In today’s fast-paced business environment, time and cost efficiency are key considerations for any company looking to relocate. One strategy that has gained traction, especially in markets like Singapore and Hong Kong, is leasing a fitted office space. But while there are undeniable benefits, it’s also crucial to understand the potential pitfalls.
The Benefits of Leasing a Fitted Office
- Substantial Cost Savings - Fitting out a new office can be a significant expense. In Singapore, for instance, fitting out costs can range from SGD 75 to SGD 150+ per square foot depending on the level of finish. By opting for a fitted office, companies can save a substantial amount, often tens of thousands of dollars, which would otherwise be spent on design, construction and installation.
- Speed of Occupancy - Time is often of the essence when a business needs to relocate. A fitted office can fast-track the moving process, allowing a business to resume operations with minimal disruption. This is especially valuable for companies in competitive industries where downtime can lead to lost opportunities.
- Operational Simplicity - Managing a fit-out project can be a complex and time-consuming process, requiring oversight of multiple contractors and adherence to strict timelines. A fitted office eliminates this hassle, providing a ‘move-in ready’ space that minimizes the burden on internal resources.
- Tangible Experience - One of the standout benefits of a fitted office is the ability to walk through the space before committing. Unlike bare-shell offices, where potential tenants must rely on blueprints and mock-ups, a fitted office allows you to see, touch and experience the space as it is, providing a clearer picture of how it will meet your business’s needs.
- Flexibility and Future Moves - Taking on a fitted space can offer flexibility for future moves, allowing businesses to adjust more easily without incurring the massive write-off costs associated with customized fit-outs.
One of the standout benefits of a fitted office is the ability to walk through the space before committing.
The Challenges and Pitfalls
While the benefits are clear, there are also potential downsides that office tenants must be aware of:
- Reinstatement Obligations - One of the most significant challenges of taking over a fitted office is the reinstatement clause. If the tenant moves out without securing a replacement, they will be responsible for returning the office to its original bare condition. This can be a costly endeavour, with reinstatement costs in Singapore averaging between SGD 15 and SGD 20 per square foot. The obligation can also include removing fixtures and fittings installed by the previous tenant, further adding to the expense.
- Hidden Costs and Compliance Risks - When leasing a fitted office, it’s important to ensure that all necessary approvals for the fit-out work were obtained by the previous tenant. New tenants may need to secure updated approvals for fire, electrical and building regulations, which can be an unexpected and significant cost. Additionally, if further alterations are required to suit your business needs, the costs can quickly escalate, negating some of the initial savings.
- Finding the Perfect Fit - Despite the benefits, finding a fitted office that matches your exact requirements is not easy. Supply is limited, and often businesses must compromise on certain criteria, such as location or size. Even when a fitted space is available, it may require substantial alterations to meet your needs, which can undermine the cost and time savings.
A Sustainable Approach to Office Leasing
Beyond the financial considerations, there’s a growing emphasis on sustainability in real estate. A recent study in the UK stated that 80% of the buildings that will exist in 2050 are already here, and this trend will continue further as we repurpose more and more buildings and interior spaces, instead of a perpetual cycle of build and demolition. This makes the efficient use of existing spaces, such as fitted offices, not only a smart business decision but also an environmentally responsible one. By reusing fit-outs, companies can reduce waste, lower their carbon footprint and contribute to the broader goal of sustainable development.
A fitted office can fast-track the moving process, allowing a business to resume operations with minimal disruption.
Conclusion
Leasing a fitted office space can offer significant advantages in terms of cost, speed and simplicity. However, it’s essential to weigh these benefits against potential challenges, particularly the reinstatement obligations and the need for careful due diligence. With the right approach and expert guidance, such as that provided by Corporate Locations, businesses can make informed decisions that align with both their operational needs and long-term strategic goals.
If you’re in the market for a new office and considering your options, contact one of our senior agents. Whether you are looking for a fitted office or a bare unit, we’re here to help you find the perfect space that fits your business, both now and in the future.
