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As a tenant looking office space in the Central London market, you have probably become very bored and frustrated with agents telling you how tight the market is with a sever lack of supply of good stock, especially between 1,000-3,000 sq. ft.
The problem is that, as frustrating as it is, the lack of supply is a real problem in the current market. What we have seen during the last 12 months is an increase in the amount of fag end leases available. A fag end lease is an agent’s term for a short term lease available by way of either a sub-let or an assignment. They usually become available when tenants either outgrow their space or are looking to downsize.
There are a number of benefits that companies are finding in taking on a fag end lease. Firstly, it provides the flexibility in lease length that many young companies require due to the fact that they do not know how quickly they may grow over a 3 year period. They do not want to be in a situation where they are stuck in a 5 year lease. The only other option is to move into a serviced office which does not suit the culture and identity of many companies.
Many will get the benefit of a lower rent as the current tenant will have agreed there rent a few years ago and the market has certainly shifted massively in the last couple of years. Saying this, tenants looking to assign their lease will often take note of this and look to get a premium for their lease. A premium will often come into play when inheriting the benefit of a good fit out as it can save a huge amount of money in upfront capital costs.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.