Office Space in London
Is your office lease ending in a few months, and you have to move office? Perhaps you have an upcoming lease break, and you're wondering whether to relocate or not. If so, one of your biggest questions will be how much will it cost to lease a new office space? If you're based in London, this will be even more important, as workspace costs are so high.
In this article, we'll go through the average office lease costs for each area of London. We'll also help you understand what affects the cost of office space and how much you need. By the end, you'll have a much better understanding of what your office lease might cost.
Office Lease Costs in London
Office costs in London vary significantly based on a variety of factors, the most important of which are location, specification, and size. Lease costs are generally shown as a cost per square foot per year to enable easier comparison. The graph below shows average sq/ft costs for the major areas of London.
These costs are quoted rates based on rent reports and commercial real estate studies. Costs are subject to change and will vary from building to building.
It's also important to be aware that the advertised rent cost is different to the cost you 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 cost is business rates – a tax based on the rental value of your office.
When choosing your next office, using the services of an experienced and well-connected commercial estate agent is essential. They are highly skilled in finding the right space at the best possible price. Using their network, they are often able to find office space before it comes on to the open market. This makes the space cheaper. Their negotiating experience will help further reduce the cost you pay.
What Affects The Cost Of Office Space?
Location
Unsurprisingly, the biggest single factor that will impact the cost of your office per sq/ft is the location. Prestigious locations such as Mayfair and St James will cost around £135 per sq/ft per year. Inner-city locations such as Aldgate or Barbican cost nearer to £100 per sq/ft per year.
Many companies prefer to have offices in a location popular with their industry – e.g., boutique banks in Mayfair or tech companies in The City. When choosing the location of your new office, consider the reputation of that area, and what it says about your company. To learn more, read Which Area of London is Best For My New Office?
Condition
The quality of the actual space will also be an important factor in your lease cost. This includes the utilities, natural light/ views, and general quality of the building itself. The costs mentioned in this article 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.
Amenities
The impact that amenities have on your lease cost will vary depending on your location, and so will the options available. Some amenities such as receptions, lifts and toilets are available in almost every building, but the quality does vary. Additional Amenities such as coworking lounges, outdoor areas, cafés, or lounges are valued highly by staff, but they do push the costs of your lease up.
Transport
Ease of access is crucial. The location of your office needs to be as convenient as possible for all your staff, clients, and visitors. One of the main reasons many staff like working from home is the lack of commute. Making the commute as painless as possible will encourage your staff to be in the office more often.
Lease Terms
The length of your lease term will also impact the cost you pay per square foot per year. Short-term leases (1-3 years) provide a lot more flexibility and are less risky than leases of 5 or more years because you are making a smaller commitment. However, these benefits come at a higher cost. Mid and Longer-term leases, on the other hand, provide greater stability and are more commonly available.
How Much Space Do I Need?
Leasing the right amount of space is just as important as the square foot cost. Over 3 years, the amount of space you need will change, as well as the types of spaces you need within that. A simple calculation based on your employees and space per employee is a good place to start.
The recommended amount of space per employee for professional services firms is 100-150 sq./ft, though this is only a guide. Some industries have an average of 110sq/ft per employee, others over 400. Workplace requirements are completely unique to your business – what worked for a contact or competitor may not work for you.
Open-plan hybrid office design is much more space efficient than traditional designs. Personal desks are much less common, as it is a waste of space if staff are only in the office 2 or 3 days per week. Spaces such as private offices and boardrooms are very space-consuming and will drive your total space requirements up. For open areas, you will want to allow 40-80sq/ft per desk, while private offices tend to be 100-250sq/ft.
The different types of spaces within your office are also an important consideration. In 2019, the average office had 10% collaboration space. In 2022, the average office fit-out contains 35-40% collaboration space. The amount of collaboration and breakout space will vary massively depending on the style of your design and the time they are meant to spend using those spaces. Most companies allow 50-70sq/ft per employee. You will also need to factor in formal meeting spaces, teapoints, toilets, receptions, and other common areas.
Another factor to consider is your growth plans – how many staff do you plan to have by the end of the lease? Though you don’t necessarily have to add extra desks right now, making sure you have planned for it will prevent overcrowding or outgrowing your space before the end of your lease term.
Your Office Relocation
Office space in London is expensive. However, if you want access to the best clients, talent pool, and brand image, it's often a necessary (and worthwhile) investment. Now that you know about the latest London lease cost benchmarks, as well as what affects the cost of office space and how much you need, you're able to set an initial budget and start comparing potential options.
To take the next step on your office relocation journey, download your Ultimate Guide to Office Relocation. There, you'll get answers to all your most urgent office relocation questions, including what is involved, what it costs, and how long it will take.
To learn more about the entire costs of moving office in London, read Cost of London Office Relocation in 2024. For more help choosing the right space, read How to Choose Your London Office Location.
