When relocating or starting a new company, businesses typically have the choice of leased or flexible workspace, such as serviced offices. Whilst both options appear to offer straightforward pricing, it’s not always clear what extra (or hidden) costs will be incurred.

This article will explore the unexpected costs of both options to help you understand what you would expect to pay in total.

Leasehold – Hidden Costs

In a leasehold space, businesses typically pay rent on a ‘price per square foot’ basis. When compared to serviced offices, this can seem like the more cost-effective option. However, that perspective normally changes when you factor in other charges.

Fit-Out

Typically, leased spaces are offered as a blank canvas. This could be an opportunity or a burden, as the space offers an adaptable layout but may be expensive to reconfigure as needed.

Making the space ‘business ready’ could involve adding walls, electrical work such as cabling or installing telecom lines, or redecorating. 

If you are considering a leased office in a ‘shell and core’ condition, preparation will cost a lot more. These spaces have minimal finishes and aren’t fitted with basic utilities such as water and electricity. Setting up utilities will therefore involve costs for meter installations and connection/activation fees. That said, most spaces will have the very basic fit out.

In some cases, hiring a space planner or interior designer may be necessary to ensure the office meets your exact requirements.

Extra Furniture & Equipment

As mentioned, leased offices are normally empty and unfurnished. While most companies may have factored in the cost of furnishing the space, it is important to know if your business has specific needs in terms of furniture and equipment.

In addition to the basics, such as desks and chairs, you may also need furniture and kitchen appliances for breakout spaces or filing cabinets for storage. The cost of specialised equipment, such as video conferencing systems or interactive whiteboards, must also be considered.

These costs can be substantial, especially if you are fitting out a large space or have a certain design aesthetic in mind.

Maintenance

Leased offices, especially in older properties, often incur maintenance costs.

Dealing with older electrical systems, plumbing, or HVAC units can lead to unexpected repair charges which were not initially apparent. Repairing or replacing equipment can increase costs quickly, especially for older items needing specialised engineers or parts.

Dilapidations

Organisations in leased offices may also be liable for dilapidations at the end of the lease. Dilapidations are the costs associated with restoring the space to its original condition. This could involve repairing damages and removing any alterations made to the office.

Health & Safety Compliance

Organisations moving into a leased office must ensure that the space complies with health and safety regulations. These regulations cover the use of fire safety systems, emergency exits, and disabled access.

Some of these responsibilities fall on the landlord of the building, while others fall on the tenant. Ensure you check before you move in. These compliance costs can be quite high, especially for older buildings.

Property Taxes & Insurance

Property taxes and insurance are included in the rent for a serviced office, but they are a separate charge for leased space. Liability insurance, building insurance and property taxes vary greatly depending on the size and location of the office space. These costs often fluctuate annually, which can impact your long-term budget.

Business Rates

Business rates are a tax on commercial properties, and they can often be unexpected with a leased space. However, with a serviced office, they are included in the monthly cost. 

These rates are calculated based on the property’s rateable value and can vary depending on its location and size. Therefore, it can be a significant cost for companies renting office space in prime locations.

Service Charge

Like business rates, service charge isn’t included in the cost of a leased office. These fees cover the cost of maintaining communal areas, lifts and shared facilities. Depending on the type of building, this could also cover the cost of security and building repairs. 

It is important to note that service charges only cover maintenance costs for communal spaces, not the office you’re renting. So, in addition to paying for the upkeep of your office, you will be expected to contribute financially to the running of the building.

Legal Fees

Organisations in leased spaces must also account for legal fees. Drafting, reviewing and negotiating leases will require legal advice. The cost of these services can vary greatly depending on the complexity of the lease, and the time it takes to get it completed.

Businesses may also face additional legal costs if disputes or renewals arise during their tenancy.



Serviced Office Additional Costs

Serviced office spaces are well-known for their all-inclusive pricing, which covers rent, utilities, cleaning, and maintenance. However, certain features, such as additional meeting room usage and I.T. packages, are often not included in the price. It is essential to check what is included in your contract.

Dedicated IT and Connectivity

Serviced offices offer basic internet and IT infrastructure, but in some cases, businesses may need more. 

For example, companies that handle large volumes of data will need enhanced network security and higher bandwidth, increasing the monthly cost.


Specific Telecoms

Serviced spaces include phone services as standard, but if you require specific features, this can cost more. Multiple direct-dial phones, VoIP systems, call recording, and analytics will incur an extra charge.

Additional Meeting Room Usage

Most business centres have on-site meeting rooms and provide a limited number of free credits to use. However, if your business requires frequent meeting room usage for workshops or training, you may quickly exceed the allotted hours.

Charges for meeting rooms can add up, so we recommend having an idea of how regularly you use them to ensure that the credits you are given will cover your usage.

Customised Office Fit-Out

Serviced offices are a plug-and-play option and are offered with a standard layout. If you require specific furniture or branding, this will also add to the costs. Small adjustments, such as partitions, can add up quickly, so consider what features you would like to prioritise.

Branding & Signage

Displaying your branding in a serviced building is usually possible, but the extent to which you can do so varies by provider.

Most serviced office providers allow businesses to customise their space and display logos at reception and/or the entrance to your office. However, if your business requires external signage, this could add to your costs. 

Some providers have strict guidelines on what is permitted in communal areas, and certain modifications will require approval and added fees.



Serviced offices and leased spaces have unique advantages, but it is crucial to know the hidden costs. Although serviced offices may initially seem more expensive, maintenance, furnishing, and utilities are included. 

Understanding these hidden expenses can help you be more informed before deciding what type of office space to rent.