L2 MR Office Supply, Acquisition, West End Flashcards
(15 cards)
Can you talk me through this example?
- I assisted a client looking to acquire a new 3,000 - 4,000 sq ft office in the West end (Soho, Fitzrovia, Tottenham Court)
- I prepared a tailored market overview to inform he client of rental targets
- I analysed comparable evidence in the West End (Fitzrovia, Soho & Tottenham Court Road)
- I spoke to agents to gauge the typical tenant incentives / general market sentiment
- I then created a shortlist of options based on my clients’ objectives and arranged a viewing tour
What were the average rents in the West end (Soho/Fitzrovia)?
Average Rents in Soho/Fitzrovia: £100 Grade A, £75 Grade B
Can you explain what a fully fitted offices is and why the client may have preferred this type of space?
A fully fitted office is a workspace that is ready for immediate occupation, typically including furniture, partitioning, IT infrastructure, and other essential facilities.
A client may prefer a fully fitted office because of:
Cost Efficiency – Avoids the upfront capital expenditure required for a bespoke fit out.
Speed of Occupation – the tenant can move in immediately, avoiding lengthy fit out works.
Flexibility – Often available on short lease terms or as part of a managed solution.
Reduced Hassle – No need to coordinate with contractors, designers or supplies
What are the key differences between a fully fitted office and other office types (e.g. CAT A, CAT B, CAT A+ fit-outs?
Fully Fitted: Includes furniture, partitioning, cabling and amenities – ready to move in
CAT A: Basic finish includes raised floor, basic plumbing, electrics, lighting, HVAS systems and lifts.
CAT B: A tenant’s customisation of a CAT A space with branding, partitions and layout. Portioning includes meeting rooms, break rooms. Interiors include finished wall coverings, floor options.
CAT A+ / Plug and Play – is a category of fit out sometimes offered by the landlord as a way of enticing tenants to the space. It is a step above CAT A, but below CAT B. In CAT A+ fit out design features and configurations such as meeting rooms and breakout spaces, furniture, workstations, fitted kitchens and It infrastructure is typically provide. Therefor it is a functional offices that the tenant can begin working in immediately, making minimal adjustments at miniminal costs to the tenant. However, a ‘plug and play’ space is not delivered tailored to the occupier’s identity/brand and therefore lacks a personalised finish that is important for some tenants.
What is a conventional lease?
A conventional lease (also known at traditional lease) is s a standard leasing arrangement where a tenant agrees to occupy a property for a fixed term, typically on a FRI lease (Full Repairing and Insuring) basis. Unlike flexible or serviced office agreements, a conventional lease places greater responsibility on the tenant for the maintenance, fit-out, and ongoing costs of the space.
What are the advantages and disadvantages of a conventional lease term compared to flexible lease options?
Advantages:
Security of tenure for tenants
More negotiation power on incentives (e.g. rent-free periods)
Lower Cost per square foot than flexible leases.
Disadvantages:
Less flexibility if business needs change
Higher upfront capital expenditure
Typically requires longer commitment (e.g. 5+ years)
What tenant incentives are typically available in the West End office Market?
Incentives vary based on lease length and market conditions but typically include:
Rent-free periods (e.g., 8-12 months on every 5 years certain – if the floor is unfitted typically 12 months, if it is not then less).
Capital contributions towards fit-out.
Stepped rents (gradual rent increases over the lease term).
Break options to allow tenants early termination flexibility.
How do financial details such as rent-free periods, break clauses, and lease lengths influence market rents?
Rent Free periods effectively lower the tenant’s net effective rent
Break clauses can increase headline rents, as landlords compensate for early termination risks.
Longer lease terms often result in better incentive but reduce tenant flexibility.
How do the different submarkets within the West End differ in terms of rental values and tenant demand?
The West End consists of several submarkets with varying rental levels:
Mayfair & St James’s: Highest rents (£110–£150 psf) due to prime location and prestigious buildings.
Soho & Fitzrovia: Creative and media-focused, slightly lower rents (£80–£100 psf).
Victoria & Paddington: More affordable (£60–£90 psf) with good transport links.
Marylebone: Boutique and corporate mix, with rents between £75–£100 psf.
My client was looking in Soho/Fitzrovia which offered more competitive rents.
What are the key criteria you used to identify suitable offices for the client?
Location with west end (Soho/Fitzrovia with more competitive rents in the west end £80-£110 psf
Office specification – fully fitted
Size – 3,000 – 4,000 sq ft
Lease Terms – has to be conventional lease, so any service office arrangements were excluded.
Budget – the rent range reflected the clients budget
What criteria did you use to shortlist the properties ?
After continuous communication with my client, I understood more about what their ideal property would look like.
I shortlisted properties based on location (proximity to transport, key clients and amenities), size (client required 3,000 – 4,000 sq ft of office space , building specification (sustainability), availability dates (aligning with the clients lease expiry dates.
What financial metrics did you included in your appraisal, and how did they help the client make an informed decision?
Average rent psf – to identify the best value for the client.
Service charge and business rates estimates – to provide a complete picture to occupier costs.
Tenant incentives – potential rent-free periods or fit out contribution to reduce overall cost of lease in initial period
What are the vacancy rates for offices in West London across all stock?
Just under 7%
Vacancy for Grade A stock in West End is 1.13%
What is the difference between Conventional / serviced / managed lease/
Serviced office is a traditional coworking type building, acquire office space on a licence agreement where you have access to amenities throughout the buildings (won’t have kitchens etc in your office space) such as meeting rooms and gym, terraces etc.
Managed office is more comparable to a conventional lease which is typically agreed on a short form lease basis, so more flexible than a conventional lease but have your own meeting rooms and kitchen etc (typically will have your own floor). Although you will get amenities such as internet, cleaning and maintenance paying one of all inclusive rent.
What are some main differences between leases and licenses?
- Licences do not provide the same security that a lease would because either party can terminate a licence on 1 weeks notice.
- Leases grant exclusive possession of the property whereas a landlord can enter the property at anytime under a license
- Licenses are used for a specific purpose, such as to carry out alterations of a property.
- Licenses are simply permission to use a spare - they do not grant other rights
- Leases create a legal interest, whereas licenses do not.
- Leases can be assignable, whereas license are personal to one individual and cannot be transferred.
