Whether you are completing an office refurbishment, office relocation or fit out project, you will undoubtedly have a lot of questions. We are here to help you answer them.
When do you need to notify your landlord that you are breaking your lease or not renewing?
It’s best to always check your lease for the detail of your lease length, break clause dates and notice periods, your solicitor or real estate professional will be able to advise. Typically notice periods are three to six months however the notice period for larger spaces can be 12 months. Before you consider termination or breaking your lease, you will need a good period of time to assess your business needs and overall property strategy. This may involve a detailed analysis of how your current space is working for you. This “workplace analysis” can take four to six weeks. You know your business best so you will be able to determine how your business makes such key decisions and the people involved, make sure you factor this into the overall period and you might find that you need to be looking at your office scenario six months before you need to give your landlord notice.
How might my lease dilapidation clause affect my costs?
For the majority of traditional UK office leases, there will be a dilapidation clause that will request that you, as the tenant, reinstate the offices back to the condition that they were found and handed to you prior to your own fit out. In most situations you will appoint a surveyor to act on your behalf to negotiate with the landlord’s managing agent. A financial deal is usually struck, and the landlord carries out the work, however it is often more cost beneficial for the tenant to get the work done directly. General wear and tear are factored into the discussions so you will not have to replace mechanical and electrical services but typically stripping out partitions, floorcoverings, tailored power and controls, audio visual, replacement of damaged ceilings etc will be a requirement. Depending on the size of your space, location and the individual terms of your lease, costs can range from £10psf - £40psf so get a professional to help negotiate and factor this into your negotiation when taking your new lease.
How is my dilapidation liability assessed and what professional help is required?
Speak to your lawyer or the real estate firm that may have advised on your original lease. If you no longer retain that relationship any specialist RICS dilapidation surveyor will be able to advise. Modus Workspace can put you in touch with a specialist and are also able to help you assess your dilapidation costs to aid negotiations.
How might modern working methods affect my space requirements and how can that be calculated?
Leading to the Covid pandemic, we saw a move towards new working practices. Particularly in London with its diverse culture and progressive approach to business. The Pandemic accelerated this at an unprecedented pace. Many businesses realised that home working had positive benefits to productivity and staff retention and since the great “return to work”, company policies formalised a new approach giving more flexibility to this agile way of working. The days off owning a set desk and a 9-5 routine have well and truly gone. Modern IT supports a far more versatile working model which has to be factored into new office design. How your space requirement is calculated has changed as we need to factor in working methods that are unique to each and every organisation. At Modus Workspace we will assess working patterns over a period of time so that we get a true representation as to office staffing levels, use of meeting space and the impact on visitors. Once we get a clear picture, we are able to design a space that reflects these working patterns and enhances company culture. This new way of working since Covid has demonstrated the want and need for office space to be more reflective of residential/leisure and hospitality interiors factoring in wellbeing, personal, collaborative and project spaces.
What should be considered from an environmental perspective when searching for new office space?
Over recent years new and refurbished office buildings have looked to provide facilities and services that are not only more environmentally sustainable but now factor in a greater sense of wellbeing for its occupiers. As such, more attention is given to building accreditations such as BREEAM, LEED, WELL, Ska. Whilst most businesses have developed policies for environmental, sustainability, corporate and social responsibility this is now being merged into a far more detailed ESG agenda (environmental, Social and Governance). Since the pandemic, landlords and developers are raising the bar for their buildings by increasing ventilation rates within floorplates, advanced lighting controls working with natural light, through to improved facilities for building occupants, eg. bike stores, gyms, showers and changing facilities, reception cafes and outdoor space. Whilst buildings with the best facilities can come at a cost, the competitive nature of office space can mean that occupiers can vastly improve the facilities for their staff without necessarily increasing their property costs. If the green agenda is particularly important to an occupier, the fit out itself can be designed and rated under Ska, an accreditation just for the finished office space.
Is your business going through change and could that mean expansion or contraction?
We live in a fast-moving world where changes happen quickly. Twenty or even ten years ago businesses would plan for a five year strategy but we are now seeing that reduced to three years maximum with a constant monthly review particularly as post Covid UK working practices are seeing office occupancy levels average between 65-85%. Other factors such as mergers, acquisitions, use of multiple sites etc may all impact on the forward property strategy. A well-managed Workplace Analysis can provide a vital input in to your business planning. You may end up negotiating with your landlord to change the use of your space rather than exit your building. It is vital to remember that landlords are more willing than ever to sit and discuss your requirements and they will help you in every way, especially if that means they do not lose a tenant.
How does a potential merger or acquisition affect your property strategy?
It is particularly necessary to incorporate your HR team when formalising your property strategy when a merger or acquisition is involved. The senior management team will need to provide clarity on what the new company structure will mean from a staffing perspective. The new company structure may not necessarily mean any changes but more often than not there may be duplication of roles across the new business. If the new structure is to be located across a single office, merged into an existing space or indeed across multiple locations, a detailed workplace analysis will need to be undertaken but there will need to be close and confidential work done with your HR team. Once the final solution has been agreed with regards to space requirement, it is vital that work is done on the new company culture so that everyone is educated on the impact on new company structure, working methods and company brand. The more your staff are informed the greater the staff retention. Our workplace experts at Modus Workspace are experienced at guiding the entire process maximise a positive outcome for all.
What are the hidden costs of an office relocation ?
