Service charges rise by more than inflation in most commercial property sectors, BDO report finds
Service charges rise by more than inflation in most commercial property sectors, BDO report finds
- BDO’s annual PropCost report analyses service charges across four commercial property sectors
- Retail parks lead increases with 11% rise in year-on-year service charges, while shopping centres see 8% rise
Service charges have risen by more than inflation in three out of four commercial property sectors underlining the challenges facing property managers, according to a new report from business and accountancy firm BDO.
The findings come from BDO’s fourth annual PropCost benchmarking report, which analysed total service charge spend of almost £700m across around 1,100 commercial properties in the offices, industrial parks, retail parks and shopping centre sectors.
Retail parks saw the biggest rise in service charge costs in 2025, with an 11% year-on-year jump, due to rising cleaning and fabric repair costs as well as wage growth.
Meanwhile, shopping centres experienced an 8% rise in overall costs compared to the year before, with almost half (45%) of service charge costs made up of cleaning and security, suggesting the increases are driven by rising costs of employing people in those roles.
Looking further back, there has been an 18% increase in total average service charge costs for shopping centres across a three-year period and a 20% uplift for retail parks.
In the offices sector, service charge costs rose one per cent above inflation in 2025 to 5%, less than the 9% identified the year before. Rises have been attributed to cleaning and mechanical and electrical costs (M&E).
Offices have the highest service charge costs in BDO’s report. Costs for M&E rose by 9%, making up 23% of office service charge costs on average. However, service charge costs in the South East, Midlands, North and Scotland were around 50% lower than the average for central London.
Finally, industrial parks were the only sector to see a below inflation increase of 3% in 2025. The relatively small increase in service charge costs of 3% - after costs had fallen between 2023 and 2024 - was attributed to falling security and fabric repairs costs.
Kathryn Archer, Director at BDO and PropCost project lead said:
“Rising costs remain a challenge for property managers. While our latest results from 2025 show that overall costs were not rising at the same pace as the previous year, we still see increases in operating costs above inflation levels due to the impact of continued upward pressure on labour costs.
“Operating costs for central London offices are the highest, reflecting the concentration of the highest quality accommodation, and higher running costs for providing service in the capital. This can mean service charge costs which are almost double those found in regional areas of the UK.”
Chris Carle, Partner at BDO and Head of Service Charge Accounting said:
“Our clients are increasingly focused on how data can be used to create value, support investment decisions and improve occupier experiences. PropCost has been developed with that need in mind, providing independent benchmarking of service charge costs across the UK commercial property market and helping all parties have more informed conversations about costs, performance and value.”
The Propcost report is developed in conjunction with the Royal Institute of Chartered Surveyors (RICS), and uses data from eight contributors: MAPP, JLL, CBRE, British Land, Brookfield Properties, Revantage Europe, Newmark and SHW.
ENDS
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