How Much Should You Pay For a Serviced Office in London

Finding the perfect office space in London has long been a challenge for thousands of businesses wanting to establish themselves in the UK’s top business centre. 

If you’ve ever searched for “rent office space London” then you’ll know that thousands of listings immediately pop up, ranging from traditional office rentals to flexible workspace or private offices.

In 2023, London tied with New York as the two leading financial centres globally in the Global Financial Centres Index, with the city continuing its historically strong performance in the key dimensions including innovation, reach, regulation, resilience, and business infrastructure.

It’s easy to see why office space in london remains in strong demand for companies to set down their roots. Yet prime-grade real estate availability has decreased and research shows that real estate shortfalls at the beginning of 2024 will primarily impact the most sought-after locales including the City of London, West End, and Docklands.

In response to these ongoing trends and the rise of hybrid working, many businesses are turning to serviced offices as a more cost-effective, flexible alternative to traditional office spaces, a choice many business owners wish they made sooner.

If you’re looking to switch to serviced offices for your business but are unsure of the costs, then our useful guide will help you decide if it's the right move for your business and what you should expect to pay for an office space in London.

For this guide, we will primarily discuss the costs of Tier 1/Grade A office spaces since almost 70% of the office space market is in this classification.

What is a serviced office?

As the name suggests, serviced offices are office spaces that come fully furnished with essential amenities provided by a facility management company.

Unlike traditional office spaces, a serviced office provider offers their clients flexible, monthly rental contracts that are tailored to fit each company’s needs, rather than being tied down to a traditional lease on a fixed contract.

In the last few decades, serviced offices and flexible office space have seen a rise in popularity in most major cities and are present in any financial hubs with a thriving economy.

On a day-to-day basis, clients of serviced offices have access to a range of workspaces including private office space, conference and meeting rooms, hot desks, and other flexible workspaces.

Depending on the service provider, serviced office amenities include:

• Shared facilities such as a fully stocked kitchen with tea, coffee and other essentials
• High-speed internet, VPN connections, and AV services such as video conferencing etc.
• IT and secretarial support services to help manage your teams day to day operations
• Mailing and courier services

Traditional vs Serviced Offices: Where businesses can get a better deal

As a business owner, your office space needs to be functional, fit your team size and be a productive environment where your employees can thrive. Yet, you also need to ensure that your space is cost-efficient and doesn’t take away from your overall revenue.

 In London, the average monthly cost of a serviced office is £700 per person but these costs can range between £500-£1500 depending on a range of factors discussed later in this guide.  Whilst £700 per person sounds like a great deal, offices at this price point often don’t come with essential services and tend to be small in size, so it’s important to do your research.

Serviced offices can save your business from the following ongoing costs and overheads.

Rent

Recent data indicates that between 2024-2027, a ‘supply squeeze’ will drive up the overall rental costs for office spaces and in particular for offices that are rich in amenities, sustainable, and centrally located across greater London.

In commercial real estate, the most commonly used measurement for office space rentals is price per square footage, with the median cost per square foot in London being £77.50.

By choosing a serviced office as your next office, your monthly fee means you’ll be paying for not just the space, but for everything else included by your office providers. The flexible leases of serviced offices make them more sustainable from a cost and revenue perspective.

Fit out costs

Have you ever stopped to consider how much an office fit-out costs for your business?

When talking about your office fit-out, we aren’t just talking about furniture and equipment, it also encompasses the building’s overall design and mechanical and electrical systems. Office spaces without properly functioning systems, such as heating and cooling, ventilation and power supplies will need to fix these issues which can be very expensive.

As of 2024, a mid-level standard office fit-out in London, the equivalent of what most workers current environment, costs £65 per square foot, which works out to between £800-£900 your business is spending per person. And this figure doesn’t consider the many needs and wants of what businesses look for in an ideal office space, such as smart office technology infrastructure or bespoke joinery and finishes. 

By renting out a serviced office for your company, your workspace comes fully furnished with luxurious design finishes and you no longer have to worry about any building management concerns, as these are all taken care of by serviced office providers. 

IT and Reception/Secretary Personnel

One of the many services included by some serviced office providers is their secretarial and IT support staff. These service provider staff act as a vital support system for your business, allowing you to delegate administration and technical tasks for you to focus on growing your business

When you choose a serviced office with these staff members on hand, you can save tens of thousands of dollars by not employing specialists in these roles.

Annual salary costs per employee:

Receptionist: Up to £24,000 

For small businesses and start-ups, making significant savings on these costs are huge advantage, allowing business owners to focus on their products and services without the administrative hassle.

Serviced Office Prices London

If you’re searching for a flexible office rental, then you will want to be informed of the local prices before settling for any location.

The serviced office industry is booming, and the number of office space providers is also increasing, so be sure to keep a keen eye out for the amenities that provide your business a commercial advantage.

Here are some key areas below:

• Mayfair - £115 - £140 per square foot
• Canary Wharf - £50 - £55 per square foot
• London Bridge & Southbank - £65 - £77.50 per square foot
• London City - £75 - £82.50 per square foot
• Soho - £85 - £97.50 per square foot

It should be noted that the above prices exclude the business rates and service charges, just the space itself.

Important Factors Influencing Serviced Office Prices

Location

When comparing serviced office costs across different areas of London, it's evident that the most desirable locations come at a premium.

Let’s compare two popular locations within London; Mayfair and Canary Wharf. Whilst both are known for being important business centres, Mayfair’s affluence and prestige means business owners would expect to pay more for a serviced office there compared to an equivalent space in Canary Wharf.

If we base it on the average price, then Mayfair costs almost three times more than the rent of Canary Wharf.

Businesses need to determine if the benefits of being situated in higher rent areas outweigh the extra costs paying this “prestige tax” consumes on their financial records.

For many firms and companies, the credibility given by having the W1J postcode on their address will prove advantageous, but for others, the additional cost won’t be worthwhile when there’s a comparable space in an up-and-coming area like Canary Wharf.

Market demand

Market demand and competition also play a pivotal role in shaping the cost of serviced offices in London. Areas experiencing high demand for office space coupled with limited availability often result in increased prices due to heightened competition among businesses.

One area that is always popular for businesses is within the city of London where the cost per square foot is around £75-£85, and this price is expected to continue its upward trajectory.

Overall, the flexible office market is gradually increasing because it blocks the barrier to entry for small businesses and grants hybrid capabilities.

Have some questions that need answering? Read our Ultimate Serviced Office FAQs for a complete overview.

Support services and amenities

Most serviced offices come with the basics; hot desks, private offices, meeting rooms and a kitchen.

But for higher-end service providers, additional facilities included in your monthly rent are access to gym and fitness centres, catering for meetings and events, IT and secretarial support, mail services and a whole suite of offerings that make serviced offices attractive to businesses and their employees alike.

Capacity and floor space

Office size matters. If you’ve ever been cramped into a small office space, then you know that every extra square foot means a greater level of comfort that allows you to get your work done quicker and to a higher standard.

Larger offices and more space than the average desk size are likely to incur higher monthly fees due to increased utility expenses and maintenance costs. These costs can be compounded based on the number of employees you have and how many private or individual offices you require. 

Nonetheless, even if you have ten employees, each at a rate of £1,100 per person per month, this still works out to be the low-cost option compared to a traditional workspace.

Final Considerations

If you’re looking for a guide on choosing the right serviced office space for you, then our essential tips will help you on your journey to finding your new idyllic workspace. Visualise yourself working in the space and pay keen attention to what services are included.

Afterall, without services all you have is a desk and chair with four walls.

Check out ours Essential Tips on How to Choose an Office Space.