Now in its 22nd edition, the Total Office Cost Survey (TOCS) is the most definitive independent survey of its type, providing detailed information on office costs for over 50 UK locations.
Through the comparison of rents, business rates, service charges and other property costs in locations across the UK, TOCS can help organisations to benchmark their own costs against prevailing, real time levels.
The survey is formed of independent data provided by leading service providers and is based on detailed output specifications which reflect the IPD Total Occupancy Cost Code.
TOCS leaves no stone unturned, providing figures across 22 separate cost metrics ranging from business rates to landscaping to waste management.
Costs are provided for 54 locations and generated for both new and 20-year-old office buildings on a per sq ft and per employee basis.
TOCS allows office occupiers to:
View full office occupancy costs across the UK and assess how these differ by location and sector across new and 20-year-old buildings on a per sq ft and employee basis.
UK Office Market Pulse
Make informed, intelligent and accurate property decisions with office market statistics at your fingertips.
Browse our property database for office space across the UK and Ireland.
Commercial property insight
Occupier overview, regional insight and investment market review of the industrial and logistics market.
For articles about UK office occupation, click on the links below.
Smart technologies are redefining the workplace. They are changing the ways that users interact with office buildings, and fostering increasingly innovative, creative and productive working environments.
Smart offices use technology enabled by the Internet of Things (IoT) to gather data on a building’s performance or usage. Sensors, smartphones or wearable devices may collect data monitoring environmental factors such as temperature, light, air quality and noise, as well as data on employees’ usage of the building.
The data collected can deliver building managers with actionable insights on how to improve a building’s performance, or it may feed through to automated systems controlling the office environment. With smart technology continually evolving, it is being used to support an increasingly wide range of applications, providing multiple benefits to building owners, investors, occupiers and employees.
Smart is sustainable
Firms’ sustainability strategies have been a major driver of the rollout of smart technology. By providing more efficient controls over energy usage, it can deliver significant reductions in energy consumption. It is no coincidence that some of the smartest office buildings in the world are also rated by BREEAM as among the greenest.
Smart systems allow lighting, heating, air conditioning and ventilation to be monitored and adjusted according to a building’s usage and occupation. Energy wastage can be minimised by turning off heating and lighting when an office is unoccupied. Intelligent building facades may also be used to control the heat and light entering the building in response to changing weather conditions.
The next generation of energy efficient smart buildings have their own sources of power generation and some are even able to generate more energy than they consume, with surplus energy going back to the grid.
Get in touch
To find out more, get in touch with LSH's sustainability surveyor Frankie Bryon on 020 7198 2359 or via email: firstname.lastname@example.org
The enactment of the Minimum Energy Efficiency Standards (MEES) legislation on April Fool’s day was certainly no joke, and office occupiers who dismiss it as a landlord-only problem may be the ones to look foolish..
From 1 April 2018, the new Energy Efficiency Regulations made it unlawful for landlords in England and Wales to let a building which fails to meet the minimum required Energy Performance rating of E. While the Regulations apply to private rented properties with EPC ratings of F and G, tenants of D and E-rated properties should also be aware of the potential benefit of commissioning updated EPCs.
A recent study by Arbnco, which re-simulated the Non Domestic EPC revealed that 33 per cent of D and E-rated properties dropped to a rating of F or G (see chart). Many landlords have been slow to fully understand the potential impact on their portfolios, particularly now that well-advised tenants are identifying how they can use them to their financial advantage.
Here we set out some key questions for office tenants to consider.
My lease is due to expire, how can I use MEES to my advantage?
Dilapidations claims on lease expiry can be substantial and tenants are rarely prepared for them. By taking professional advice on the impact of the MEES Regulations on your dilapidations liability, it may be identified that you have little or no liability at the point of lease expiry.
But how can this happen? Where it can be proven at lease expiry that a property is in breach of the Regulations and requires improvement works, the tenant could argue that these improvement works will render some or potentially all of the dilapidations claim valueless and therefore the claim is actually zero.
What about lease renewals and rent reviews?
Understanding your position with regard to MEES may also significantly bolster your negotiating position over break options, renewals and rent reviews.
