Office designs are evolving. With new priorities for the office space in the post-pandemic world, understanding office fit-out costs and the factors that influence these costs has become equally as important as the design of the space.
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Welcome to the Officeinsight Fit-Out Cost Guide
Office designs are evolving. With new priorities for the office space in the post-pandemic world, understanding office fit-out costs and the factors that influence these costs has become equally as important as the design of the space.
This guide has been created to help educate you with the latest insight and cost considerations when embarking on an office fit-out project. Through answering the most frequently asked questions with regards to cost, budget and finance we hope to provide you with valuable guidance to efficiently budget for your office fit-out.
Contents
- Type of office fit-out
- Average cost of an office fit-out
- External factors that affect an office fit-out
- Internal factors that affect an office fit-out
- How long does it take?
- Setting a budget
- How to maximise the ROI
About Us
Over the last 15 years, Officeinsight has been delivering turnkey design and build projects for our clients. We provide a comprehensive range of office services under one roof – from initial consultation and space design and planning, through to fit-out services, project management, competitive tendering and furniture provision.
We transform workspaces into places where everyone can thrive, driving performance for your people and your business through delivering quality workplaces for clients that value their people.
With the most efficient and effective process in the sector – Define, Design and Deliver – the best working environment can be realised to help you attract and retain the best talent.
Section One:
Type of office fit-out
What type of office fit- out do you need?
Identifying the type of fit-out required for your office space is a good place to start when looking to efficiently budget an office fit-out.
Office fit-out tends to fall into one of three categories:
Cat A
A CAT A fit-out is the basic fit-out needed to get a building functionable, it does not include many things you may expect to find in an office space such as a kitchen or meeting rooms.
- Smoke alarms, carbon monoxide detectors and fire alarms
- Basic utilities such as lighting, plumbing and working plugs
- Raised access floors
- Toilets
- Heating, ventilation and air conditioning systems
Cat B
A CAT B fit-out shapes the interior workspace space, adapting the building to how you want it.
- Furniture and workstations
- Design and company branding
- Kitchen area
- Partitioning for offices, meeting rooms and breakout areas
- Floor finishes
Cat A+
CAT A+ combines elements from both A and B, essentially a plug-and-play office setup provided by landlords.
- Workstations and desks
- Basic décor
- Kitchen
- Breakout spaces
- Tea points
The cost between a CAT A project and CAT B will vary significantly and the category of fit-out your company requires will considerably affect the cost. To help provide a realistic estimate the next section covers off the average cost per square metre.
Section Two:
Average cost of an office fit-out
How much should an office fit-out cost?
Throughout the UK, the average cost of an office fit-out varies per square metre.
As a general rule, to provide an initial indication of the cost of an office fit-out based on the square metre of the workspace, we’d recommend the following calculations based on our experience:
This initial calculation can offer a good starting point when preparing a budget, offering a sense check to see if your estimations are realistic. However, the next step is to add your wish list of items you’d like in your office space into our new office fit-out cost calculator.
This allows you to tailor your specification, select your desired standard of finish and receive an estimate of cost and space requirements you will need to consider for your fit-out project.
Once comfortable with the figures, the next stage is then to arrange an initial site visit to view the current condition of the building and to define your exact requirements and budget.
In most cases, cost per square foot is benchmarked across range of three level of design quality basic, medium and premium – allowing clients to use the specific benchmark level that best fits their requirements, rather than a one-size fits all costs.
Basic
Simple and straightforward design with basic technology. Focus on function.
Average
Straightforward brief with unique design features and upgrades throughout. Standard quality finish materials, medium entry tech with some special features and finishes in key areas.
Premium
Custom and complex design with top quality material, finishes and technology. Unique and flexible design with high spec technology and special features throughout.
Section Three:
External Factors
What factors affect office fit-out costs?
The office fit-out market is not alone in feeling under pressure.
Considering extraordinary and unpredicted possibilities and the impact this would have on office fit-out project cost no longer seems incomprehensible given that we’ve have all recently endured unsettling and uncertain times.
Knowing what could have an impact on the cost of your project is key to maintaining control and making sure you and your contractors factor in provisions.
External factors impacting the cost on an office fit-out include:
- Economy and attitude to risk
- Material shortage
- Labour
- Insurance costs
External factors
are those influences, circumstances or
situations that a business cannot control but that affect business
decisions.
are those influences, circumstances or
situations that a business cannot control but that affect business
decisions.
Economy and the effect on office-fit-out
Take the economy as an example, the pandemic has wreaked havoc throughout the world, causing instability and confusion. Due to this, everyone is much more careful on how they spend their money and starting jobs is harder than before. Contractors’ appetite for risk has reduced significantly, after spending months being pulled on and off sites, due to the several lockdowns in the UK. This makes finding willing contractors difficult and therefore could impact the fit-out costs, as it’s likely they’ll have to be paid more.
Global material shortage as a key factor that affects office fit-out cost
Another knock-on effect from the pandemic however, is the global material shortage. Increasing pressure on supply chains has resulted in a sharp increase in material pricing and unfortunately, this will very likely impact your fit-out cost as the following are all showing notable price increases from pre-pandemic levels:
- Suspended ceilings
- Joinery
- Steel
- Mechanical, electrical and plumbing (MEP)
- Partitioning
You may ask why there is a building materials shortage?
