The True Cost of Office Space in Australia
Beyond the Headline Rent
When budgeting for office space, many businesses focus on the net face rent. But the true cost of office occupancy includes multiple components that can significantly change the picture.
The Cost Components
1. Net Face Rent
The base rental rate, typically quoted in $/sqm per annum. In Australian CBDs, this ranges from $450/sqm (Adelaide) to $1,650/sqm (premium Sydney CBD) depending on location and grade.
2. Outgoings
Building operating costs passed through to tenants — typically $80–$180/sqm per year. These cover rates, insurance, building management, common area cleaning, and maintenance.
3. Fitout Costs
The cost to design and build your workspace. Budget ranges:
- Basic / open plan: $800–$1,200/sqm
- Mid-range: $1,200–$2,000/sqm
- Premium / bespoke: $2,000–$4,000+/sqm
Landlord fitout contributions (typically $200–$800/sqm) offset some of this cost.
4. Furniture & Technology
Workstations, chairs, meeting room tech, AV equipment, and IT infrastructure. Budget $3,000–$8,000 per person depending on quality and requirements.
5. Moving Costs
Physical relocation, change management, downtime, and temporary accommodation if needed. Often underestimated at $50–$150 per person.
6. Make-Good Provision
Set aside $200–$500/sqm for end-of-lease reinstatement obligations, even if you negotiate a cap or waiver.
A Real Example
For a 500sqm office in Sydney CBD for 50 people on a 5-year lease:
- Net rent: $1,100/sqm/yr = $550,000/yr
- Outgoings: $150/sqm/yr = $75,000/yr
- Fitout (amortised): $1,500/sqm over 5 years = $150,000/yr
- Furniture (amortised): $5,000/person over 5 years = $50,000/yr
- Total: ~$825,000/yr or $16,500 per person per year
That's before you factor in incentives (which could reduce total cost by 25–35%) and your make-good provision.