Calculating the true cost of office space

The costs associated with office space are often significantly more than just the monthly or quarterly rent.Even though it is the rent that is quoted on the lease document, it is important to assess all the costs when comparing buildings, to ensure a like for like analysis and will probably be split into three categories

Annual property costs

Running/operational costs

Fitout and dilapidations costs

Lets look at what may make up each of these:

Annual Property Costs

Rent

Service Charge (Building and estate charges may be due to cover the running of shared services)

Taxes (In the UK there is a specific Business Rates Charge assessed on the Rateable Value, or RV, of the property. This RV is assessed centrally and the tax is billed and collected by Local Authorities. It is calculated by applying a multiplier (set by central government) to the RV although there are some adjustments to this, particularly for smaller businesses

Building Insurance. (This is likely to be a charge incurred by the landlord and billed to tenants on a pro rata basis)

Next>> Running and Operational Costs