Good question – as the first lockdown led to a slowdown in the production of materials from some factories in the EU, having a knock-on effect to supply chains ever since. A shortage of more than 100,00 lorry drivers in the UK, out of a total 600,0001 has led to transportation delays. After-effects from Brexit remain, as roughly 60% of imported materials used in UK construction projects come from the EU, and labour vacancies peaked between July and September.
Labour
Brexit and the global pandemic both led to trade contractors’ shortages and this has continued to drive up wages. Despite the restrictions affecting most business’ ability to trade now being lifted the construction market is still recovering. A significant number of contractors are still reporting a worker shortage and have been unable to meet demands.
Insurance
As a result of higher material prices, reinstatement values for construction materials have increased insurance costs. Insurers are now seeking above inflationary increases to policy renewals, which for the first time has seen material damages move ahead of the traditional concern of rates for injury.
Section Four:
Internal factors
What factors affect office fit-out costs?
Ultimately, office fit-out costs are heavily influenced by the specification required by the company moving into the new space. Some companies seek high spec finishes, bespoke joinery, fixtures and furniture, whereas others many only need the basic spec.
As well as the specification, the average square metre estimated cost will also be influenced by a number of common internal traditional fit-out factors, including:
- Raised floors
- The age of the building.
- Mechanical and electrical (M&E) systems
With the various workplace changes more uncommon internal factors that affect office fit-out costs, include:
- New hybrid working
- More focus on health and wellbeing and sustainability
- Tech-centric design to support new ways of working
The terms hybrid working, blended working and agile working have become pretty commonplace, as flexible working is now absolutely the new normal.
Different considerations now need to be given to the workspace to accommodate these changes. Rather than filling your office with standard desking, adding a variety of working methods and socialising spaces, can maximise your office space whilst either encouraging employees to work in the office or making it more suited to the flexible working method. Popular options are a canteen, breakout areas and booths. This shift to focus more on functional spaces rather than simple desk space, often requires complete layout redesign to become a more fluid space and requires investment in the accompanying hard and soft furnishings to provide a more diverse way of working.
Adding in these areas can have an incredible impact on your staff, as it shows them that you care about their wellbeing and can help boost their productivity whilst having a smart space to be able to show off to clients and prospective customers. This then increases value for money, because not only are your staff happy and enjoy working for your company, but they’ll be willing to put in the hours to help your business go from strength to strength, and you could find that attracting and retaining talent is much easier.
Enhancing sustainability during an office fit-out is also attracting more attention and not only benefits the environment, but can also have measurable financial benefits. A well designed, resource efficient space can significantly reduce operation costs in the long run. Whilst building certifications such as BREEAM, LEED or SKA can add additional costs, they provide independent verification of achievements against recognised standards.
As the working world becomes more agile, a company’s success in the new world of hybrid working will hinge on whether it has a supportive technology strategy. A shift towards more flexible workspaces requires investment and a new approach to technology, including AV. Questions to consider are around do we have the right environment and technology to do this inclusively? The requirement for dedicated technology enabled meeting rooms of varying sizes has never been more important. You also might find that new hybrid processes and procedures require new digital tools like electronic room booking facilities and more video conference facilities to aid better integration and ensure collaborations occur in the most productive way possible, all of which come at a cost.
Section Five:
How long does it take?
How long does it take and how does time influence cost?
An office fit-out project is usually defined as a success if it has been delivered on time and on budget, which is why we place great emphasis on negotiating sensible budgets and achievable deadlines from the start.
As a rough guide, we would expect an office fit-out project to take anywhere from six weeks – twenty-one weeks. Obviously, the timescale can vary significantly depending on the scale of the fit-out and quality of finish you are looking to achieve.
Timescales can be adjusted, flexible and sometimes even sped up – but the basic assumption of the bigger the size of project the longer the timescale and bigger the budget provides a good estimation.
At Officeinsight, we use an unrivalled three-stage process ‘Define, Design and Deliver‘. This not only breaks down the process into smaller, more manageable steps but it allows us to be more specific with how long each step will take and in what areas your budget is spent.
The Define stage: 2-4 weeks
This is the first stage of the process where we Define what the space is and its current condition. This starts by obtaining building plans, site surveys and technical elements but aims to remove any subjective assumptions around the purpose of the workspace, how it should look and how it will be used.
Next, we dig deeper than most to uncover the purpose of the space for all users. Through running a Define workshop with key members of the team and collecting real data from the current space users with our Define tool we are able, quite quickly to build up a strong design brief. The brief not only captures the vision for the space but examines the data that helps to plan departmental adjacencies, working pattern, employee’s needs from the space and the required improvements to collaboration and communication.
The Define stage: 3-5 weeks
Now armed with actual data and insight to create what is really needed from the space, the Design stage starts by creating zonal plans, before moving in 2D general arrangement plans.
We then create mood boards and start selecting finishes for your feedback as well as sharing how users will move and collaborate through the space. Following adjustments and final agreement on these initial concepts, we then bring the designs to life in 3D photorealistic renders and video fly-throughs.
