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Morgan Pryce recently acquired 1,313 sq. ft. for a property management company in the heart of Victoria, on Buckingham Palace Road, taking on a 10 year lease with a 5th year tenant only break. This floor was one of the last remaining floors of this size in Victoria at the time of this acquisition. The floor had been newly refurbished to cat A condition and provides raised flooring, capped off services for the tenant to fit their own kitchen or kitchenette as well as air condition units.
The landlord insisted on the rental level maintaining its quoting rent, something that is becoming more and more frequent due to areas such as Victoria being such a Landlord market. Certain institutional landlord’s will let out their buildings without reducing the rental levels so that their investment level remains high, however they will compensate with a much larger rent free period. Morgan Pryce and their client headed this route and managed to secure 16 months’ rent free which brought the net effective rent down quite a bit.
Christina Weguelin of Morgan Pryce comments, “I often advise clients that when considering certain options where we are in particular dealing with an institutional landlord, we need not take the quoting rent at face value and should also consider what the net effective rent could look like, if the companies business plan allows them to consider costs in such a way’’.
Rent free periods were initially granted to compensate for fit-out time but in the 80’s this became an incentive that was used by Landlords to entice Tenant’s into their buildings, initially introduced in the economic downturn of that decade. It is now a standard element to negotiate
Morgan Pryce’s client managed to complete the signing of the lease just before Christmas, complete the fit-out in the interim of the holidays and are now happily occupying their new office.
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.