UK businesses are paying more for offices as they aim to lure people back to work
Data from professional services firm BDO shows service charge costs for office spaces rose by 9% in 2024 as wage pressures, overdue maintenance projects, and investments designed to attract staff back to the office all contributed to an above-inflation rise.
The 9% year-on-year rise was the second consecutive year of above-inflation increases in office service costs, following a 15% rise from 2022 to 2023.
The new figures come from BDO’s latest PropCost benchmarking report, which analysed over £600 million’s worth of service charge expenditure across over 1,000 properties, broken down by four sectors – offices, industrial parks, retail parks and shopping centres.
Developed in conjunction with the Royal Institute of Chartered Surveyors (RICS), this year’s Propcost report uses data from eight real estate contributors – JLL, Mapp, Brookfield Properties, British Land, Revantage Europe, CBRE, Newmark, and SHW.
BDO’s analysis found that the costs making up service charges increased at a greater rate than inflation across most sectors, with changes to the national minimum wage playing a particularly significant role in shaping overall cost trends. However, there were specific cost categories driving service charge rises depending on the asset type.
The report also highlighted the impact of location on service charge costs, with central London offices, for example, experiencing costs almost 70% higher than those in the rest of the UK.
Tracking attendance
BDO’s data aligns with a recent analysis by legal firm Dentons after reports that several professional services firms have started to monitor office attendance across their UK workforces, using data from staff entry passes and WiFi connections to track how often employees are coming into the office (or client’s offices).
Some firms are only looking to address consistent non-compliance with an office attendance policy, while others may use the data when awarding pay rises or promotions, Dentons said.
The question of how often employees should attend the office remains a tricky area for employers to navigate. While there is a trend towards encouraging greater office attendance, particularly among larger employers, it is equally clear that some segments of the workforce will continue to push back against rigid in-office requirements.
“The drive to bring employees back to the office often collides with a strong preference for flexible working arrangements that emerged during the pandemic. Many employees now view flexibility as essential rather than a perk,” Dentons said.
At the same time, employers may see increased office attendance as vital for collaboration and maintaining organisational culture.
“Navigating this tension requires a careful, consultative approach, which recognises the legitimate interests on both sides. Organisations that successfully build consensus are likely to see higher staff morale than those that impose rigid mandates.”
