Commercial property is a huge market in the UK. In fact, the PIA Property Data Report 2015 states that commercial property accounts for 13% of the value of all buildings in the country.
It also reports that over the last decade, the number of commercial properties has grown at less than half the rate of residential property, meaning that good office locations are in high demand. It can seem daunting to arrange your office relocation in the current market, but there are ways to negotiate a great deal on your new lease. The tips listed below will help guide you through the process.
- Decide what your ‘must-haves’ are
The needs of a business are entirely individual. What is essential to one may be inconsequential to another. The requirements of your particular business are of paramount importance when considering moving offices.
For example, how many desks does the area need to accommodate? How close is it to transport links? Is there potential for expansion? Do you need private offices for managers or will your space all be open-plan?
Our advice: Before you start discussing what you’re willing to pay for your office relocation, produce a detailed list of exactly what it is you want from your new commercial space and consider which aspects you can be flexible on.
With this list, you can adjust how much you’re willing to spend on any particular office, and can refer to it whenever you feel your resolve wavering.
- Do some research on the state of the market
In a popular city like London, attractive and functional office space is a precious commodity in short supply. Naturally, this drives prices up. Further out from city centres, rents are generally more reasonable but can vary widely depending on many different factors.
For example, current rents in Covent Garden, for a high quality new or refurbished office, range from £75-£90 per square foot per annum. Venturing slightly further out from central London, in Stratford, for a comparable office is approximately half the price, between £37.50-£47.50 per square foot per annum.
Our advice: When you find some potential areas, download our Guide to Office Rents from this page to get a feel for the rents that business owners are paying. Aspire can also research companies who have recently leased commercial property nearby to aid your negotiations. Pay particular attention to the price of offices that encompass the qualities you require in your own space. This should guide your decision when making an offer.
- Get an independent measurement of the space
The rent of commercial property is usually calculated by the square footage of the space. Unfortunately, it’s easy for these measurements to be inaccurate, either through genuine human error or due to an opportunistic landlord.
Additionally, rentable square footage usually includes areas in the space like the lobby, corridors, bathrooms and sometimes even vertical structures like the stairs or lift shaft.
In 2014, the International Property Measurement Standards Coalition (IPMSC) introduced the International Property Standard (IPMS) which is designed to standardise property measurement across the globe. However, at present, this standard is not mandatory in the marketplace, so the way that the figure included in the initial offering is calculated is up to the landlord and their agent.
Our advice: Be sure to take your own measurements of the actual usable office space so you know exactly what you’ll be paying for. When it comes to negotiating the rent, you’ll have these measurements to hand and can point out any discrepancies to use as leverage during the discussion.
- Be mindful of the length of the lease
Signing a lengthy lease will often prompt a landlord to make concessions on the rent and in other areas of the agreement.
However, these savings will mean nothing if the needs of your business change and you’re locked into a long-term contract. You also may end up paying over market rent if you’re unable to renegotiate.
Our advice: Think carefully about your business plan for the next couple of years. Could you be downsizing or expanding in the near future?
If the latter is the case, it’s important to negotiate either a shorter term, or to add a break clause. A break clause means that, even if you commit to a five-year lease for example, you’ll be able to break the contract at certain points after an agreed period of notice.
- Look out for repairs charges
Unforeseen problems in an office building have been the downfall of many businesses. When a serious issue occurs, like burst pipes or electrical damage, having to foot the bill can place financial strain on the tenant.
It’s incredibly important to be aware of who is responsible for different kinds of damage according to the lease agreement. As stated by gov.uk, “Any responsibility that isn’t mentioned in the lease will usually be yours as the tenant.”
Our advice: Try to limit your obligation when it comes to repairs. If possible, have it stipulated in the contract that you’re only responsible for interior maintenance and repairs.
It’s also best practice to ensure that you have a Schedule of Condition, which is a record of the state of repair of the property prior to your tenancy. You are only required to maintain the space at that standard. When there are disagreements, you can refer to this to protect yourself against unwarranted charges.
- Get professional advice
Negotiating the lease for a commercial property is unlike doing the same for a residential property. There are a great deal more variables and it can prove confusing to even the most experienced renters.
Our advice: It’s always advised that you carry out as much of your own research as possible, but when it comes to negotiating the terms of your lease, consulting a professional will ensure that you get the best possible deal.
Aspire Property Group specialise in commercial property strategies. We take the guesswork out of negotiating for your office relocation.
If you’d like more information on negotiating a great deal on your office relocation, get in touch with Aspire or call 020 3627 2555. We provide impartial advice, exclusively for the benefit of tenants.