The Hidden Costs of Managing Your Own Office Space (Maintenance, Utilities, and Everything Else)

When companies look for office space, they’re used to planning around paying rent. It’s expected. But that’s only the tip of the iceberg in terms of what you’re going to pay. There’s an entire world beyond the lease that, after the documents are signed, comes to life and many businesses are woefully unprepared for it.

The kicker here is that these aren’t always made transparent to people when they’re searching for spaces. Landlords are clear about square footage and cost per square foot, but they’re not necessarily clarifying what’s going to fall on your shoulders in addition to that. And some of it can be 30%-50% more than your basic needs. When you’re trying to run a business and set a budget, you don’t want to be hit with financial blows like that.

What "Utilities Included" Means (Not Much)

Even when it says utilities are included in the lease, it usually means they’re just the basics. For example, heat and air conditioning is typically covered, perhaps some electrical use for the building. But what about what your computers use all day? What about additional cooling for your server room? Water for the break room and bathrooms?

These are often on separate line items. And they can be expensive. A small office with 10 employees can easily rack up $300-$500 in utility charges that weren’t part of the base rent conversation. When you have 30 or 40 people, you’re talking serious dollars.

And let’s not forget internet and phone service. Most offices have no connectivity included within leases which means you’re contracting that too. Business class internet is not what you pay for at home. Expect $200-$800/month depending on your needs for bandwidth, redundancy, etc.

Maintenance That Nobody Warns You About, Too

And this is where it gets expensive. Something breaks and all of a sudden you’re responsible for it. The HVAC goes out in July. A pipe bursts and eats some ceiling tiles. The parking lot needs to be resealed because the potholes are everywhere.

Depending on your lease conditions, you could be responsible for these repairs and more, and in some cases, in part if your landlord is covering them as most repairs come out of CAM (common area maintenance) charges. Everything from landscaping to snow plowing to elevator maintenance comes through CAM charges, and they can increase year after year without notice.

So, what’s the solution? Most companies find it advantageous to seek an alternative where facility management is not their problem. For businesses that need office space but want predictable recurring monthly costs, a coworking space accommodates all maintenance, utilities and facility operations as part of the fee. It’s easier than being blindsided when you should have known better.

Insurance You Didn’t Count On

The landlord has insurance on the building. Fantastic. But that’s not going to cover your business, liability and equipment needs. You’re going to need your own commercial policy which generally costs between $500-$2,000/year for small offices, $500 being the lower end if you’re insuring less or in a safer industry.

You’re also going to need liability insurance (slip and fall), property insurance (for your furniture and equipment), and potentially business interruption insurance (if something happens where your space isn’t operable). And all of this happens outside of your rent payment.

Furniture and Equipment, Too?

Let’s not forget that you can’t walk into an empty space and just open up shop. You’re going to need desks, chairs, filing cabinets, conference table (and perhaps couches in a waiting area). For a small office with 10 people, you’re talking anywhere from $15,000-$30,000 in furniture, and that’s if you’re doing this reasonably without buying everything new right off the bat.

Technology? Networked equipment, possibly 1-2 servers, printers, phones (based on how big your office is), security systems (or cameras). Anticipate another $10,000-$20,000 depending on what you need. All of this needs maintaining too, updating and eventual replacing over time.

The breakroom needs a fridge, microwave, coffee pot, dishes. Bathrooms need supplies. You’re going to need cleaning supplies, paper goods, light bulbs, all operational overhead after budget discussions total hundreds of dollars monthly that never see day light by the time you all but secure your lease.

Cleaning and Janitorial Services

Someone’s going to have to clean your office. Unless you’re planning on having employees take turns vacuuming and scrubbing toilets (please do not), you’re going to need a cleaning service. Commercial janitorial services run between $50-$150 per visit depending on how big your space is, and most companies require cleaning at least twice per week.

That’s another $400-$1,200/month that’s easily overlooked because you’re focused on rent alone. And should you require daily cleaning or other customization in cleaning efforts, those costs skyrocket quickly.

Security Access Control

Most commercial buildings have some level of security; you may need more access control for key cards or fobs for your employees or an alarm after hours or security if there are valuable materials/equipment on hand with video cameras as an option.

That’s another several thousand dollars upfront plus monthly monitoring fees, not to mention every time an employee leaves the company, that means changing locks or deactivating access cards for HR/management having to issue them new ones.

The Real Math No One Does Upfront

For example, let’s say you’ve found some office space quoted at $3,000/month. That sounds manageable enough, but when you include utilities ($400), internet ($300), insurance ($150), cleaning ($600) and monthly CAM charges ($500), all of a sudden you’re at $4,950 without putting any furniture in or touching any repairs yet.

That’s 65% more than what you started with as a rent number alone. Never mind what’s factored in one time (furnishing) or security deposit (typically two or three months’ rent).

When all is said and done over the course of the year that’s an additional ten thousand dollars or more which businesses simply don’t account for when their revenues are tight or when they’re looking to save cash for scaling possibilities down the road this can present serious problems.

What This Means for You

This isn’t to say that traditional spaces aren’t good deals for businesses; sometimes they make perfect sense. But you need to go into it knowing fully what you’re signing up for, getting a true picture of all-in cost, not just rent, because your time and energy spent managing these complications is also a cost, and every hour you spend focusing on HVAC repairs versus growing your business is an hour lost on profit development opportunities.

For businesses that want to simply get down to business without worrying about facilitating facilities efforts it’s worthwhile investigating what the all-in picture looks like. Sometimes paying slightly higher per square foot rates for spaces that include everything is cheaper than doing it all separately, and almost always less stressful when expenses come knocking when they’re least expected.