Value Add Offices Are Worth Considering

Fully Fitted / Plug & Play / Flexible Terms Available….

Value Add Offices are worth considering!

One of the most common factors I am experiencing currently when advising SME occupiers is Cost. When I say Cost, I mean the overall cost of moving to a new office versus staying put in their current premises. The “Stay v Go” analysis (that are now a common part of our Tenant Rep advisory repertoire at Murphy Mulhall) we undertake for clients looks at both the exit costs for leaving their existing offices together with the potential entry costs of a different office option.

In summary, these can be categorised as follows;

Exit Costs

• Dilapidations (Most leases contain clauses obliging the occupier to “put the space back to the way they got it”)  – rule of thumb cost approx. €30 per sq.ft.

Entry Costs

• Office Fit-Out – typically running between €100-150 per sq.ft depending on standard (Gold/Silver/Bronze)
• Tenant Rep Agent Fees for acquisition service
• Legals Fees for new lease to be processed
• Dilapidation Costs at end of this new lease

When SME’s need to move (their existing office space is not large enough to satisfy their current/future business requirements), capex on the fit-out element of a new office is a significant factor in the decision making process.

One of the ways to help offset this “pain” can be by way of rent free periods being offered by Landlords to entice occupiers to take their open plan “Cat A” specification and undertake their “Cat B” Tenant Fit-Out. One of the other ways is to consider the growing amount of office space options that are fully fitted or in plug and play condition – the industry way of saying that the space has the benefit of a fit-out that has been carried out by the current or previous occupier of the space.

Typically, this will cover most of your needs – open plan desk layout with IT in place / Kitchen area / meeting rooms and a reception area. Depending on the layout and condition, there may be little work required or limited work thus saving a lot of capex for the incoming tenant. Also, as most of these option are available by way of a sub-lease situation (typically 3-5 year timeframes), any future dilapidations liability will rest with the existing occupier as it will fall to them to deal with such an item with their Landlord.

With WFH patterns differing across various sectors, I am seeing an increasing amount of this type of surplus space being made available in the Dublin Market (in particular the CBD). It is a good option for those occupiers who need to move/grow their business in the short-medium term but don’t want to be placing their cash reserves under pressure by spending on a new office fit-out.

If you are interested in exploring your “Stay v Go” options as an SME occupier, get in touch with me or the team and we can have a chat. If we can help, we will.

Author: James Mulhall