Don’t forget the fit-out

Year Published: 2015

All too often, in the rush to acquire new premises, businesses treat the actual fitting-out of a new base as something of an afterthought. A bit of thought ahead of time can save you time, money and hassle.

The sheer initial costs of a fit-out can (and in many cases will) dwarf the annual rental cost to a tenant. Manchester prime city centre premises costing say £30 a square foot can easily end up costing a multiple of that to fit out. So a potential occupier (and their solicitor) is well advised to spend more time on the negotiations with the fit-out contractor and the details of that contract. Whilst the lease is of course an important document, surprisingly little of it will really be negotiable so as to affect the cost of it to the tenant over the life of the lease. Landlords, certainly the institutions and those wishing to sell to them, will expect their leases to fall within a narrow band of criteria and the tenant will not be permitted a lease which deviates from those.

However in a fit-out, far more is negotiable over and above the base price. Negotiations might fruitfully include for example:

  • Those items which the base price covers;
  • Cost of further employer’s variations and the profit which the contractor might attach to those;
  • Extent of warranty on the works; and
  • Risk of the extra work arising out of the pre-existing condition of the building.

Further, do not assume that you will have your pick of the market of contractors at any given time. In today’s market, good contractors are booked out months ahead. Get them interviewed well ahead of time, procured with proper advice and work with them on the design. You may well find that this will give you both a saving (initial and longer term) and a more seamless occupation of your new building, which is after all what you’re looking to do with this.

For more information on negotiating a fit-out contract, please contact our Commercial Property team on 0161 475 7676 or email [email protected].

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