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Over the past couple of decades, landlords incentives to a tenant for them to lease their office space have become standard across the UK and play a large part in negotiations when taking on a lease in the Central London office market. Most people looking for an office in Central London tend to know that they are entitled to some sort of rent free period when taking on a new leased office. The general feeling is that this is to offset any fit out costs the incoming tenant may have when setting up the new office, such as putting in a kitchen, portioning meeting rooms etc. Fitting out an office is usually a requirement that a tenant has because most landlords will completely strip out an office back to a Cat A condition taking out all partitions and just leaving capped off services.
However, in reality the amount of fitting out work that a particular tenant has to do has little effect on how long a rent free period the landlord is willing to give away, as two different tenants could move into a the same space with one spending £50,000 and the other spending £100,000. Therefore rent free periods are generally governed by the relationship between demand and supply in the different sub-markets of Central London.
The two major office market in Central London are still the City Core and the West end, although there are number of emerging office markets with the growth of the TMT sector such as Clerkenwell, Shoreditch and London Bridge. The incentives that landlords will give away are quite different in the City and the West End. In the City vacancy rates at above 9% for office space with rent free periods on 5 year leases being achieved of up to 12 months, whereas in the West End where the market is far tighter with vacancy rates being around 4% you will luck to achieve a rent free period more than 1 months per year term certain in the lease.
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.