Choosing a New Office Space
Are you moving office? Have you begun looking for new offices, but are slightly overwhelmed by the complexity of all the different options and factors to consider? Are you hesitant, given the significance of your decision and its potential implications? If so, you’re not alone. This is a situation we regularly find when we speak to companies about their upcoming office relocation. They’re wary, confused, and a little scared.
As an office design & build firm, we’ve helped many companies across the UK move to new offices. We offer turnkey office relocation that takes you right from finding and securing a new office, to designing & fitting out your new office, to helping you move in and hit the ground running.
In this article, we’ll walk you through the 9 key criteria we use to help our clients choose their new office. We’ll also give you a weighted matrix that helps you assess and compare longlisted office spaces. By the end, you’ll be able to objectively evaluate potential new offices and rank them in order of preference, so that you can choose the right new office for your company.
Choosing a new office is just one part of moving office. To learn about the entire process, download our ultimate guide to office relocation. It’s one comprehensive guide that will help you understand everything that goes into an office relocation, what it costs, and how long it will take.
Size
The first decision you need to make when defining the criteria for your new office is what size it should be. For office space, this is even more important than location or cost. If you lease an office that is too large, your real estate costs will be unnecessarily high. On the other hand, leasing too little office space will mean your people are cramped, creating a distracting environment that reduces productivity.
A good starting point to work out how much office space you need is to multiply the number of staff by your sq/ft per head. Exactly what that sq/ft per head should be will vary depending on your industry, working model, and company culture. A good starting point is 150 sq/ft, including receptions and common areas. For more help deciding what size your office should be, read How Much Office Space Do I Need?
Location
Unsurprisingly, location is also a major factor in choosing your new office. Now the office is no longer an everyday default, what it offers has become even more important. Where your office is located will be a key factor in your access to talent. If it is in a convenient location, prospective staff will be keener to join your company. Your office location will also have a major impact on how you are perceived by potential staff and customers alike.
There is no one “best” area for every company to locate their offices. Which is best for you will depend on your industry, workforce, and budget. Certain cities or boroughs are well-known hubs for certain industries, so you should consider if this is relevant for you. You also need to consider how easy the location is to access for staff – if it is inconvenient, you will struggle to attract new staff, as well as retain existing staff. To learn more about choosing your office location, read this article.
Lease Cost
The third factor to consider when choosing your new office is the cost of the lease. For many companies, real estate is their second highest overhead behind staff. For professional services companies based in London, office space can amount to nearly 20% of annual turnover. Every other factor will have an impact on the cost of potential offices you are looking at – both positive and negative. For this reason, you should be wary of surprisingly cheap leases. That doesn’t mean you shouldn’t lease a cheap space, but you should understand why it is cheap.
Leased office space in key commercial London districts will normally cost anything between £70 and £140 per sq/ft per year, including rental rates and service charges. For major UK cities outside London, costs are £35-£50 per sq/ft per year. Outside of major cities, lease costs will be significantly lower. Offices in skyscrapers or famous buildings will be significantly more expensive. Lower cost (and quality) spaces will also be available. When making your choice, it's important to focus on getting the best overall value, rather than just minimising cost at the expense of ROI.
Lease Terms
The final major factor to consider when choosing your office is the terms of your lease. These will vary by the building type and the landlord, rather than location. What lease terms are right for you will depend on your company structure, stability, and growth trajectory. You should be aware that changing your lease terms will often impact the cost of your lease (positively or negatively). Negotiating costs will likely also involve changes to the terms.
Key aspects of your lease terms to consider are term length, break clauses, payment terms, rental review terms, and alterations clauses. If you do not fully understand your lease terms, you could expose yourself to major risks. Commercial office leases are very complex, especially for large spaces. We recommend working with qualified and experienced real estate agents and solicitors to negotiate your lease terms on your behalf.
Operational Cost
When comparing potential new offices, the cost aspect includes much more than just the headline figure lease cost per sq/ft. You also need to consider the ongoing operational costs of the space. This includes landlord service charges, energy costs, and office sundries costs. Typically, there is a trade-off between lease costs and operational costs.
Newer offices will typically have lower energy costs because they are better insulated and have more efficient systems. Service charges tend to be higher for high-quality buildings due to better tenant service. However, old buildings will also sometimes have high service charges due to high maintenance costs. Effective financial planning is crucial to optimise your long-term real estate ROI.
Transport Links
Ease of access is an absolutely crucial consideration when choosing your new office. If your people face a time-consuming, expensive, and/ or unpleasant commute, they will be reluctant to return to the office. you will also struggle to attract and retain talent. You may not think of this as part of your remit. However, it is part of your employee’s experience of coming into the office, so you need to take it into consideration.
