptionists. Another additional cost is business rates – a tax based on the rental value of your office.
An experienced and well-connected commercial estate agent is essential to finding the right space, at the best possible price. Using their network, they are often able to find office space before it comes onto the open market. This makes the space cheaper, while their negotiating skills will further reduce the cost you pay. Some estate agents will charge a percentage of the fee they save against market rates, while others will charge a percentage of the overall rate. For many agents, this will equate to 3-5% of the first year’s rent, though this will vary.
Mayfair & St James's
Oxford St/ Covent Garden/ Soho
Farringdon & Clerkenwell
Kensington & Chelsea
Unsurprisingly, the cost of your office lease depends on two key factors: location and quality. The below rates are based on good quality space with standard amenities. For landmark buildings or tower blocks, the rates will be much higher. Lower cost (and quality) spaces will also be available.
Survey & Legal Costs
Once you have found the right space, you will need to carry out due diligence to ensure the space is suitable. A building survey by a qualified building surveyor is essential. They will produce a detailed report of the condition of the building, including any potential repair and maintenance costs you may not have included in your budget. Premises survey costs in London range between £1000 to £5,000. This will differ depending on the condition and size of the premises being surveyed, as well as the detail of the survey you require.
Commercial property law is complex, and a specialist solicitor will be necessary to negotiate the lease contract on your behalf. If you are not adequately protected in your terms, you could be liable for large costs in the future. Your legal costs for signing a lease will likely be between £2,500 and £10,000. It may be higher or lower depending on the size of your space and the terms of the lease.
The office you are vacating also needs to be considered. Most lease contracts have a clause stipulating that, at the end of the lease, the space must be restored to its original condition. This will typically involve partition strip out, redecoration, reconfiguring the utilities to their original state, and cleaning. Depending on how much you have changed your space from its leased state, this will likely cost between £8 and £20 per sq/ft.
In many situations, the landlord will be willing to negotiate a settlement. This will involve the landlord surveying the condition of the existing space and how much it has been altered. You will then negotiate a settlement sum, payable to the landlord, and they will waive the dilapidations clause. It is also important to review the dilapidations clause in the lease contract for your new space so that you understand exactly what will be required when you relocate again.
Office Fit Out
Of all the variable elements of an office relocation, the fit out is the most changeable. There are hundreds of things that can drive the cost up or help work it down. What your office fit out costs depends primarily on 4 factors:
Size is the one factor that will have the most impact on the cost of your office fit out project. This is not surprising, as many contractors calculate their quotes based on the quantity of materials required. Labour and margin are then factored into that cost. Due economies of scale, the sq/ft costs can be significantly lower for projects above 10,000 sq/ft.
The specification is almost as important as size when it comes to your office fit out costs. As mentioned earlier, a high-specification workspace can cost more than twice as much per sq./ft as a basic design. Upgrading the specification of your workspace will come at a cost, but often is a worthy investment.
Another element that can increase the cost of your project is the condition of the building. Older buildings with solid walls and floors are much more complex to alter, and the cost increases as a result. More modern buildings with features such as raised access flooring and easy access are much simpler to work in. In this situation, the costs will decrease.
Much like the structural state of your new workspace, the condition of the services can add unexpected costs to your office fit out quote. If they are in poor condition, they may require extensive remedial work before you can begin other works. Systems such as air conditioning and sprinklers are particularly expensive to adapt, as they require a lot of labour-intensive reconfigurations.
Based on office fit out projects we’ve carried out recently, most office fit outs will range from £50 to £100 per square foot. This means that for a 5,000 sq/ft space, a full category B office fit out could cost anything from £150,000 to £450,000 or more. To find out more about what your project will cost, check out our office fit out costs 2023 article.
The final key cost you will face in your office relocation is the actual relocation. There are several key factors that will dictate the cost of your office removal. The ease of access (what floor your offices are on, is there a good lift) will have a big impact on the cost, as well as the distance between the two offices. Other factors are how much furniture and fixtures have to be relocated, as well as the temporary storage required. The costs can vary massively depending on the above factors, but most removals cost £100-£150 per person.
Planning Your Office Relocation
Every office relocation is different, and there are many different factors that can affect the cost of your office relocation. The two most important are your rental costs and office fit out. These will control, to a large extent, what your office relocation will cost.
To take the next step in planning for your office move, download our ultimate office relocation guide. This is one comprehensive guide that will help you understand everything that goes into an office fit out, what it costs, and how long it will take. First, we’ll give an overview of what an office relocation is likely to cost your company. We’ll then go through the 8 stages of an office relocation. Each section will be accompanied by checklists, timeframes, and explanations. Download your ultimate office relocation guide here.