If your business is based in London, running an office is probably one of your biggest costs, second only to staff salaries. Here are our top 6 tips to save money on London office space. Some of them may seem obvious, but when our clients consider all of them, we have always helped them make significant savings.
(NB. Most of these tips apply to businesses in conventionally-leased offices. We will be writing an equivalent list of ways to save money on serviced offices in due course)
Let’s get started.
For many companies their post-pandemic office needs to be a collaborative, inspirational and efficient working space. But size really does matter because the annual rent is calculated on a per square foot basis. The bigger the space, the more you pay in rent and other recurring office costs. In a period of inflation, with historically high utility bills, the imperative to reduce costs is more relevant now than ever. However, your company can ensure value for money by planning your office use in the most efficient way. For example:
- Reducing desk size
- Operating in a more collaborative open plan workspace
- Storing less and going paperless
- Adopting a flexible strategy to facilitate some of your team working from home on rotation
Office occupiers used to be inflexible when it came to location. Film & media businesses wanted to be in Soho, bankers were based in The City of London, the garment (shmatter) trade worked North of Oxford St, government departments were in Westminster, exclusive family offices and FTSE 100 HQs favoured Mayfair & St James’s, solicitors renting their offices in Holborn and no one really wanted to work in Clerkenwell!
Well things have changed and modern businesses are now far more flexible and mobile. You just need to look at our Central London office rental guide to see that some great business locations are much cheaper than others! You can locate your office in the perfect position and spend less money. And many offices in Clerkenwell now provide a very popular, high quality creative environment – perfect for modern workspace requirements!
Some great business locations are much cheaper than others! You can locate your office in the perfect position and spend less money
So initially, always search the entire office market. When you have identified potential locations, you should undertake a comprehensive office search to identify full market availability and pricing.Back to Contents
When you have done your homework and undertaken a comprehensive office search you need to look at comparative pricing. If you have an office agent, they will be asking landlords for indicative terms so they can advise you on the commercial terms you can negotiate. In the correct market conditions, your landlord may offer an initial rent-free period. Correctly negotiated, these opportunities can save you significant sums of money.Back to Contents
Landlords naturally love rental streams for as long as possible. But from a tenant’s point of view, business is dynamic and it can be very expensive having a long unexpired office lease when business circumstances change.
It can be very expensive having a long unexpired office lease when business circumstances change. The ability to sublet space to another business if you no longer need it could bring huge savings
So it’s really important to think about time horizons and tailoring the term of your lease to compliment these. It can be very beneficial to negotiate early options to break, which can be worth their weight in gold. It is also important to negotiate with your landlord the ability to sublet all or part of your space to another business if you no longer need it! Potentially this could bring huge savings on unnecessary expenditure.
Do you want to save money on London office space?
It’s not exactly “sustainable”, but landlords often rip out perfectly good kitchens, meeting rooms, partitioned offices, comms rooms etc before they place space on the market ! They are left with a cavernous (and sometimes quite attractive) large open plan area for marketing purposes.
Ironically, when a new tenant takes the space they often have to spend a fortune on a new fit out – you can guess what they need to install! A new kitchen, meeting room, separately partitioned office(s) and a comms room – you get the idea! This is great for office fit out builders, but can be very costly and time consuming for tenants!
Such being the case it can make a lot of sense to find office opportunities that have already been fitted out. Your company will almost always need to make alterations to make it suitable for you and your team. However acquiring fitted out space can be a very effective way to save a lot of money. These opportunities often arise when tenants (as opposed to landlords) are disposing of surplus office space.Back to Contents
In addition to rent, tenants are also responsible for business rates and service charges on London offices. However there are opportunities for companies to save money here as well.
Business rates are a tax levied by the government on occupiers of commercial premises. It is always worth checking the level of business rates on any office because they constitute a significant proportion of your occupational costs. As you can see from our Central London office rental guide, areas that benefit from cheaper rent, will also tend to benefit from cheaper business rates.
Service charges pay for facilities that are shared by other tenants within the office building. These can include for example maintenance of a ground floor reception, shared W/Cs, or repairs to the roof! The level – and therefore cost – of these facilities can vary significantly from building to building. In our experience it is always worthwhile looking carefully at the service charge and where possible, saving money by getting it capped!Back to Contents
I hope you found these 6 tips useful, but as you can imagine we have loads more ideas to save money on London office space. Here’s just one more cost-saving tip:
Physically measure the size of the office on site before you sign the lease. You’d be amazed how many businesses fail to get someone to do this, even when they know they have to pay rent, rates and service charge for every square foot of office space they occupy!Back to Contents
Trying to decide where best to locate your London office? Follow our 5 easy steps to identify the best office location for your business.Read More