Why tenants are weighing up their office options
Businesses are hunting for flexibility as they slide into new ways of working
Landlords and tenants are making lease agreements with new levels of flexibility in efforts to insure themselves against economic uncertainty and meet new expectations of the office.
While it may be familiar ground for some larger organisations, it’s new for those with smaller space requirements.
“You could probably go out to market with a requirement for as small as 5,000 square metres and get rights to hand back some of the space at any point for the duration of the lease, ” Dirk van Velden, head of tenant representation in Queensland, for JLL, says in JLL’s Perspectives podcast. “Because there’s still so much uncertainty many businesses don’t know how they’re going to use office space in the long term, which makes the flexibility an important driver for either renewing or entering new agreements.”
In one example, an engineering company in Brisbane that no longer needed all of its office space due to greater flexible working arrangements negotiated a deal to retain 75 percent of its existing office, with the landlord providing a new fit-out, rent abatement and the flexibility to break the lease at the end of three years with no penalty. It also negotiated first refusal over the relinquished space, in the event the company expands.
Listen to the podcast to hear van Velden and Jessica van Raay, a JLL tenant representative based in Melbourne talk about this generational shift to the workplace, and how investors, landlords, businesses and employees are adapting.