Renting Office Space

[Travelling Sam]

We're about to make an offer for a new office. It's with Workspace.

I know they sometimes put in offers (i.e. 3 months free rent etc) but they ignored that when I asked them. We've never had to negotiate rent (as currently paying peppercorn rent - but have to move due to office being turned into flats ).

It's for one of their newer buildings, and they have quite a few empty offices at the moment.

I'm wondering what is reasonable to ask for? And what type of reasonable offer I should put in (what % under the asking price etc). It's for Greater London. Or perhaps they are very unflexible with what they offer?

Any advice anyone? This is all very new for us!

 

[termsandconditions]

This may be an extreme example, but I heard from two reliable sources that rents as low as £5 per sq ft are available in Central London (within a couple of miles from Waterloo station).

Even if you don't find something this inexpensive, it's definitely a renter's market at the moment.

Best Regards

 

[Travelling Sam]

This may be an extreme example, but I heard from two reliable sources that rents as low as £5 per sq ft are available in Central London (within a couple of miles from Waterloo station).

I'm guessing that is for very very large industrial esque buildings (two miles from Waterloo can be pretty grim in certain directions!) - but I havn't come across anything like that.

Although if it's for smaller office space, would love to hear about it!

I've seen everything from £12 psf - £55 (all in though) - we're only after 500-660 square feet.

 

[Travelling Sam]

OK, i'm going to answer my own thread to bump it up, because, someone out there has an answer for me!

And to think my working background is in contracting and negotiating. However, I know nothing about renting / lettings market etc.

What % underneath a quoted price for an office would be reasonable for us to offer? Or would we target something else (i.e. rent free months etc).

We are excellent tenants so i'm sure they really want us!

 

[cowork]

Hi Sam

Just seen your threat on looking for office space in London. We are an alternative approach to the usual serviced offices. www.co-work.co

The difference being that as a 3 person company you would rent desks in an open plan office and pay a set weekly price for the number of desks you rent. That set price includes all of the services that a typical service office company would load on top once you had signed up i.e. broadband, expensive phone systems, use of meeting rooms, printing and deposits etc.

Our price is an all inclusive from £79 per desk per week with no deposit and a minimum 1 month stay.

Please contact us if you would like further information

Regards

Tom

 

[Travelling Sam]

Thanks Tom,

Looks interesting, good idea, but wrong location at the time,

Good luck with it,

Sam

 

[cowork]

Thanks Sam? Where are you looking?

We are currently opening a space in London Bridge next to Borough Market.

 

[CHHare]

Hi Sam,

We are commercial landlords (not your area sorry).

We get a variety of offers and negotiations and it is a fluctuating market.

We're not in a city so perhaps our area behaves a little different.

We've taken this as our best approach to date:
3-5 year leases, if no break clause then we offer an opportunity for a new/small business to get going. e.g. lower rentals for the first couple of years.
This helps businesses find their feet, we fix increases for the 3-5 year period, so they know when and how much these will be.

We have in the past entertained many other options, but tend to find we get stung one way or another.

We want companies to come, stay and grow, our larger spaces are taken up with such companies, and we do our best to accomodate growth.

Reasonable as a landlord is rent increases, but at a rate that ensures everyone can grow and develop.

I don't know if that helps you.

 

[Travelling Sam]

Thanks,

That's interesting, it's good to see it from the other point of view.

We're only moving due to asbestos discovery in current building (well, we having to move early, but this has cut short our plans), and I have no experience in this area.

We are actually good tenants (always paid on time, good references, lovely people to be around!) - but having a short deadline, we're probably going to head to a Small Business Unit (so we can expand as and when). We are not interested in moving for a while (and if we do, probably within the same complex) but would need some type of break clause in case it doesn't work out. A Small Business Unit is less like to activate this clause as long as we are nice tenants and pay on time

However, again, we wouldn't accept the list price (would anyone else?) - it seems natural to make a lower offer (especially when they have 15 units available). I'm still getting my head round lease / license and all the terms - again, this is a new (but interesting!) area for me, so want to negotiate a good term asap!

I was thinking of offering 15% below list price, asking for 2 weeks rent free, reduced deposit (50% of what they were asking), and a max 4% (upwards only) yearly increase. In return we'd take the office asap. Would this be a reasonable offer?

 

[CHHare]

Hi,

I would say from a landlords perspective, that reducing the deposit is not something I would entertain. This is security against any damages etc... left behind from the tenant and isn't an income so much,
but I can quite honestly say that it is impossible to chase a former tenant for anything after they have left, so the deposit is the peace of mind that at least something is recoverable.

4% is reasonable, and we have been happy with that as an increase.

Determining the starting rent has so many factors, e.g. location, facilities etc... so it's hard to comment on what starting price.

You can of course in negotiations make an offer.

Good tenants are worth supporting, but obviously the landlord needs to make a living too!

Typically the pattern we experience is as spring sets in our enquiries grow and we see regular cycles like this through the year, it's often abit "feast & famine"

The main thing is go to any meeting with what you would like, make sure your relationship with any new landlord is one where you can discuss, and see where the middle ground is.
There is no right or wrong in terms of negotiating, and in your Heads of Terms it's all laid out, neither party has to agree to something they dont like.

Good lucK, and if you decide to move 3 hours North let me know