Are you sitting comfortably? Good...
Some costs of moving office are obvious, and some not so much, until you peek behind the curtain.
OK, it’s true that the physical space itself is the biggest expense by far. But you might need to budget for some other areas of spending as well.
There are four main costs to be aware of:
Finding and securing your new office, fitting out the space, the logistics of the move, and putting your current space back to rights.
1. The costs of finding and securing your new office
You’ll usually pay a deposit of between 3-9 months rent, depending on your business accounts.
You may need to pay a finders fee to your agent/broker, which is typically a % of your first year’s rent. Market standard is 10%, based on who you use, the market conditions and the landlord. Other ways to charge a fee include a fixed price per square foot, or a % of savings. Or a combination of the above. Simples, right?! (That’s why at Kontor we try to get the landlord to pay the fee instead of you. Which also means you’d save quite a hefty chunk of money.) “Fee” probably isn’t your favourite word (ours neither), but in the best case scenario, you will get back more than what you pay for in the form of expertise and support.
You may also need to pay solicitor fees and stamp duty land tax.
Fully-managed flexible office?
You’ll usually need to pay a rent deposit or the first 1-3 months in advance. (This isn’t an extra cost, but it is an upfront outlay you need to plan for!)
2. The costs of fitting out the space
A “fit-out” means you take the blank canvas of the building and turn it 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 if you’re going for a leased office. But they may also apply if you’re going for a fully-managed flexible office where you want to go over and above on the spec, add some form of custom design or other, or want an abnormal number of meeting rooms, for example.
There are different levels of fit-out:
“Shell and core”: works done by the developer to communal areas of the building only, (e.g. main reception, lifts, communal toilets, car parking).
“Category A”: a basic level of fit-out for the offices themselves (e.g. raised floors and suspended ceilings, mechanical and electrical services).
“Category B”: a more advanced fit-out for the offices (e.g. kitchen and meeting room installation, specialist lighting, furniture) with scope for you to do the final touches.
“Turnkey developments”: 100% good to go from the outset.
As you might expect, the cost of fit-out varies.
It depends on the spec you want, any niche requirements, and which of the following two routes you choose to go down. There’s the “design and build” path, where one company takes care of everything. Or there’s the traditional fit-out route, where you get an architect to design the space and then a project manager and contractor all separately. (Each has pros and cons. We won’t go into them here, but feel free to get in touch with us for our view.)
Also worth noting that there’s a chance the landlord will offer you a rent-free period as a contribution to your fit-out. Not bad eh. See what you can negotiate!
To give you an idea... in London, you can expect to pay somewhere in the region of £40-60 per sq ft for standard open plan space. Or if you want something high end with lots of individual offices and meeting rooms, this could be more like £100+ per sq ft.
Keep in mind: a fully-managed flexible office that’s ready to move into means you can forget the cost and hassle of a fit-out. For some companies, having control over the design, shape 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. And suddenly you realise just how much Stuff™ your company has accumulated over the past chapter of life. And that all your furniture and art happens to be weirdly shaped and fragile. And your scanner has become heavier than a black hole.
Feeling brave? Some companies tackle the moving logistics themselves.
Yes. It can be done. You buy or rent the boxes, bubble wrap and so on, rally the troops and get everyone to pitch in for a couple of days. The biggest cost in this case is a van or lorry for you to get up close and personal with on the day (hello Zipvan). We’ve done this several times in the past at Kontor and our plants have the scars to prove it… kidding (not kidding).
If you have more than a handful of employees though, watch out for the false economy. Any money you save may pale in comparison to the cost in productivity, sanity, and damaged equipment.
The alternative? Pay a logistics company to sort out all the packing materials, plan the choreography and do the grunt work. Then all your team need to do is pop their things in a box on a Friday afternoon, rock up at the new office on Monday morning, and crack on. (So things don’t get lost, make sure you know where every item is going before you start packing. Note it all down. Don’t overfill the boxes, and give everyone their own.)
Remember, in a fully-managed flexible office, the majority of furniture is already included. So just pack up the laptops, the random cacti and off you go... (In fact, it may be a good idea to go back to your original agreement to check the inventory.
4. The costs of putting your current space back to rights
You might need to budget for this, or you might not. (And it’s handy to know when you’re budgeting ahead for when you move out of your next office too.)
Moving out of a leased office?
It all comes down to what you’ve agreed to. Most leases will insist that you restore the space to the original condition in which you found it. Ouch.
This typically costs around £10-15 per square foot, depending on the type of fit-out in situ. Clearly, if you've cut holes in floors for fancy staircases, be prepared to pay a lot more!
Moving out of a fully-managed flexible office?
Some “reasonable wear and tear” is generally allowed (though please always check your licence agreement!). So you can just hand back the keys and wave goodbye. Nice.