Having a look at the internal document from LG, who are manufacturing the Nexus 5, a software update will be required to run the device after you take it out of the box. This will be installed during the set-up procedure and you will not be able to complete the set-up and use the phone without this update.
It would seem that Google finalised the hardware and initial manufacturing runs of the Nexus 5 some time ago in order to avoid the shortfall in stock that plagued the launch of the Nexus 4 last year. Due to this, the current first batches are not installed with the final Android 4.4 KitKat release. You will not be able to skip through the set-up process without having first connected to either a data / Wi-Fi connection and installed this update.
Also be aware that the update will be around 374.5MB. The final download size however will be smaller, depending on region and software pre-installed on the handset. Clove UK stock for example had a download size of 139.3 MB.
Thank you Clover.uk for providing us with this information.
Images courtesy of Clover.uk.
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