Authored by Michael Dubicki
Over the years, the model for how price is quoted in flexible offices has changed quite a lot.
When the sector was young, things like telephone handsets and internet connectivity (and sometimes tea / coffee) were all tagged as add-ons. They were then bolted on to a ‘per-desk-per-month’ cost.
So each building was chopped up into a variety of offices which were labelled as a ‘5-desk office’ or a ’10-desk-office’ which you then had to multiply by the number of desks and add the cost of IT, phones and anything else you wanted as an ‘extra’. If you wanted to get more efficiency from the room, you could put more desks in there and your ‘price per desk’ would effectively reduce – but you would have to pay the extra IT and phones for the additional desk.
This was also during a time when the majority of space in a building was dedicated specifically to offices with desks in them. Break-out areas, communal spaces, call booths etc. were not a major feature. This meant that the average space per desk was also much higher than it is now.
In the last decade, the way we use office space has changed massively – laptops have replaced computers, the cloud has replaced bulky server cupboards, digital has replaced paper, the rise of outsourcing services has resulted a net reduction in the total number of people required in one place to make a business run.
This has meant that a shift occurred from giving as much space ‘inside an office’ as possible to giving as much space ‘outside an office’ as possible. Desks have become smaller – a standard desk is about 50% smaller than 10 years ago. Conversely, space for communal break-out, call booths for private phone calls, meeting rooms, wellness activity etc. has grown massively.
But the ‘price per desk’ in flexible offices hasn’t reduced – it’s gone the other way. This is because when paying for a flexible office, you don’t just pay for your dedicated office space. You pay for the investment in the working environment that the operating company has put into the building. This often stretches to millions of pounds – and a level of quality which would be impossible to replicate if you had to pay for it out of your own pocket.
But back to the core question: how much does flexible office space cost?
The thing is, there is no single answer.
We regularly publish average ‘price per desk’ costs for London, split by the major sub-areas in the capital – you can see how massively varied these prices are depending on which part of the city you want to be in… take a look here.
So the cost of space will depend on how prestigious your address will be – this makes logical sense.
But the cost of spaces in each building is very different too, depending on a range of things:
- Where is the office operator pitching their brand? There are clear ‘tranches’ in the marketplace. Some position themselves as ‘premium’ brands, only interested in high-paying clients. Others go for the other extreme and offer a much more ‘no frills’ solution where you won’t get as many bells and whistles, but the cost will be much more reasonable.
- Is the space more (or less) ‘premium’ than others in the building? If it’s a penthouse with a private balcony then it will be more expensive than a basement office without any natural light. This will hold true regardless of whether you’re looking at high-end ‘premium’ buildings or much lower cost ‘budget’ buildings.
- The cost of space is massively linked to the availability in the building – the less full a building is, the more incentives there will be for new clients to sign up. After all, empty desks mean less income which is particularly important if they’ve just sunk £3million into the refurb… on the other side, if a building is 95% occupied, they will be more comfortable with charging ‘list price’ for space.
- The sales cycle should also not be ignored. Remember, office space is sold by sales agents that will typically be incentivised through commission to hit specific targets. This means that there will be key points in a month or quarter where they will be a little bit more willing to throw discounts around to make sure they hit their quotas. This one needs a little bit of inside knowledge, but that’s where we come in – since we work with them every day, we know where the best chances are.
‘High density desking’ is still very much a thing for clients too, and it depends on how precious a company is about cramming people in a little bit.
The best way to illustrate this is: if an office with 10 desks in it costs £5,000 per month, that’s effectively £500 per month for each desk. Nice and easy to work out. But if you, as the client, decide you’re happy to throw an 11th desk in there, the price won’t change – but the price per desk will (at least artificially) – to £454 (5 grand divided by 11). Are your people really friendly? Making a 10-person office into a 12-person office would take the ‘effective’ price per desk to £416.
Clearly there is a limit to how far this can be taken – and a lot of office operators will set limits to the maximum density they can have. This is typically dictated more by how many people each floor can safely manage from health and safety perspective.
But you can see that there are a lot of ways to make the cost of flexible office space work to your advantage.
The key thing is to make sure you talk through the situation with someone that can help and ask as many questions as possible. This is pretty much what we do all day, every day – so if you’re concerned about the prices shown on the website, or they don’t make much sense, just pick up the phone and talk to one of our people. We’ll be happy to explain how things work and help you find the right office for the right price – where your people can thrive.
Would you like to find out more? Check out our other helpful resourced here:
Flex Space Guide.
Your Perfect Office in Four Steps.