Similarly to the dilapidations example, if, as a tenant, you can demonstrate that the property is at risk of failing if reassessed below the minimum required rating then, with expert advice, you may be able to negotiate more favourable terms with your landlord. For example, using your right to exercise a break option, you could leave your landlord with a non-compliant, unlettable building, requiring potentially very costly improvement works.
I’m in a modern air-conditioned office; the regulations won't apply to me
The MEES Regulations apply to all private rented property. Many seemingly modern office buildings constructed since 2000 will not comply and therefore be rendered unlettable. Given the potential impact, tenants should not presume that their property will be unaffected.
Furthermore, the majority of current EPC ratings are widely recognised as being inaccurate. This is due to the fact that they were first required in 2008 when a property was constructed, sold or let. At that point, EPCs themselves were simply a means to an end of transacting a property and were often produced with little attention to detail.
I know that the building I am in is compliant – it's a D-rating
Through consequent revision of respective EU and UK legislation, and cyclical tightening of the building regulations requirements (upon which EPC ratings are based), ratings have regularly been seen to result in a two rating drop when EPCs are reassessed. Therefore, even if you know you are in a D-rated building, you may well find the building is re-rated F under current standards.
Surely these regulations aren't meant as a means for me to cause problems for my landlord?
The MEES Regulations are in place to bring about energy efficiency improvements to the least energy efficient private rented building stock in England and Wales. They are enacted in UK law and the penalties for infringement of the legislation can be really quite punishing, see table.
Surely these regulations aren't meant as a means for me to cause problems for my landlord?
The MEES Regulations are in place to bring about energy efficiency improvements to the least energy efficient private rented building stock in England and Wales. They are enacted in UK law and, whether realised through direct penalties or tenants gaining the significant strategic benefits outlined above, will:
How do I find out what my position is?
Ensuring that you understand your current position will enable tenants to protect themselves against substantial landlord claims for improvements and may open opportunities to drive their costs down.
To understand your current position, contact Lambert Smith Hampton’s MEES specialist, Rob Burke email@example.com, 02038244726, 07748111885
Work-life balance and mental wellbeing is increasingly being recognised as key to staff motivation and productivity. Many businesses are beginning to incorporate Workplace Wellness as part of their strategy to deliver a meaningful and engaging employee experience and, in turn, create a higher-performing workforce.
Optimising indoor air quality to support the health and well-being of building occupants
Promoting safe and clean water through proper filtration and other methods
Availability of fresh, wholesome foods to encourage better eating habits
Minimising disruption to the body’s circadian system through requirements for window performance and design
Integrating exercise and fitness into everyday life by providing the physical features and components to support an active and healthy lifestyle
Establishing requirements designed to create a distraction-free, productive and comfortable indoor environment
Incorporating design, technology and treatment strategies designed to provide a physical environment that optimises cognitive and emotional health
From a practical perspective, this means that businesses are able to assess and compare a building’s wellness quality against measurable criteria, allowing them to make informed decisions about their future property strategy.
For landlords, the return on investment will come from differentiation; attracting the highest-quality tenants will enable them to command premium rents, increase their property values and reduce potential void risks.
Race to the top?
Despite these far-reaching benefits, in the three years since its introduction, a mere 34 projects across the UK totalling circa 7.2m sq ft of office space have been registered, only four of which have reached certification status.
Globally, there are just-under 900 WELL Building projects; the majority of which are, unsurprisingly, located in the United States and China.
Serviced offices have existed as a flexible solution to office needs for decades, although rapid employment growth within smaller businesses and start-ups, and the need for a flexible lease product has driven recent demand.
This has been most evident in central London, where serviced/co-working office providers accounted for a substantial 25 per cent of office take-up in 2016 and now occupy just under 11 per cent of total built stock. That said, even larger, more established businesses are taking space, often to ensure smoother transition in wider corporate accommodation strategies.
However, with various advantages and disadvantages associated with conventional leased space and serviced office solutions, knowing the right solution can be difficult . To help inform your thinking, here we outline the main questions and answers around this issue.
Co-working space is a relatively recent phenomenon from the US, and is an evolution of the serviced office model. Space is rented on a desk-by-desk basis within a shared open-plan, creatively designed environment, allowing the exchange of ideas and collaboration between the businesses in situ.