We also allow you to virtually walk through your new space using the latest virtual reality technology. At the end of this stage, you will be presented with a detailed costing, schedule of work and delivery contract.
The Define stage: 6-12 weeks
The third stage is the on-site delivery stage as outlined in the schedule of works. Our specialist team manages the whole process, including contractors and looking after areas of compliance such as Building Control application, HSE notification, CDM regulations and a detailed O&M manual. Communication is one of our priorities, to ensure that all stakeholders are aware of where the project is up to. We use a unique shared platform which gives all stakeholders access to the latest live information and allows all to stay informed.
Weekly site meetings, emailed weekly updates detailing progress, next steps and variations are all part of the deliver stage and upon completion, there is a handover meeting where a quality check is carried out. The O&M (link to blog) file is issued and any demonstrations are completed.
A further influence on cost is whether the work needs to be phased or completed outside of normal working hours. Routinely working outside of ‘core’ hours will come at a premium.
Section Six:
Setting a budget upfront
Why should I set a budget up front?
It is crucial that you set a budget that is realistic. Whilst it is difficult to estimate each specific cost, setting an accurate budget for your project will then help office fit-out companies create a brief that fits within your budget and also your vision for the space.
It’s important to remember that your budget will vary depending on how many staff you have currently, how big your space is and what the current condition of the space is. Whilst it may seem sensible to go for a smaller space, remember that an office fit-out should last you several years, so it’s important to allow for expansion and growth in the future.
A good place to start is by adding your requirements into an office fit-out calculator as this will help provide an estimate budget and give you a basic idea of general costs based on your needs.
https://www.officeinsight.co.uk/a-guide-to-office-refurbishment/office-fit-out-calculator
Section Seven:
How to maximise the ROI
How to maximise the return on investment (ROI) of your office fit-out project
There are several benefits of an office fit-out project, such as improved employee retention, attracting the best talent, the potential productivity boost and the enhanced employee well-being. But these alone may not be enough to convince the key decision makers – what you need is concrete facts, not speculation.
To aid those discussions, we’ve put together ways to measure the potential ROI, taking both tangible and the more intangible benefits derived from an office fit- out to ensure that you can present a solid business case for your project.
Operational and Space Costs
A good place to start is to establish just how much space you need and what valuable space, if any, could be repurposed into an area which adds value to your organisation.
A good place to start is to answer the following:
- What percentage of your workstations are currently not being utilised and how much space does this equate to? – These can be eliminated in any redesign.
- What is the average cost per workstation in terms of equipment, heating, lighting, cleaning and security?
- What does the space now need to cater for in terms of collaboration facilities, one to one private facilities, full team presentation areas, meeting spaces etc?
- How much would your new office design save in terms of utilities, equipment and maintenance for each workstation?
The positive impact of an office fit-out can also be measured if you consider the following:
Saving on recruitment costs:
An inspiring office design has such a huge impact when it comes to leaving the right impression on your desired candidates. Office design is a subjective area and any future projects should keep in mind the type of person you’re trying to attract to your business.
According to Forbes, the cost of replacing an employee can range from 30% of their annual salary for an entry level employee and up to 400% of a high-level employee’s salary, therefore meaning a high churn rate will be detrimental to your business’ bottom line.
Increase in productivity:
Office design can impact productivity both positively and negatively. The best office fit-out design will include a variety of spaces for different working styles, such as spaces for spontaneous collaboration but also spaces where employees can work in peace, allowing the individual to focus on their work away from the chatter of the office floor.
TOP TIP
A good measure of improved productivity is to calculate productivity by dividing outputs by inputs:
A good measure of improved productivity is to calculate productivity by dividing outputs by inputs:
Productivity= Outputs/inputs
Inputs are the resources used to create products and services – such as capital and labour, whilst outputs is the value of services sold.
2https://www.tlnt.com/what-was-leadership-thinking-the-shockingly-high-cost-of-employee-turnover/
Improved Employee Wellbeing:
Prioritising wellbeing as a key factor in any office design can lead to substantial benefits, especially when businesses incorporate design aspects that directly contribute to the health and wellbeing of their employees.
An example of this being used widely in today’s office is Biophilic design. This design concept increases employees’ connection to the natural environment through the use of characteristics from the natural world into the building.
Modern offices which include plenty of greenery have reported a 30% decrease in sickness related absences as well as an increase in cognition and sleep quality.
Biophilic offices with better air quality, natural light and controlled temperature can positively impact employee wellbeing and subsequently may increase productivity.
Whereas, poor air quality and a lack of thermal comfort can each reduce productivity by 10% meaning any office design project should pay careful attention to these important design elements.
A good measure of employee wellbeing is to look beyond simply reporting on sickness absence and instead uses these workplace metrics such as absences, staff retention and quantity and quality of work alongside results from an employee satisfaction survey. By combining both you can start to build a better picture on how employees are really feeling and gain specific insight on key issues.
For more information on office fit-out costs, please get in touch:
0161 246 2360
projects@officeinsight.co.uk
www.officeinsight.co.uk
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