The CFO’s Guide to Office Space: Turning Real Estate from Cost Center to Strategic Asset

For most companies, office space is the second-largest expense after payroll. Yet many CFOs still treat real estate decisions as an operational detail, delegated to facilities teams or outsourced brokers.

That approach is risky. Office commitments tie up millions in capital and can affect everything from balance sheet health to employee retention.

Handled strategically, though, office space can shift from cost center to asset, one that supports growth, reduces risk, and improves culture.

This guide is designed for CFOs who want to approach office space with the same discipline they apply to financing, tax, and investment decisions.

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Why CFOs Must Lead on Office Decisions

· Material financial impact: Real estate often represents 10–20% of overhead.
· Balance sheet treatment: Under IFRS 16 and ASC 842, leases are liabilities.
· Risk management: Poorly negotiated leases expose companies to multi-million-pound liabilities.
· Employee retention: The office influences satisfaction, productivity, and recruitment.

Delegating office decisions without CFO oversight can lead to financial blind spots.

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The CFO’s Office Space Framework

1. Model Total Cost of Occupancy (TCO)

Do not stop at rent per square foot. A true model includes:

· Base rent
· Service charges
· Utilities and cleaning
· Insurance
· Fit-out and furniture
· IT infrastructure
· Dilapidations at lease end
· Moving and relocation costs

👉 Use LEVEL’s Office Cost Calculator to model TCO across lease, serviced, and flexible options.

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2. Balance Opex vs Capex

· Leases: Often require upfront capital for fit-out, furniture, and IT.
· Flexible offices: Structured as opex with minimal upfront cost.

The right choice depends on balance sheet strategy. Some CFOs prefer predictable opex for agility, while others favor capex if long-term stability is assured.

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3. Evaluate Risk Profiles

Different models carry different risks:

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        Model                              Risk Profile                                     Common Risks

Traditional Lease                   High                  Dilapidations, inflexible terms, vacancy costs

Serviced Office                   Medium               Limited customisation, bundled costs

Flexible Office                       Low                   Higher monthly desk cost, less brand control

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CFOs should align office risk with overall business risk appetite.

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4. Link Real Estate to Workforce Strategy

· Hybrid working reduces desk demand but increases meeting space needs.
· Employee location data informs where hubs should be.
· Amenities drive retention and recruitment costs.

Finance leaders who ignore employee experience risk false economies: saving rent but losing talent.

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5. Plan for Exit Before Entry

Always budget for:

· Dilapidations
· Break clauses
· Subletting rights
· Relocation costs

Exit planning is a financial safeguard, not a facilities detail.

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Case Example: When CFOs Lead, Costs Fall

A 400-person consultancy in London tasked its CFO with leading an office review. Instead of renewing a 25,000 sq ft lease, they:

· Shifted to a 12,000 sq ft HQ
· Bought 150 flexible memberships across regional coworking hubs
· Negotiated capped service charges

Result: 35% cost reduction and improved employee satisfaction.

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FAQs for CFOs

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How do office leases affect financial reporting?

Under IFRS 16 and ASC 842, leases longer than 12 months must be capitalised on the balance sheet as liabilities.

Is flexible office space cheaper than leases?

Not always per desk. But flexible models reduce upfront capex, exit costs, and risk exposure — often making them cheaper over 3–5 years.

How should CFOs compare office options?

Always compare total cost of occupancy over 5 years, including fit-out, service charges, and exit costs.

What KPIs should CFOs track for office space?

Cost per employee, utilisation rate, attrition rate, and cost of turnover.

Why should CFOs care about office amenities?

Because turnover is expensive. The right office features reduce attrition, saving recruitment and training costs.

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For CFOs, office space is more than a facilities decision. It is a financial instrument that carries risk and opportunity.

The right approach transforms real estate from a liability into a lever for growth and culture. The wrong approach can weigh down balance sheets for years.

👉 Use LEVEL’s Office Cost Calculator to compare office models, forecast costs, and build board-ready scenarios. Make office space part of your strategic financial toolkit.