The more traditional serviced office essentially offers occupiers their own private space within a building, along with meeting rooms and reception areas. The boundaries are blurring however, with some operators providing both co-working and traditional forms of serviced offices within the same building, a system which allows small businesses to graduate from the co-working environment into the more private option if desired. The Office Group and WeWork are the leaders in this.
Above all, flexibility and speed are the main drivers behind opting for a serviced office solution over a more conventional lease. For serviced office space solutions, contract terms typically run for a year, but can often be as little as two months and frequently negotiated. In contrast, conventional leases typically involve a minimum three year term, more typically five years, with the business liable for any dilapidations costs at lease end.
Other factors are speed; the contract can be signed within 24 hours compared to four to eight weeks for a traditional lease and as the serviced office comes complete with furniture and IT connection, companies do not have this added hassle and capital expense. Another key advantage is the ease of running the space on a day-to-day basis. Cleaning, recycling and refreshment services are typically included.
It is commonly assumed that the flexibility associated with co-working and leased offices command a considerable premium. Typically this is the case – operators have to make a profit– but it is not always as significant as expected, particularly if you’re prepared to compromise on location and specification.
While costs may be cheaper over the duration of a lease, the upfront capital expenditure required to fit-out and furnish the leased space can also be prohibitively expensive. However, this is often partially off-set by rent free incentive periods offered by the landlord, which vary depending on the level of choice and demand at the particular time.
It is the add-ons that really make money for the operator – phones, meeting rooms, printing etc.
In addition to cost savings, another key advantage associated with leased offices is the ability to influence the space to your own requirements, whether in terms of layout, furniture or design. This allows a business to communicate its brand credentials more clearly . The other factor is the ability to create workspace that suits your identity and personality including private meeting rooms, dedicated reception, your own break out and soft seating areas, as well as occupying space not by desk numbers (which is typical of serviced offices) but by creative and inspirational zones, which could increase productivity.
However, this advantage is also arguably being eroded by the increasingly sophisticated approach taken by a number of serviced office providers. While freedom to influence space continues to be constrained, operators are paying much closer attention to the space, which is designed to appeal visually as well as simply provide a functional work-setting.
Serviced office locations run parallel with conventional lease locations with the bulk of supply concentrated in London. On average 75-80 per cent of turnover is derived from London and providers are happy to occupy space on the same street but tend not to be in the same building. The centres tend also to be non-branded with each having a slightly different fit out according to the target market and micro location the centre is in.
For more information about serviced offices and conventional leases, contact David Earle in Lambert Smith Hampton’s office agency team.
There's no escaping the explosion of colour and employee perks in the modern workplace, with today’s offices barely recognisable compared with those of the recent past.
Are these environmental changes a departure from the more traditional, honest expression of what work is about, a thin veil disguising the reality of work: dull, stressful and a necessary evil? Or are they a sound contributor to the performance of an organisation?
Happiness is a serious business. According to the Hay Group: What’s My Motivation? report, disengaged employees and poor health costs the UK economy around £6bn, and with only 15 per cent of UK workers reporting to be ‘highly motivated’, it is clear that organisations need to pay attention.
So how exactly do employees ensure that their workplaces provide that elusive thing called happiness? Let's focus on some particular examples.
Building design features have a positive impact on health, wellbeing and productivity. And these elements form the foundation of basic human comfort.
Consider comfort in two ways: physical comfort and psychological comfort.
The functional elements of an environment contribute to physical comfort. Access to daylight, controllable temperature, a place to sit. These are the things that that allow people to get work done, and link to productivity.
Psychological comfort is at a higher level, and contributes to increased performance. Permission to personalise space, feeling a connection to the company and colleagues, even a view of nature yields positive results.
Studies support the notion that some level of personal control over ambient physical conditions— temperature, light, noise—make workers feel more comfortable, happier, and more productive.
Environments that encourage participation produce a climate of citizenship. They get people involved with keeping spaces clear of clutter and provide opportunities to contribute to the process of creating environments.
