Navigating Rising Occupancy Costs: The Impact of Fit-Out Costs and Business Rates.
In this Q&A Interview, ForeView Director Henry and Co-Founder Philip Legg explore the impact of these pressures and where businesses can identify opportunities to reduce costs and make more informed property decisions.
Rising fit-out costs, increasing rents and higher business rates are reshaping the commercial property market and placing greater emphasis on total occupancy costs. As businesses review their real estate strategies, decisions around relocation, refurbishment and space optimisation are becoming more closely linked to cost management and long-term value.
Philip Legg: What are the industry implications of rising fit-out costs?
Henry Edwardes: “Rising fit-out costs are widening the gap between best-in-class and secondary space. For occupiers, that means higher capital expenditure, longer decision-making cycles and more scrutiny on whether every square foot is delivering value. For landlords and developers, it reinforces the need to invest in quality, sustainability and technology if they want to remain competitive in a market where occupiers are becoming far more selective.
As fit-out costs continue to rise, more landlords are offering Cat A+ space to help reduce occupiers’ upfront capital expenditure and make buildings more attractive in a cost-sensitive market.
From a business rates perspective, the rising cost of fit-out results in Landlords demanding higher rental values which in turn could increase the levels of Rateable Value and rates payable following revaluations.”
Philip: How does this link with occupancy and business costs?
Henry: It links directly because fit-out costs now sit alongside rising rent, service charge and business rates as part of a much bigger occupancy cost equation. Businesses are no longer looking at rent in isolation – they are assessing the total cost of occupation and whether a building supports productivity, retention and operational efficiency strongly enough to justify that spend.
Philip: Do you think occupiers will prioritise relocation, refurbishment or optimisation of existing space?
Henry: In many cases, optimisation and refurbishment will come first. With prime space constrained and fit-out costs elevated, many occupiers will look to reconfigure existing offices, improve utilisation and extend the life of what they already have before committing to a full relocation. Relocation still makes sense where the current building cannot support sustainability targets, workplace quality or long-term business needs, but the decision threshold is now much higher.
Both optimising existing space and relocating to new premises can create opportunities to reduce business rates costs. Being proactive with this and having early consultations on this can help business understand where there are potential savings.
Philip: Are businesses becoming more proactive in reviewing business rates exposure as part of wider real estate strategy?
Henry: Yes – and they need to be. Business rates are becoming a more important part of strategic property decision-making, especially as occupiers face higher rents, tighter Grade A supply and increasing pressure on total occupancy costs. The most proactive businesses are reviewing rates exposure earlier, not after a move, because it can materially affect the affordability of a transaction and the value of staying put versus relocating. Being proactive in this process generally is the best approach.
Philip: Where are businesses uncovering hidden savings opportunities?
Henry: From a business rates perspective, hidden savings are often found where liabilities have not been reviewed for some time. That can include inaccurate assessments, unclaimed reliefs, changes in occupation, lease events, or opportunities to challenge whether an assessment properly reflects the property and how it is used. In many cases, businesses are paying more than they need to simply because rates have not been looked at strategically.
One of the biggest business rates savings opportunities often arises during a move from one office to another. During the overlap period, occupiers can find themselves paying rates on both properties while fit-out and transition works are being completed. If that process is managed proactively, there is often scope to reduce unnecessary liability and help offset some of the wider cost of relocation.
Philip: How do ForeView support clients navigating rising occupancy and business rates costs?
Henry: ForeView helps clients take a more strategic view of occupancy costs, with business rates forming a key part of that picture. We support occupiers by assessing rates exposure on prospective acquisitions, identifying opportunities for savings or mitigation, and helping them make more informed decisions around relocation, refurbishment and ongoing occupation. In a market where rents, fit-out costs and operating costs are all rising, that early, joined-up advice can make a meaningful difference.
Reviewing your property strategy? Whether you’re relocating, refurbishing or reassessing your existing space, ForeView can help uncover potential business rates savings and provide clarity on total occupancy costs. Get in touch to discuss your plans with our expert team.
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