Confined office space is a demotivator for staff AND clients

We have talked about making the most of your office space, especially how office space design is a significant influence over productivity. It is easy to see the conflict of interest that this entails.

Crammed Office

The sardine effect

Businesses are squashing more workers into tighter spaces due to the pressure to cut costs. There is a growing feeling of unhappiness among employees who feel they are not getting sufficient personal space. If you are wondering what the situation regarding crowding is in London, please hop on the tube during rush hour! I have full confidence that you will have a new, more sardine like perspective.

Remember this when you are looking for an office, it is important to maximise the use of your space, but also keep in mind that turning your office into a battery farming experiment is a bad idea!

Over the last few years, the amount of office space available per employee has fallen by over a third. Planners now consider every square foot of office space right down to the size of the toilet! Your budget allowing, you should consider leaving some headroom, it is especially useful for if you plan to expand in terms of staff number as well as giving your current employees more space.

Telecommuting
If your business fits into the category of one that uses hot desking and flexibility through telecommuting, it might be somewhat more acceptable to employee tactics suck as reducing space between desks, dropping partitions and cutting storage.

Implications
One only has to look at the animal kingdom to see the effects of overcrowding, it is natural to get bad tempered and defensive in a confined space. In an open plan environment, a lack of room can make people feel threatened due to a lack of privacy. This even foster an unhealthy feeling of competition amongst workers through being always on display. Ultimately, it could go as far as causing absenteeism and staff turnover levels to soar.

The bottom line
The biggest cost in business is going to be your staff, so why waste that money by demotivating them with an awful work environment?

With increased tax rates and banking on the floor, the press has been full of articles about high profile business leaders leaving London. Cities such as Geneva are competing for high net worth immigrants with a less punative tax regime and fewer regulations.

Politicians need to think carefully about potentially shooting themselves in the foot by taxing businesses out of the country. They came here to make money in a sympathetic environment and are certainly not tied to our shores.

Having said this, in the longer term we suspect London will continue to be Europe’s pre-eminent commercial center because of its unique offering of culture, history, cuisine, (ever improving) legal system, time zone, education, and language.

While super league business leaders may seek personal shelter in foreign climes, most of their employees on more modest salaries will be disinclined to relocate abroad.

London is also likely to be helped by a steep decline in office space costs. Prime office rents in the West End, for example, have almost halved in the last year and eye watering incentives (such as “rent free periods”) are being negotiated by savvy tenants in the City and Canary Wharf, who are prepared to sign up on leases.

At FindaLondonOffice we make it our mission negotiate every deal to attain the best possible terms for our clients. Contact us to find out more about how we can save you time and money.

It might seem like a good idea to search for your own office space, but as I mentioned in the post regarding frequently asked questions, the process takes time. Although some people do succeed, there are many details to consider. Many companies seek advice as trying to do it can take an inordinate amount of time.

Why is it time consuming?

1. To get details of everything that’s available around Central London you would need to contact around 500 firms. That’s a lot of phone calls to make!
2. After you identify the offices that fit our requirements, how do you value them?
3. Can you identify the lease terms you need to negotiate? Having a good  understanding of current market conditions is key to securing the best deal.

At FindaLondonOffice, we have inside market knowledge and contacts, as well as access to databases that allow us to find London office spaces that have not yet hit the main market.

Without turning this into a sales pitch, I would like to point you towards the nature of comments we receive from our clients:

Their great strength from the standpoint of another professional is their diligence in <strong>getting the detail right</strong> – not something that I always come across in their competitors. They follow through on the process and I know when they are involved that the client will have all the back up needed.

Colin Cannings, Senior Partner, Cannings Connolly – Solicitors

This industry requires a meticulous work ethic.

So what are business rates and and how do they affect me you ask? Here is a Q&A:

1. Are Business Rates important to me?
2. Can the Business Rates be challenged and reduced?
3. Does HM Revenue & Customs always get the Rateable Value correct?
4. Is an appeal easy to lodge?