Employees who have control over the design and layout of their workspace are not only happier and healthier – they're also up to 32 per cent more productive, according to research from the University of Exeter.
Businesses are increasingly using their workspace as a means to communicate the values and culture of the organisation. With business having to work ever harder to differentiate themselves from their competitors, even more consideration is being taken on fit-out design to give a sense of kudos to their staff and visiting clients. As working practices become more agile, the office is likely to serve increasingly as a focal point for the face-to-face interaction between staff and clients, intensifying this trend further still.
Fulfillment is also important. Displaying the history, legacy and struggle of peers and the journey of the organisation reminds people of the purpose of the business they’re a part of. Acknowledging contribution of the individual and team’s role in the organisation’s mission through physical expression can be a great motivator.
Within a multi-tenanted environment, shared amenities are important. The more familiar amenities include cafes, bike storage and shower facilities. Other types of amenity are also increasingly being provided, such as crèches and multi-faith prayer rooms, reflecting the increasing diversity and needs of today’s workforce.
Relationships are important in the workplace and can be nurtured by ensuring that space is available for social interactions and activating spaces. Bringing people together who might not work with each other on a daily basis - through common interest and downtime - creates social bonds that fulfil our need to connect with others.
Businesses are increasingly recognising that their space is a resource which can add value to their business. Happy employees work harder, are more effective and cost an organisation less than those who are disengaged or disgruntled. As Shawn Achor’s article on Positive Intelligence in the Harvard Business Review highlights, they create better bottom-line results with on average three times more creativity, 31 per cent more productivity and 37 per cent higher sales.
This article has been provided by Kursty Groves a workplace innovation consultant and an expert on the relationship between space, collaboration and creativity. To find out more, visit Kursty's website: kurstygroves.com
Dr Johnson famously said “To be tired of London, is to be tired of life”. Over 200 years on, one wonders whether all Londoners share this sentiment.
According to London First, London’s housing crisis is a serious threat to its global competitiveness. Its report warned that unless addressed, by 2040, only financial sector workers will be able to rent in inner London, choking off the supply of talent in other areas.
But this London-centric view overlooks the important role key regional cities have in helping the UK to compete globally. With London’s professionals feeling the pinch of housing costs or long, crowded commutes, does the solution to a better lifestyle lie elsewhere?
London has always commanded a significant cost premium to elsewhere in the UK. But, over the past few years, strong rental growth across central London has pushed the relative expense of the capital over other regional locations up to record levels.
At £127 per sq ft per annum, the cost of occupying a new-build development in London’s Midtown is now 78% higher than an equivalent building in the UK’s ‘big six’ cities (average of Birmingham, Leeds, Bristol, Manchester, Edinburgh and Glasgow), rising from a more modest 55% in 2008, prior to the last recession.
The use of Midtown as the comparator also highlights how London’s expense is spreading. The relative cost parity that once existed between the core cities and London’s fringe locations has vanished. Tech City, South Bank and Clerkenwell have seen exceptional rental growth in recent years, placing resident occupiers under increasing pressure.
Significant as occupier costs are, staff costs are by a distance the largest business expense, typically accounting for over 80% of expenditure. On average across the Big Six cities, current annual staff (based on average local salaries in the upper quartile of earners), and occupier costs amount to circa £50,000 per workstation. Reflecting the increased salary costs associated with London, a Midtown workplace carries an annual cost of nearly £85,000.
Placing the above into context, for both staff and occupier costs combined, the overall annual cost of a new-build 50,000 sq ft office building within the Big Six amounts to £27m. Over five years, this amounts to an effective £68m ‘saving’ compared with London’s Midtown.
Together with other strategies aimed at improving work-life balance, such as flexible working, relocation may offer existing staff a better lifestyle while securing local talent.
London’s horrific housing costs
While London-based office workers command markedly higher salaries, for most, this is offset by housing costs. The average cost of a house in London’s inner boroughs is almost ten times the average combined salary of a cohabiting couple.
Alongside affordability difficulties is time. The average couple saves for eight years for a London deposit, at least three times as long as other UK regions. This has implications for young families, who often settle for relatively cramped conditions to remain in the capital.