There are a whole host of hidden costs that are not necessarily factored into the overall budget. When engaged with at an early stage, we are able to add real value to the process and can assist in the overall planning of a relocation project. Here are just some of the other areas that may impact on the overall project costs:
- Workplace analysis
- Building appraisal from a fit-out perspective
- Landlord approvals for fit out works – often a landlord will ask their Mechanical and Electrical Consultants to oversee your fit out plans and assess the impact on base build systems
- Telephony and Internet Service Providers – new connections
- Removal costs
- Marketing costs associated with relocation - website updates, new corporate collateral and stationery
- Dilapidation costs – cost of reinstating old space
- Project Management costs – independent policing of your Design & Build process
- Staff – attrition and cost of recruitment
- Technology – new IT and Audio Visual
- Environmental accreditation for the fit out - Ska
What professional help will I need as part of the relocation process?
Your lawyer will advise you on the lease terms and guide you through the formal property process, they will work alongside your appointed real estate professional who is appointed to find and negotiate the terms on your selected office space. Once you are set on your new location you will need to appoint a fit-out partner. In recent years we are seeing that clients like to appoint an independent project manager to assist in the selection of a Design & Build partner and manage the entire process from the initial pitch for work through to the full fit out stage, ensuring programme and quality is being maintained and managing the fit out contract, payment valuations and handover process.
How can the best location for my business be assessed?
Office occupiers make decisions on location for very varied reasons. Historically in London we have seen vertical business sectors drawn to particular districts, finance and insurance was always the City, media and marketing the West End, and government and infrastructure, Victoria and Westminster however over the last 10-15 years, investment and redevelopment in less populated areas has changed this perception. Coupled with increasing rentals in the West End, there has never been a greater dilution of this sector centric view. Across Central London there has been a levelling of office rentals. Now with the need for agile workforces, locations around transport hubs are more valued. In London with varied transport choice this opens up a wide search area so finding a location that reflects a company culture in terms of local feel and architectural style can be a consideration. Of course, many businesses may now question the need to be in London or any major City or Commercial centre. Across the UK, there has been a huge investment into Commercial centres and this improvement in building quality has been nationwide. In the South, there has been a move west from London with centres such as Maidenhead, Reading, Basingstoke, Swindon, Bristol & South Wales seeing a huge upturn in attraction. Likewise, investment in East of London from the Docklands towards Stratford has been a huge draw. Improved train links to Birmingham, Manchester and Leeds has also been a major draw for business and many large organisations have relocated entire infrastructures to a wholly different part of the UK, just look at the BBC and its incredible media village in Manchester, a total relocation from its roots in West London.
Office Fit Out
What procurement methods are available when considering office fit out?
When considering how to go about your office relocation project, you will face choices on how to go about the design and construction or fit-out process. Generally speaking, every procurement method will follow the RIBA Plan as set out below, but responsibility and control can change ownership as you go through the stages depending on the procurement route you select. The industry jargon sets out the main procurement routes as follows:
You pay an interior design or architect a fee to design your new office space. The fee is generally a percentage of the ultimate fit out cost. The scale generally is between 5-8% and will depend on how much workplace analysis is incorporated within the design stage and if you want the designer sitting alongside the actual construction phase. Once the design is complete an independent project manager will generally manage a tender process to a fit-out operator. They will act as the contractor only and whilst their declared overhead and profit is considered to be lower than that of the D&B firms. The ultimate cost rarely differs that much when you factor in the professional fees paid for the designer, project manager, quantity surveyor etc that have policed the process, let alone the cost of variations and change that often occur throughout the fit out process. The architect / design consultant stays on the project to the end, being responsible for all the construction stage design detail and the issue of information to the contractor.
- Design & Build
One company is responsible for working alongside the client throughout the various stages detailed in the RIBA process. More often than not, the client will issue an overall brief that will be developed as part of a pitch process between two or three design and build firms. The client will select a final partner based on most appropriate and inspiring design, cost and what we at Modus believe is the most important factor, the quality, experience, and ability of the team that will work on the project. Don’t forget that this project could take anything from 3-4 months through to 12months plus, so it’s vital that you get on as a team and the process is an enjoyable and inspiring experience.
- Detail & Build
You will work with an architect or design consultancy to Stage three of the RIBA process and then appoint your fit out contractor to take the design from Stage three to completion. The main advantage of this as a procurement method is that the initial workplace analysis and development of the design concept is seen as an independent process away from construction influences. Once the design goes out for costing by the fit-out contractor, more is known on the key design drivers and the contractor and designer can work more collaboratively on the design development and ultimate construction solutions and costs.
Whatever solution works best for you, having an independent project manager guiding you through the process generally works for all parties and helps manage expectations, maintains programme and supports positive communication.
How do I assess the fit out contractors pitching for my work?
Everyone’s buying criteria varies and whilst cost, design and people are the main driving influences it is sometimes very difficult for a business to assess the pitches on a level playing field. Often what is perceived as best design, lowest cost, shortest programme is not as it appears. An independent project manager will help you assess the bids and recommend what they believe to be best value. With over thirty years 30 years of experience in workplace consultancy, we find that our approach to understanding your brief will always result in costs, design and programme meeting your expectation. We do not design based on multiple choice, our highly skilled design team will listen to your brief and work to develop the scheme with you. Understanding brand, culture and business aims and aspirations are vital to a successful collaboration. This collaborative approach is across the board from the design stage through commercial and delivery. Ensuring customer satisfaction throughout the process is what matters most.