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The relationship between the landlord and fit-out contractor is rarely without complication and has matured very little over time, Rob Gregory, Managing Director at Oktra, tells us.
Leading up to the signing of a lease, the discussion between the landlord and the tenant’s agent will be followed by a discussion post-signing with the fit-out contractor and landlord.
Each party has its own priorities to fulfil during the initial stages and all will act based on what will benefit them the most. The tenant’s interest is to agree the lease but, more importantly, to set up their business and start using the space quickly. The fit-out team has similar interests to the tenant and wants to establish a programme and begin work on site. However, the landlord’s primary interest is to have the lease signed quickly in order to start accumulating rent as soon as possible, with little or no interest in enabling a quick occupancy for the tenant.
Typically, landlords will hire a third party to advise them when giving their consent to the fit-out proposals. This usually takes between 4-6 weeks to approve; Oktra, however, has been known to expedite this step, acquiring consent in less than a week. This is achieved by both early dialogue with the landlord and robust planning. Landlords are not motivated to act quickly at this stage, in the same way as tenants and fit-out contractors are, as it does not benefit them directly. During this process, there needs to be a flow of steady communication between the landlord and tenant to ensure the lease is signed and the tenant feels informed and secure with the agreement.
The rise in take up by coworking providers has increased the drive to move to the new space faster and have discussions with the landlord prior to a lease agreement. We are experiencing more tenants like WeWork, who are experienced with the leasing process and keen to use the space as soon as possible. There is an increased interest in spaces left in raw (shell and core) condition that require both Cat A and Cat B fit-outs before occupancy. Tenants are looking to take on the Cat A refurbishment themselves, which in turn is inciting a more developed relationship between the fit-out contractor/tenant and the landlord.
As with most new offices, they are focused on maximising the use of space, compacting more people per sq ft. This is having significant consequences on building services, which are not usually designed for a larger number of people. Equally, the higher occupancy has an impact on other compliance matters, including the number of toilets and means of escape provision. These two matters were previously a landlord matter but now need to be considered by the tenant. A new fit-out will need to consider the wider aspects of the building, like fire strategy and escape routes, to ensure health and safety requirements are met. This is presenting more challenges for landlords/tenants to overcome, which is bringing tenants/fit-out contractors closer to the landlord to achieve the common goal of making a building work for the tenant.
For landlords, their best course of action is to keep up with tenant trends and what they may want from the fit-out. It is important to be aware of the diversity between each tenant in order to adapt a space that can accommodate anyone. It is beneficial to all parties to start having discussions earlier, prior to the lease agreement, in order to further the relationships. Although technology and coworking have helped to evolve the landlord/tenant relationship, greater developments could take place with enhanced communication at an earlier stage.
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