Cheap house, long commute
In search of value, the only viable option is to move into the further reaches of the capital’s transport catchment. A recent TUC study showed that those in the South East with a daily commute over two hours has more than doubled over the past decade. For many, commuting is unwanted. Rather than settling for long commutes, relocation to a core city makes living centrally more affordable.
Relocation is a big step
The compelling case for relocation indicates that we may be on the cusp of a wave of inward investment into core regional cities. However, the extent of inward investment moves – from either London or overseas – has actually been relatively modest over the past year. Clearly, there is more to setting up in the UK’s core cities than operating costs. Here are the main obstacles businesses have to contend with.
|Company||Market||Building||Size (sq ft)|
Freshfields Bruckhaus Deringer
One New Bailey
Ford Credit Manchester
No.1, Capital Quarter
2 Arena Central
XYZ Building 90,000
While employees may welcome the lifestyle afforded by moving, many may be tied by family commitments. A gradual approach to relocation might help, initially through setting up a smaller satellite operation, then expanding, allowing staff time to plan.
London is unrivalled for the depth and breadth of its skills base. Consequently, in particular specialist areas, there may be a limited supply of employees. However, core city economies are becoming increasingly sophisticated with, for example, growing concentrations of Technology and Media businesses in Manchester, Bristol and Leeds.
For some London-based businesses in niche sectors, operating elsewhere is inconceivable. Complex social networks cannot be readily transplanted.
Above all, ensuring talent is in situ will be fundamental to relocation decisions. Most UK core cities already boast renowned universities, but the challenge is stemming the ‘braindrain’ into London. Ironically, as the cost barriers of London become more widely understood by ambitious young professionals, businesses may increasingly come to them.
The cost data has been supplied by Lambert Smith Hampton and a number of leading industry suppliers. The data in this edition represents the position as of 31 March 2019.
To get consistent and comparable costs between locations, the type of building and associated day-to-day services have been specified in detail. For full information on the building's specification, see Definition of Cost Heads below.
Key building parameters:
We have adopted the hypothetical purchasing power of a medium sized organisation which employs 500 staff, this is considered the minimum size required for procuring the TOCS bundle of services.
The survey has also assumed all expenditure items are procured separately, which in the real world is unlikely.
To identify costing, we have analysed all relevant annual and one off capital costs for the occupation of office space. This analysis has taken into account expenditure items contained within the IPD Total Occupancy Cost Code.
Actium Consult, the previous owner of TOCS, helped IPD to define this cost code, which is now established as an industry benchmark. These costs include net effective rents, rates, annualised costs such as maintenance, security and cleaning and relevant business support costs such as reception, telephones, catering and printing and reprographics.
Calculating the net effective rent from the headline rent is a necessary step in calculating the total cost of occupation in different locations around the UK.
For the purpose of this survey, the level of headline (or lease) rent of a hypothetical 50,000 sq ft NIA office building in a prime office location let to a single occupier was determined. It was assumed that this property, excluding car parking, would let within a reasonable time, approximately six months, and on a 10-year FRI lease with a review after five years.
The typical rent free period for each of the 54 centres covered was also taken into account.
Net effective rent is calculated using the current quoted prime rent for a good quality modern office building. The net effective rent reflects any rent free inducement on a straight line basis up to the end of a 10-year lease. The rent free period also includes the traditional three month allowance for fit out.
Since the intensity of use in office buildings varies it has become standard practice in the industry when looking at occupancy costs to measure not only price per sq ft but also costs per workstation. For organisations who use a 1:1 ratio for workstations (no desk sharing/hot desking) and staff, this measure also relates to cost per staff member.
Therefore a good best practice benchmark for the total workstation area is 100 sq ft (NIA). This is a reasonable assumption for an occupier moving into and refitting new space, although in practice some occupier sectors use considerably more space.
The net area of a workstation* is the area taken up by a desk, chair, pedestal and proximity storage, which comes to approximately 52 sq ft. However, any analysis of gross workstation area also needs to accommodate other spaces in the building including:
Our space calculation assumes approximately 12% cellular space and 88% open plan.
You can download the Space model for the Total Office Cost Survey
* Floor measurements referred to are based on the RICS Code of Measuring Practice, 6th edition.