Hidden costs of moving office

Some costs of moving office are obvious. Others only show up once you look behind the curtain.

Yes, rent is by far the biggest expense. But there are other costs you should budget for too.

There are four main costs to be aware of:

Finding and securing your new office, fitting it out, the move itself, and returning your current space to its original state.

1. The costs of finding and securing your new office

Leased office?

• You’ll usually pay a deposit of 3-9 months’ rent, depending on your business accounts.
• Deposit plus VAT means deposit plus equivalent VAT. You won’t get that 20% back until the end of the term. Annoying, we know.
• You will need to pay solicitor fees as well as stamp duty land tax.
• You may need to pay a fee to your agent, typically a percentage of your first year’s rent. The market standard is 10% of the rent and 5% of the rent free period. This depends who the agent and the landlord is. Other fee structures include a fixed price per square foot, a percentage of savings, or a mix of the two. At Clark Street we try to get our fee from the other side – we’ll be super transparent with those requests. If it doesn’t work, we promise you’ll end the process better off than when you started.

Fully-managed flexible office?

• You’ll usually need to pay a rent deposit, or the first 1-2 months’ rent in advance.
• Setup fees. Every operator is different, but paying £25 - £50 per person (one off, not monthly) is not unusual.
• Meeting room costs. Most are on a credit system, some need real money.
• Exit fees. Some operators charge for this. Make sure you ask.

2. The costs of fitting out the space

A “fit-out” turns the blank canvas of a building into a space that’s ready to move into, with places for your team to eat, sit, work, meet, talk, meditate (if that’s your bag) and generally win at life.

You’ll probably only face these costs with a leased office. They can also apply to a fully-managed flexible office if you want a higher spec, custom design, or an unusual number of meeting rooms.

There are different levels of fit-out:

• “Shell and core”: nothing in there at all (e.g. stairs, lifts and communal toilets only).
• “Cat A”: a basic fit-out of the offices themselves (e.g. raised floors, lighting, mechanical and electrical services).
• “Cat A+”: more than A, less than B. Usually not enough meeting rooms installed, so they can be added to as part of the deal.
• “Cat B”: a more advanced fit-out (e.g. kitchen and meeting room installation, specialist lighting, furniture), leaving you to add the final touches.

As you’d expect, fit-out costs vary.

It depends on the spec you want, any special requirements, and which of two routes you take. With “design and build”, one company handles everything. If you “go traditional”, you hire an architect, a project manager and a contractor separately. (Each has pros and cons. We won’t go into them here, but get in touch for our view.)

Worth knowing: the landlord may offer a rent-free period as a contribution to your fit-out. See what you can negotiate!

But how much? In London, expect roughly £46-65 per sq ft for standard open plan space. For high-end space with lots of exec offices and meeting rooms, you might be at £100+ per sq ft.

Keep in mind: a fully-managed flexible office is ready to move into, so you skip the cost and hassle of a fit-out. For some companies, control over the design and feel of the space makes sense, but remember you have options.

3. The logistical costs of moving

The day of your move draws near. Suddenly you realise just how many items you are dealing with. All that stuff which has collected dust for all that time is now staring at you. And you are staring at the bin.

Who should do the heavy lifting?

Get an external company to supply the packing materials, plan the move and carry the heavy stuff. Your team just pack up their things on a Thursday afternoon, turn up at the new office on Monday morning, and crack on. To avoid lost items, give everyone their own box, plan where everything is going before you pack and note it all down.

Can’t we do it?

Some companies do handle the move themselves.

It can be done. You buy or rent crates and bubble wrap, rally the troops and get everyone to pitch in for a couple of days. The biggest cost is a van for the day, or multiple Ubers.

But don’t forget that what you save may be dwarfed by the cost in lost productivity, sanity and damaged walls.

The alternative

In a fully-managed flexible office, most of the furniture is already included. So just pack the phone chargers and your cereal boxes and off you go... (It’s worth checking the inventory in your original agreement.)

4. Costs at the end

You might need to budget for dilapidations, or you might not. (It’s also handy to know for when you leave your next office.)

Moving out of a leased office?

It all comes down to what you’ve agreed. Most leases require you to restore the space to its original condition. Annoying, we know.

This typically costs around £15 - £20 per sq ft, depending on the existing fit-out. If you’ve made significant changes that won’t be relevant for most occupiers, expect to pay more.

Moving out of a fully-managed flexible office?

Each operator is different. Exit charges are becoming commonplace within flexible offices, so make sure you check. Some “reasonable wear and tear” is generally allowed (but always check your licence agreement!). So you can usually hand back the keys and wave goodbye.