There is a growing trend in commercial offices, which sees companies shifting towards more flexible, people-focused workspaces that prioritise wellbeing, collaboration, and adaptability. This change is not about desk density, but focusing on the provision of breakout areas, collaborative zones and office amenities.
Understanding Commercial Space Classifications
By Matthew Watts, CEO and Founder of MWA Projects
The consensus is that most companies currently on the hunt for new office space actually want more space than they have at present. This is because even if employees go into the office 3 days per week, they tend to be the same 3 midweek days, coupled with business now assigning more space per employee. Businesses in 2019 assigned 115 ft2 per employee but this has now risen to 145 ft2 per employee. The additional space is not desk space but for additional break out areas, facilities etc.
The following cost guidance is based on a typical 10,000 ft2 office project (or 930m2 - divide by 10.764 to convert!), so to house 70 employees based on the above calculation, though economies of scale can affect pricing for significantly larger or smaller spaces.
The journey from acquiring raw commercial space to creating a functional office environment involves several stages:
Shell and core represents the base building – essentially the bare bones including the structural frame, exterior walls, and primary mechanical and electrical systems.
Cat A transforms this into a basic functional space with raised floors, suspended ceilings, and primary mechanical and electrical distribution to an open plan layout, typically costing £45-65 /ft2 in London.
The emerging Cat A+ specification bridges the gap between traditional Cat A and Cat B, offering a 'plug and play' solution that includes quality flooring, enhanced lighting, and collaborative spaces. Cat A+ costs typically range from £75-95 /ft2,reflecting the additional finishes and amenities included. While Cat A+ spaces require minimal additional fit-out (typically £5-20 /ft2 for branding and furniture), they offer less design flexibility and customisation potential than traditional Cat A spaces.
Cat B creates the finished workplace environment to meet an occupier’s unique specific requirements. Basic Cat B fit outs can start from £45 /ft2, with mid-range specifications running at £65-90 /ft2, and high-end finishes reaching£120+ /ft2 in London. Regional costs typically run 15-25% lower than London prices, though this gap has narrowed in recent years due to supply chain pressures.
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The True Cost Picture
Beyond base construction costs, several elements impact total project costs:
- Furniture: £20-35 /ft2 (up to £60 for high-end)
- AV and IT infrastructure: £5-15 /ft2
- Security systems: £1-3 per /ft2
- Relocation costs
- Dilapidations: £15-20 /ft2
Remember to accrue for dilapidation costs from day one! This often-overlooked expense can significantly impact your project's overall financial planning.
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Market Pressures and Cost Impacts
The past 3 years have brought unprecedented challenges. Covid-19's impact on supply chains, combined with inflation reaching 11%, led to material cost increases of35-50% particularly affecting steelwork, m&e components and copper cabling. Plasterboard saw prices rise by over 80% between 2021-22 alone. Labour costs have also risen by 25-30% since 2020, driven by Brexit reducing the available workforce, increased demand for skilled trades, and wage inflation.
These market pressures have also impacted project planning. For a typical 10,000 ft2 office, a traditional Cat A to Cat B journey requires several months for space identification, lease negotiations and Landlord's consent to the tenants’ proposed works. The design period typically overlaps with these negotiations to ensure work can commence immediately upon lease completion, maximising any rent-free period negotiated. Construction typically takes 12-16 weeks depending on complexity. In contrast, Cat A+ spaces can significantly reduce this timeline by eliminating extensive design and build phases, though this comes with reduced design flexibility and customisation options.
Looking Forward
The commercial fit-out sector faces both challenges and opportunities. Major corporates are increasingly focused on prime new buildings with strong ESG credentials, creating a shortage of Grade A space in prime locations. Meanwhile, landlords of secondary buildings face significant challenges with new Minimum Energy Efficiency Standards (MEES) requiring a minimum EPC rating of B by 2030. The costs of upgrading these buildings to meet requirements, combined with rising construction costs, are making feasibility calculations increasingly challenging.
Despite these challenges, we're seeing remarkable advances in sustainable materials and smart building technology. These innovations are helping create more adaptable, future-proof workspaces while managing costs effectively. The future workplace will demand greater flexibility, stronger sustainability credentials, and enhanced digital integration.
What's clear is that while the way we use offices has evolved, their role as centres for collaboration, innovation, and company culture remains essential and very much alive.
For guidance on your next commercial fit-out project or to discuss how these trends might impact your workplace strategy, please contact me at MWA Projects