Are Business Rates important to me?
In a word, yes. It’s a tax on business occupiers fixed by the Government (HM Revenue & Customs) and collected by the Local Authority to pay for all their expenditure including education and services such as Police, Fire Brigade and Refuse collection.

Can the tax be challenged and reduced?
Yes. The basis of charge is the Rateable Value, which is reviewed every 5 years and can be challenged.
The annual amount by which the RV is multiplied to produce the rates bill is fixed by the Government and cannot be contested.

Does the Inland Revenue always get the RV correct?
No. The current figure is supposed to be the Rental Value at 1st April 2003
In many cases the Inland Revenue had to estimate this figure and may have over pitched their answer, resulting in an over charge to the occupier.

Is an appeal easy to lodge?
Yes. A rating advisor will probably charge on success so if there is no saving there will be NO FEE

Get an advisor to check your Rating Liability. It could result in a substantial saving.

As we discussed while breaking down the costs involved with running London office space, there are several costs to consider aside from rent.

Service charges, usually expressed as a rate per square foot occupied (i.e. £6.00 per sq ft per annum), are paid to landlords or managing agents for running multi let office buildings.

Common service charge items may include:

• Rubbish Collection
• CCTV
• Lightning Protection
• Pest Control
• Water Rates
• Electricity
• Cleaning Common Parts
• Lift Maintenance
• Telephones (Lift)
• Telephones (Security)
• Health and Safety
• Access Control Systems
• Air-conditioning
• Heating
• Security
• Fire Precautions
• General Maintenance
• Engineering Insurance
• Public Liability Insurance
• Building Management

An additional payment of £0.65 – £0.75 per ft² will be charged for Buildings Insurance.

The service charge elements will be slightly different, dependent upon the building – it depends exactly how they are run.

We receive many queries regarding commercial property in London, to save you time we have put this list together.

With this post we will answer the most frequent questions, however if you require additional help, register to talk to one of our experts.

The questions include:

1. How Long Does it Take to Find a London Office?
2. Do London Offices Have Car Parking?
3. Should I Rent or Buy?
4. What Are Service Charges?
5. What Are Business Rates?
6. What Do I Need to Know About Security and London Buildings?
7. What is DDA and Who Pays It?
8. Is VAT Paid on Rent?

1. How Long Does it Take to Find a London Office?

• Longer than you may think
• 2 weeks to inspect what’s available
• 1 week to agree terms
• 4 weeks with the solicitors

But any of these elements can take longer which is why it is useful

2. Do London Offices Have Car Parking?

• Car parking is a rarity in Central London
• Insist on having car parking, and your choice of offices is limited
• Any car parking is expensive
• Say £3,000-£5,000 per annum plus rates, and then add the congestion charge!
• Offices with car parking can be found
• Most occupiers rely on the excellent communications in Central London

3. Should I Rent or Buy?

• Most companies rent
• Freeholds can be bought, but they are difficult to find.
• Own a freehold, and you may be on 5 floors; this may not suit
• Freeholds are a major capital commitment, however, buying a freehold can be a great investment.
• More info: freehold versus leasehold

4. What Are Service Charges?

• With your own self contained building, you operate it and you pay the bills.
• When you rent part of a building, you pay the landlord towards the running costs, i.e., heating, maintenance, commissionaire etc.

For more information, see the Service Charge Guide

5. What Are Business Rates?

• They are a property tax charged to the occupier by the local authority
• The cost can vary very widely; they can cost as much as £20 per sq ft a year

For more information, see our post on Business Rates

6. What do I Need to Know About Security and London Buildings?

• This can be very important to some companies
• Not all buildings have a good level of security at all
• Secure buildings tend to have higher service charges – you get what you pay for
• Options are a commissionaire, video entry, CCTV, card entry systems

7. What Is DDA and Who Pays It?

• This is the Disability Discrimination Act
• Buildings must comply

For more information on DDA

8. Is VAT Paid On Rent?

• Generally yes
• Most buildings are now VAT registered, so VAT is payable
• Some VAT free buildings can be sourced for those groups that cannot reclaim VAT, e.g. banks etc…but it’s difficult

Your Office Style is Important

While one would be forgiven for assuming this post is directed at discussing the effect painting your walls blue has on your well being, there is a more important business purposes behind it.