How easy your office is to access will depend on its road links and proximity to public transport stations. Especially in large cities such as London, commuters tend to be much more reliant on public transport, so good Underground connections would be important. In more rural areas, a large car park may be more important.
Building Quality
One factor that is often underrated when companies a comparing potential new offices is the state of the building itself. This is mainly comprised of the specification it was originally built to and its state of maintenance.
Buildings that are older or have not been well maintained will cost a lot more to run. They may also result in increased fit out costs, as remedial works will likely be required to correct faults. If a potential office building does not have a B+ EPC rating, modern utility systems, and excellent internet connection, you should consider its impact on the quality of your design and the productivity of your people. to learn more, read 8 Things to Look For When Moving Office.
Growth Potential
The average office lease term in the UK lasts 6.8 years. If you are going to commit to a 7-year office lease, you need to consider how your office space needs will change in that time. This is especially relevant for growth. If your company strategy involves rapid growth, then you will need to allow for this in your real estate strategy. On the other hand, if you are planning to offshore some of your services, then you should plan to reduce your quantity of office space accordingly.
Once you have decided how your office needs may change in the coming years, you can take it into consideration when choosing your new office. This could involve leasing spare space, but it doesn’t have to. You could include lease breaks to allow for a sooner-than-planned relocation, or you could sign a pre-agreement with your landlord for more office space in your existing building. Regardless of how you do it, planning for the future is crucial.
Local Amenities
Another often overlooked aspect of choosing a new office is the local amenities. Much like transport links, it doesn’t directly concern your office, but you do need to consider it due to its impact on your people’s workplace experience.
Common examples are entertainment (e.g., bars and restaurants) and health (e.g., gyms and parks). If you are planning to relocate to an entirely new location, you will also have to consider factors such as housing, education, and local demographics.
Comparing Office Spaces
Choosing a new office is a major decision, one that will have long-lasting implications for your company. It’s crucial that you get it right. However, there are so many different factors to consider that it can be overwhelming. Once you have worked with your estate agent to define your new space requirements and longlisted several options, we recommend rating them according to a weighted matrix like the one below.
| Size (5) | Location (5) | Lease Cost (4) | Lease Terms (4) | Building Quality (3) | Operating Costs (3) | Transport Links (3) | Local Amenities (2) | Growth Potential (2) | Total (/310) |
Space 1 | 8 | 9 | 2 | 3 | 8 | 7 | 8 | 6 | 3 | 192 |
Space 2 | 9 | 7 | 6 | 7 | 6 | 8 | 5 | 4 | 7 | 211 |
Space 3 | 6 | 4 | 9 | 8 | 2 | 6 | 3 | 4 | 6 | 171 |
You may need to adjust the weighting or the categories according to your needs but this will help you rank potential new offices and understand exactly how they compare.
We still recommend you use real estate and legal experts to help you understand the options and make your decision, but at a high level, this will help you understand what the best option for your new office is and crucially, why. Even if you don’t use this matrix, it’s important to objectively assess and rank potential new offices, so that you are not making such a major investment based on instinct alone.
To help you avoid biases and uninformed opinions, it is helpful to get all the members of your internal project team to fill this matrix out separately. You can then discuss the differences in your rankings and the reasons for them to arrive at one final ranking table.
Once you have chosen your top 2 or 3 options according to this matrix, you can carry out full team site visits and more in-depth due diligence. We also recommend you begin preliminary lease negotiations and office designs for shortlisted properties, to further inform your decision. Once you have made it this far, a clear favourite will usually emerge, and you can choose your new office, considering that you are making the right decision for your business.
How to Choose Your New Office
Now that you know about the 9 key aspects to consider when looking at potential new offices, you’re able to objectively evaluate potential new offices and rank them in order of preference. As a result, you are now able to find and shortlist the best offices for your company, setting your office relocation up for success.
As choosing a new office is such a major investment and has such long-lasting implications for the performance of your company, we recommend working with a team of qualified and experienced experts. This will help you get better lease terms and be more comfortable with your final decision.
This should include a commercial real estate agent with a detailed knowledge of your local market and current market dynamics. A specialist commercial property lawyer will help you negotiate with the landlord and minimise the risk of the terms. You may also want to work with a workspace consultant to help you define your real estate strategy and new office space requirements.
Choosing a new office may be a major and complex decision, but it's just one part of the office relocation process. To ensure you’re as well-informed as possible about your office move, download our ultimate guide to office relocation. it’s one comprehensive guide that will help you understand everything that goes into an office relocation, what it costs, and how long it will take. Download your copy here.
To learn more about selecting a new office, read How to Find a New Office. There, we’ll walk you through the process we use when helping our clients find a new office space – from strategy to negotiation.
