The answer to this question depends on several elements: the type of fit-out—open or closed spaces and the type of finishing. Other considerations include: Are you planning to have technology-equipped conference rooms, a kitchen, bathrooms, a server room…? Another key question that is often overlooked by renters regarding budgeting for the development of an office space is how the landlord will hand over the space and the elements he must provide.

Regardless of the space layout you choose, you must consider the starting point. Is the space handed over as is with the previous tenant’s improvements? In this case, all work executed is at the renter’s expense. Renters who wish to retain existing office features may seek this type of arrangement.

In other cases, the landlord agrees to hand over an empty shell. A lot of questions can be asked about this shell’s parameters. Will there be a suspended ceiling with lighting, a ventilation zone, and sprinklers? Will perimeter walls, an entrance and exits already be in place? What is the condition of the floor slabs? Will they be leveled? If all this work is done before you arrive, you may well have to change them. Ceilings will be reopened, sprinklers moved and the ventilation reconfigured.

Office fit-out undertakings are the start of a long-term relationship with your landlord. To maintain it, you best to start off on the right foot.

To save costs and avoid doing double the work, it is possible to skip the initial shell setup and proceed directly to the fit-out of your offices, even if it is specified in your agreement that the restauration of the shell would be covered by the landlord. But how then can you establish which fit-out costs should be covered by the landlord?

The sharing of costs between the landlord and renter can be a real headache. To avoid unfairness, the distribution of costs and agreement process must be considered from the get-go. In some cases, the retained approach can simply be a rule of 3. For instance, the landlord provides 10 sprinkler heads for the empty shell and the tenant’s fit-out needs 15. A third of the costs will then be covered by the renter. Needless to say, certain elements may be problematic depending on each party’s interpretation of the clauses in the lease agreement.

If you can clearly define each party’s responsibilities in the lease, raise questions about the division of costs from the very start of the project, establish together with your landlord cost-sharing mechanisms and work in collaboration with your contractor to set up these mechanisms, you are taking the best steps towards a fair distribution of costs for both the landlord and his tenant.

Office fit-out undertakings are the start of a long-term relationship with your landlord. To maintain it, you best to start off on the right foot.