Mistake #1: Underestimating Hidden Costs
Securing office space isn’t just about the base rent. There are often hidden charges that can drastically affect your overall budget.
Service charges and business rates
- Fitout: This can often be a much higher cost than people predict, make sure you have this fully scoped about before taking on any office lease.
- Service Charges: These can include building maintenance, repairs, cleaning of communal areas, security, and even some utilities. Ensure you request a full breakdown of what’s included, and a forecast for the term of your office lease.
- Business Rates: These are essential like council tax on commercial property and vary by borough. Many tenants underestimate this cost, especially if relocating from outside London where rates are lower. You can estimate rates with the VOA .
- Dilapidation Costs: At the end of your lease, you may be required to return the property to its original condition, which can involve high repair and restoration costs.
- Insurance and Utilities: In some leases, tenants are responsible for insuring the premises or paying a share of the landlord’s insurance policy, on top of utilities like electricity, water, and broadband.
- Other costs to consider: have you thought about the cost of furnishing your leased office, how much cleaners will charge you to clean it, stocking the fridge with drinks and snacks, general maintenance and repairs etc etc, the list goes on and on.
Failing to calculate the true total occupancy cost often leads to cash flow problems later on. Always request a full cost analysis before signing a lease. Use the industry calculators provided by Flux and speak to the team to estimate your full cost for comparison.
Mistake #2: Choosing the Wrong Location
The location of your office impacts more than just your address – it affects staff retention, client convenience, operational efficiency, and your brand image.
Accessibility for clients/employees
- Transport Links: Offices near major public transportation hubs like King’s Cross, London Bridge, Liverpool Street or Canary Wharf can improve punctuality and reduce commute times. We always run a full postcode analysis for our clients team members to make sure that people will be happy with the new location.
- Parking and Delivery Access: Not all central London offices have adequate vehicle access. If your operations depend on deliveries or client parking, verify these facilities exist.
- Proximity to Clients: Being close to your key clients can improve face-to-face engagement and reduce future travel costs and the team’s time out of the office travelling. For some industries, location near tech hubs (like Shoreditch or Old Street) or finance districts (like The City or Canary Wharf) is key.
- Staff Amenities: Offices surrounded by cafes, fitness centres, green spaces, and retail outlets provide a better work-life balance for your team, boosting morale and retention.
Many companies focus on aesthetics but forget these functional considerations. If you need help finding a balanced location, contact Flux for tailored consultation.
Mistake #3: Poorly Negotiating Lease Terms
Lease agreements are legally binding and often very complex, sometimes hundreds of pages long. Businesses that sign without thorough legal review after expert lease negotiation via an agent like Flux HQ, can end up trapped in unfavourable conditions.
Reviewing restrictive clauses
- Break Clauses: These give tenants an option to end the lease early under specific conditions. Without them, you may be locked in even if your business grows or pivots, and make sure you note when you have to give notice and set yourself reminders so you have plenty of time to action it.
- Rent Reviews: Many commercial leases include rent review clauses, typically every 3-5 years. Ensure you understand how and when your rent could change, and budget for it accordingly.
- Repair and Maintenance: Some leases are full repairing and insuring (FRI) , which place the responsibility for both minor and major repairs entirely on the tenant. This can lead to large unexpected costs.
- Alterations and Fit-outs: Check whether you're allowed to make cosmetic or structural changes to suit your business’s branding or operational needs, get necessary consents, and be aware of the costs of returning the space back at the end of your term.
- Assignment/Subletting: If you outgrow your space, can you sublet or assign the lease to another tenant? If not, you might be stuck paying for a space you no longer need, and having to pay double-rent to cater for your change in needs.
If you are unsure about the lease type or need a flexible agreement, explore options like serviced or managed offices , which typically offer all-inclusive and shorter-term arrangements.
Mistake #4: Skipping Legal Advice
Many SMEs view legal advice as optional or too expensive, but the cost of not hiring a legal expert far outweighs the upfront fees.
Why you need an office broker or solicitor
- Lease Negotiation: Experts can help you check that the favourable lease terms your agent has negotiated are included in the legal documents and haven’t been tweaked in the landlord’s favour.
- Legal Compliance: London's commercial property laws can be complex . Your advisor will ensure you comply with planning permissions, building regulations, and fire safety etc.
- Risk Identification: Lawyers identify legal liabilities, such as third-party rights, rights of access, or unclear service obligations.
- Exit Strategy: An expert will guide you through early exit options, subletting, or lease assignment terms, safeguarding you against harsh penalties.
Consult a reputable, accredited solicitor for professional guidance.
Mistake #5: Over/Underestimating Space
Planning the correct amount of space is essential. Too little and your team becomes cramped; too much and you're paying for underused real estate.
Growth planning & utilisation
- Space per Employee: Current workspace planning standards suggest between 80–120 sq. ft. per person depending on desk layouts, collaboration zones, and meeting room usage.
- Shared Space: Don't forget reception areas, storage, IT server rooms, kitchens, breakout areas, collaboration zones, and bathrooms.
- Flexibility for Growth: If you're scaling, look for buildings with adjacent units you can expand into (making sure you have negotiated first rights over them), or choose modular office layouts.
- Hybrid Work Considerations: With remote work common, some businesses need less permanent space. Think about coworking areas and rotating desk models.
- Meeting Rooms and Quiet Zones: In open-plan offices, designated zones for calls and meetings are essential for productivity.
- Office design is crucial for attracting and retaining talent too.
A thorough assessment can save you thousands and ensure your space grows with your business. Flux HQ offers comprehensive workplace strategy sessions.
Leasing office space in London can be a strategic move for your business – but only if you avoid common traps. Hidden costs, a poor location, unfavourable lease terms, lack of legal guidance, and incorrect space estimates can create long-term issues. Take the time to plan thoroughly, seek professional advice, and work with trusted partners like Flux to find an office that supports your growth.
Whether you're considering a leased or serviced space, a well-informed decision will lead to better financial and operational outcomes.
