Sector

Offices — tenant-side surveying

Office markets have split in two: fitted, well-rated space with amenity is letting, and secondary space is not. That divergence means headline rents on prime floors are a poor guide to what a tenant in an older building should be paying, and incentive packages are doing most of the work in the market.

Written by Chris McGarrigle MRICS · Tenant side only

What drives value here

  • Net internal area measured consistently, and the loss factor on the floor plate
  • Net effective rent after rent free, contributions and stepped increases
  • EPC rating and MEES compliance, and who funds any improvement works
  • Fitted, plug-and-play or Category A shell, and how the review clause treats it
  • Service charge levels, caps and sinking fund contributions
  • Break rights, term certainty and the value the landlord places on them

Headline versus net effective

Almost every office comparable needs unpicking. Twenty-four months rent free on a ten-year term with a break at five is a very different deal from the same headline with no break, and a landlord contribution to fit-out is rent in disguise. Analysing to net effective rent is the whole exercise.

Energy standards and who pays

Minimum energy efficiency standards have pushed improvement obligations into lease negotiations. Where a building needs work to remain lettable, that is fundamentally a landlord problem — but poorly drafted repairing and statutory compliance clauses can push the cost onto the occupier.

Right-sizing at renewal

Renewal is the natural point to reset floor area, term and flexibility around how the business actually uses space. The 1954 Act framework, used properly, gives an occupier real leverage on all three.

Common questions

Guides for offices

Talk it through

Initial advice is free — tenant side only.

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