The True Cost of Office Space: Flexible vs Traditional Leases Over 5 Years

When leadership teams explore new offices, the first question often sounds simple: “What’s the rent per square foot?”

On paper, that figure looks like the best way to compare spaces. In practice, it hides most of the real costs. Furniture, fit-out, service charges, utilities, and exit fees can make one space far more expensive than another, even when the headline rent looks cheaper.

For CFOs, COOs, Facilities Directors, and Chiefs of Staff, the office is not only a line item. It is a long-term financial and cultural commitment. Choosing the wrong model can tie up millions, strain cash flow, and create costly inflexibility.

This guide breaks down the five-year total cost of occupancy across three models: flexible offices, serviced offices, and traditional long-term leases. It also includes a link to LEVEL’s Office Cost Calculator so you can model scenarios for your company.

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Why “Rent Per Square Foot” Misleads

The property market loves quoting rent per square foot. But anyone who has run an office knows that is only the tip of the iceberg.

Hidden costs include:

· Fit-out and furniture: desks, meeting rooms, AV equipment, branding, partitions.
· Utilities and services: electricity, water, heating/cooling, cleaning, waste disposal.
· Insurance and compliance: building insurance, fire safety, health and safety certifications.
· Facilities: reception, security, internet infrastructure, repairs, ongoing maintenance.
· Exit costs: dilapidations, reinstating space to original condition.

These costs can add 30–50 percent on top of base rent.

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Model 1: Flexible Offices

Flexible offices bundle services into a predictable monthly fee, usually on a per-desk or per-membership basis.

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What’s included:

· Furniture, IT infrastructure, and fit-out
· Cleaning and utilities
· Security and reception staff
· Shared amenities like kitchens, lounges, and sometimes gyms

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Pros for leadership:

· Predictable budgeting
· Zero upfront capital expenditure
· Ability to scale headcount up or down
· Faster move-in times
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Cons:

· Higher monthly cost per desk compared with long leases
· Limited ability to fully brand or customise space

Five-year scenario (100 desks in London):

· £700 per desk per month

· Annual cost: ~£840,000

· 5-year total: ~£4.2m

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Model 2: Serviced Offices

Serviced offices are private spaces inside a shared building. They cost less per desk than flexible coworking but still bundle most services.

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What’s included:

· Private branded office
· Furniture and fit-out options
· Shared reception, utilities, cleaning, security
· Meeting rooms (sometimes included, sometimes billed separately)

Pros:

· More privacy and control than coworking
· Less upfront cost than a traditional lease
· All-in-one monthly bill

Cons:

· Higher cost than traditional leases long-term
· Less scope for custom IT or layout design

Five-year scenario (100 desks):

· £650 per desk per month
· Annual cost: ~£780,000
· 5-year total: ~£3.9m

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Model 3: Traditional Long-Term Lease

Traditional leases can look like the “value” option. Rent per square foot is lower, but nearly every other cost falls to the tenant.

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What’s included in base rent:

· Space only. Everything else is your responsibility.

Additional costs:

· Fit-out: £100–150 per sq ft upfront
· Furniture: £1,000–1,500 per desk
· Service charges and utilities: ~£200,000 annually for 10,000 sq ft
· Insurance and compliance
· Dilapidations on exit (~£250,000 typical for 10,000 sq ft)

Five-year scenario (100 desks, 10,000 sq ft at £60 per sq ft):

· Base rent: £600,000 annually
· Fit-out + furniture upfront: ~£1.5m
· Annual operating costs: ~£200,000
· Exit costs: ~£250,000
· 5-year total: ~£5.25m

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Side-by-Side Cost Comparison

       Model                    Annual Cost            5-Year Cost                Risk Profile                        Flexibility               Upfront Investment

Flexible Office            £840,000                £4.2m             Low (all-inclusive)                    High                           Minimal

Serviced Office          £780,000                 £3.9m                      Medium                    Medium-High                   Minimal

Traditional Lease        £1.05m avg.            £5.25m         High (fit-out + exit risk)             Low                  Heavy (£1.5m upfront)

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What CFOs and COOs Should Weigh

· Cash flow vs long-term savings: Flexible models smooth costs, while leases demand upfront capital.
· Balance sheet impact: Leases are liabilities; flexible models are operating expenses.
· Risk exposure: How likely is your headcount forecast to change? If uncertainty is high, flexibility protects capital.
· Employee experience: Serviced and flexible offices often provide better amenities with less hassle.
· Operational focus: Facilities Directors save time when they do not need to manage multiple vendor contracts.

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Operational focus: Facilities Directors save time when they do not need to manage multiple vendor contracts.

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How to Model Costs for Your Company

Every business has unique needs:headcount growth, city, sector, and amenity expectations. The fastest way to understand true cost is to model it.

👉 Use LEVEL’s Office Cost Calculator to compare flexible, serviced, and traditional leases for your team. The tool breaks down all hidden expenses so you can present board-ready scenarios in minutes.

Office space decisions can lock a company into millions of pounds of spend. Looking at rent alone is not enough. By calculating total cost of occupancy over five years, leadership teams can weigh financial stability against flexibility, employee experience, and risk exposure.

The companies that succeed in 2025 will not chase the lowest rent. They will choose the office model that protects cashflow, supports talent retention, and gives them freedom to adjust as markets change.

Want more information that can help you understand the available options in detail? Get in touch with our team of experts today who will be able to help you on your journey to finding a new workspace.

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