It’s time to find your next office. So where do you begin? Our five part series aims to help you look beyond the jargon that so often surrounds the commercial property space. We'll help you focus on what's really important to find the best possible deal on an office that’s right for you and your business.
First things first. What do you want, and where should you look to find it?
Whether you’ve outgrown your current office space, are approaching a lease expiry or simply find that your organisation’s goals are not supported by your current leasing agreement the aim of your search revolves around two guiding practices:
Commercial letting contracts fall into two main categories: leases and licenses. As a rule, leases are longer-term arrangements offering exclusive occupation of part or whole of a property. Licenses are most commonly associated with shared and/or serviced offices, essentially rolling contracts, giving you the option of bringing the arrangement to an end at relatively short notice. So which type of arrangement should you focus on as you look for a new office? To help you decide, here’s a snapshot of each.
What is it?
A contract between the landlord and tenant, granting the tenant the right to occupy and use the property. The length of a lease varies. In 2015, for instance, around 73 percent of commercial leases were for a term of between one and five years, but some are much longer (as much as 25 years).
Situations where leases are suitable.
What to look out for in lease arrangements.
Break clauses - these give you the option to exit from the lease earlier than the full term. As a business, they give you the opportunity to reappraise your property requirements at set periods, although generally, greater flexibility in this area is usually reflected by higher rents.
Sub-letting - during the term of the lease, your property needs might change. You might, for instance, find yourself with more floor space than you need. Or, you might even want to move out entirely before expiration. In order to maximise your options, it’s worth focusing on lease arrangements which include the ability to assign the lease completely or to sub-let the premises.
Alterations and additions - be clear on your particular requirements in areas such as layout and branding. Make sure that the restrictions within the lease do not prohibit your desired alterations or additions to the premises.
What is it?
Essentially a license is an ‘easy in, easy out’ occupation arrangement. A licence is usually used to grant tightly defined, non-exclusive use of a premises, such as the use of a certain number of desks or a defined portion of floor space within a property. Most licenses give you the scope to terminate the agreement by giving so many weeks or months notice.
Situations where licences are suitable.
Your office accommodation requirements are difficult to predict. By entering into a licence agreement for serviced office space, you often have the ability to scale your space allocation up or down at short notice.
Fixed costs. These arrangements often feature an ‘all-inclusive’ monthly fee covering desk space as well as ancillary services such as concierge and use of meeting rooms and breakout facilities. This, combined with the fact that you are not going to be presented with unexpected maintenance and repair bills, makes it possible to accurately predict the cost of your property footprint.
Move straight in. A licence generally gives you little or no scope to make alterations to the premises. If you want immediate occupation of an already fitted-out office space, a licence offers a convenient way forward.
What to look out for in licence arrangements.
Notice period - how much notice are you required to give if you decide to vacate the premises?
Other occupants and scope for expansion.
Licenses are often used as a means of granting access to shared office spaces. As such, it’s worth looking at the profile of the businesses who have a presence there already. In other words, is this an environment you want your business to be part of and associated with? If there’s a chance that you’ll want to expand your space allocation in the future, it’s worth checking whether there is space available to enable this in your target premises.
Contact us for help finding your perfect office space with the best lease (or license) conditions for your business. We service tenant and occupier organisations exclusively and are experts in navigating the challenges that often come with a landlord biased market.