# Office Occupancy Cost Calculator: Total Cost for Each Seat a Month

> Total occupancy cost is everything an organisation spends to occupy its office, expressed as a monthly figure: rent, maintenance, parking, utilities and other running costs, plus the fit-out, furniture and IT spread over the years the office will be used. Divided by seats, it gives the cost for each seat a month.

## What it calculates

From your own figures, the calculator works out the total monthly cost of occupying an
office and shows:

- the **running costs** each month;
- the **one-time costs** (fit-out, furniture and IT) **spread over each month** of the term;
- the **total occupancy cost** each month, and over the whole term;
- the cost **for each seat** a month;
- the cost **for each person served** a month, at your peak attendance;
- the cost **for each sq ft** a month, if you enter the area;
- the **security deposit**, shown separately because it is refundable.

It contains no rents or rates. Every money field is yours and starts blank. The
calculator stores nothing.

## Inputs

Monthly costs, from your term sheet and bills:

- **Rent**, **CAM / maintenance**, **parking**, **utilities and electricity**, and
  **other monthly costs** such as housekeeping, security, insurance and internet.

One-time costs, from your quotations:

- **Fit-out**, and **furniture and IT**.
- **Security deposit**: entered so it can be shown, but not added to the cost.

Your office:

- **Seats**, and optionally the **area** in sq ft.

In the assumptions panel:

- **Spread one-time costs over**: years, usually the lease term or the time you expect to
  stay. Starts at 5.
- **Interest or discount rate**: optional, your own cost of money. Blank spreads the
  one-time costs evenly with no interest.
- **Peak attendance**: the share of people in the office on the busiest day. Starts at
  100%, one seat for each person.

## Method

1. Running costs = rent + CAM + parking + utilities + other.
2. One-time costs = fit-out + furniture and IT.
3. One-time costs a month = one-time costs ÷ months in the term, or, with an interest
   rate, the level monthly payment: one-time costs × i ÷ (1 − (1 + i) ^ −months), where
   i = the yearly rate ÷ 12.
4. Total a month = running costs + one-time costs a month.
5. Cost for each seat = total ÷ seats.
6. People served = seats ÷ peak attendance; cost for each person = total ÷ people served.
7. Cost for each sq ft a month = total ÷ area.
8. The security deposit is shown on its own. With an interest rate, the interest it could
   have earned (deposit × yearly rate ÷ 12) is shown as a note, not added.

## Assumptions

| Assumption | Default | Notes |
| --- | --- | --- |
| Every money field | Blank | Your own figures |
| Spread over | 5 years | Usually the lease term |
| Interest or discount rate | Blank (none) | Your own cost of money |
| Peak attendance | 100% | Lower it for hybrid working |
| Security deposit | Not a cost | Refundable; shown separately |

## Limitations

- **It treats running costs as flat.** Rent and CAM usually rise during a lease. Use the
  [rent escalation calculator](/calculators/office-rent-escalation-calculator) to find the
  average effective monthly rent over the term and enter that as the rent.
- **It ignores any value left at the end.** Furniture and IT may still be usable after
  the term; spreading their full cost over the lease overstates the monthly figure.
- **It does not include tax effects.** GST credits, depreciation and the accounting
  treatment of the lease are matters for your chartered accountant.
- **It leaves out costs you do not enter.** Moving, reinstatement at the end of the lease,
  brokerage, stamp duty and registration are only included if you add them.
- **Peak attendance is your estimate.** If attendance rises, the cost for each person
  served moves towards the cost for each seat.

## Worked example

Suppose an office of 4,600 sq ft with 50 seats, used for 5 years. The figures below are
invented for the example and are not market prices.

- Monthly: rent 1,000 units, CAM 200, parking 50, utilities 150, other 100.
- One-time: fit-out 30,000 units, furniture and IT 18,000.
- Security deposit 6,000 units. Peak attendance 80%.

| Step | Calculation | Result |
| --- | --- | --- |
| Running costs | 1,000 + 200 + 50 + 150 + 100 | 1,500 a month |
| One-time costs | 30,000 + 18,000 | 48,000 |
| One-time costs a month | 48,000 ÷ 60 months | 800 a month |
| Total a month | 1,500 + 800 | 2,300 |
| For each seat | 2,300 ÷ 50 | 46 |
| People served | 50 ÷ 80% | 62.5 |
| For each person served | 2,300 ÷ 62.5 | 36.8 |
| For each sq ft | 2,300 ÷ 4,600 | 0.5 |

The total occupancy cost is **2,300 units a month**, or 1,38,000 units over the 5 years:
**46 units for each seat** and **36.8 units for each person served**. The deposit of 6,000
units is shown separately and is not part of the total.

With a 10% a year interest rate entered, the one-time costs become a level payment of
**1,019.86 units a month**, the total rises to **2,519.86**, the cost for each seat to
**50.4** and the cost for each person served to **40.32**. The deposit could have earned
about **50 units a month**, shown as a note and not added.

## How occupiers use it

Rent alone is a poor way to compare offices. A building with a lower rent may carry higher
maintenance or parking charges, or need a bigger fit-out because it is handed over bare.
Putting every option on the same total monthly cost, for each seat, makes the comparison
fair. The cost for each person served adds the effect of hybrid working: if fewer seats
serve the same team, the office can be smaller, and the
[seat capacity calculator](/calculators/office-seat-capacity-calculator) shows how many fit.

## When a professional must replace it

Use the calculator to compare options and to understand what each seat costs. Before you
commit, have the lease reviewed by a lease advisor or property lawyer, have the fit-out
priced by a quantity surveyor against drawings, and have the tax and accounting treatment
of the rent, deposit and one-time costs confirmed by your chartered accountant.

## Frequently asked questions

### What is included in office occupancy cost?

The running costs of the space (rent, CAM or maintenance charges, parking, utilities and electricity, and other regular costs such as housekeeping and security) plus the one-time costs of making it usable, chiefly the fit-out, furniture and IT, spread over the period you will occupy it.

### Why is the security deposit not counted as a cost?

Because it is refundable: the landlord holds it and returns it at the end of the lease, less any agreed deductions. It is cash tied up rather than money spent. If you enter an interest rate, the calculator shows what the deposit could have earned each month, but it still leaves it out of the total.

### How are the fit-out and furniture costs spread over the lease?

With no interest rate, the one-time costs are divided evenly over the months of the term. With an interest rate, they are turned into a level monthly payment, as if the money were borrowed or could have earned that rate elsewhere, which gives a higher monthly figure.

### What is the cost for each person served?

In a hybrid office the seats are sized for the busiest day, not for everyone. If peak attendance is 80%, each seat serves 1.25 people, so the cost for each person is the cost for each seat × 80%. At 100% attendance the two figures are the same.

### Where do the figures come from?

From your own term sheet, bills and quotations. The calculator contains no rents, maintenance charges or fit-out rates, and every money field starts blank. Use the rent escalation and fit-out budget calculators to work out the rent and fit-out figures first.

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Source: https://hagerstone.com/calculators/office-occupancy-cost-calculator