The most important consideration is productivity. Getting feedback from your staff is the key to achieving this. Of course, if you can afford it, it is worth considering having professional planning done.

These are some of the questions you need to consider:

• Does a modern or period style better reflect your company?
• Do you need to be on the first floor?
• Do you require a self contained building?
• Do you require air conditioning, or is central heating sufficient?
• Must you have a commissionaire?
• Do your offices need to be prestigious, utilitarian, or perhaps funky?

Of course the reality is that many put keeping the cost low ahead of all of these factors. However, an office is an investment. If your premises is to be client facing, you might want to choose a more prestigious area due to the effect it will have on the perceived value of your business. Consider that if your product or service is high value, the difference of very few leads generated through this decision could more than make up for the cost.

If you may generate leads or customers from passers by, getting a ground floor location could make a dramatic difference.

On the other hand, if your London offices are not to be client facing, choosing a different district can make a dramatic difference in terms of price. Be sure to check the London office prices guide if you want an up to date approximation of current prices for office space in London.

The other questions raised here all have one thing in common. Can you guess what it might be?

That’s right, they all affect productivity. Research done on employee thoughts on their workspace revealed over 90% consider their office space as being important for their productivity level.

Also, consider growth, it might save you a headache later down the line.

I will be posting more about this research so stay tuned.

Rather than simply naming a cost per square foot, our clients prefer to understand the full breakdown of what is needed to pay for their London office space.

Ultimately, rent constitutes the largest cost, however it is important not to overlook the other reoccuring costs and of course the initial sums involved.

At FindaLondonOffice, we aim to make all costs as lucid as possible to make matters simpler for our clients.

In this post, we will systematically answer the 6 main questions we receive regarding costs:

1. How Much Are Office Rents In London?
2. What Are Recurring Costs Involved In Renting A London Office?
3. What Are One Off Costs Involved In Renting A London Office?
4. What Are Business Rates?
5. Is VAT Paid On Rent?
6. What If I Have An Existing Office?

1. How Much Are Office Rents in London?

These vary widely dependant on location and type. For more information see our rental guide.

2. What Are Recurring Costs Involved in Renting a London Office?

The main property costs are rent, rates and service charges.

3. What Are One Off Costs Involved in Renting a London Office?

• Fit out costs
• I.T. and data expenditure
• Removal costs
• Legal costs
• Stamp duty
• Surveyors fees
• Other services engaged

4. What Are Business Rates?

They are a property tax charged to the occupier by the local authority
The cost can vary very widely; they can cost as much as £20 per sq ft a year.

5. Is VAT Paid on Rent?

Generally yes. Most buildings are now VAT registered, so VAT is payable.
Some VAT free buildings can be sourced for those groups that cannot reclaim VAT, e.g. banks, but this is difficult.

6. What if I Have an Existing Office?

The trick is to minimise any duplication of cost.

For more information on disposal of space, talk to us.

London Office Space Decision Making

London offices can be obtained in a huge range of very different areas. Some are smart established corporate areas where rents are high, and others are less so. This may sound simple in principle, but making the right decision is another matter. The difference of £1 per square foot in rental has a huge impact on the overall cost.

Which London location do you need?

• It’s important to decide what you need, and why.
• It’s important not to pay for better than you need.
• Where are you based already, and do you want to stay there?
• Do you want to be located where your competitors are?
• Communications: who needs to get to your office, and from where?
• Every area has a different image: what image do you want to portray to your clients and your staff?

Communications and infrastructure:

• The central business districts are very well served by the London Underground system, London buses and taxis.
• Close proximity to an underground station is a big plus, particularly for companies who work beyond normal office hours.
• For companies who need access to areas outside London, consider which London mainline station is the most relevant.

Choose a Location

Of course, I would recommend you seek the advice of an experienced commercial property agent to ensure that no step is overlooked.
Meanwhile, use the navigation to find information and price guides for the main Central London areas, as well as links to currently available office space.