HOA Signed – What Now?
You’ve just signed a Heads of Agreement (HOA) for a new office premises — what happens next?
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Leasing Process
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Size, Fit-Out, Budget
Size, Fit-Out, Budget
Review your current office as a starting point and decide what changes you would make in your new space.
Next, head to Caden’s Office Space Calculator to get an idea of how much space your business needs. Our Suites pages also have a Rent Calculator to estimate your rent based on your lease term — the rule of thumb is you pay a higher rate for flexibility, with longer leases being more cost-effective, but not as flexible.
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Search for Space
Search for Space
Caden’s Search Function (above) allows you to search at speed and easily find tenancies that suit your size and budget. If you are not sure how much space you need, jump into our Office Space Calculator!
*Tip – Widen your search parameters in both size and cost. It pays to challenge your thoughts and expectations by looking at spaces that might sit a little bit outside of your exact parameters.
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Inspect Properties
Inspect Properties
Armed with a list of office space options, it’s time to run some inspections. This is a critical (and fun) part of the search process.
Getting out and inspecting tenancies is the best way to get a true feel for size and value. There is often a stark difference between a space that may look good on a floorplan or in photos, to a space that works well in practise.
It is common to view a handful (5 – 10) of properties at once, before shortlisting your favourites and inspecting them for a second (and maybe a third) time.
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Negotiate Terms
Negotiate Terms
With your preferred office options decided, it’s time to ask for an Offer to Lease —prepared by the landlord, these are not legally binding and set a platform for terms to be negotiated, prior to engaging solicitors.
They will include the landlord’s standard terms for the building and the commercial terms (see Caden’s Glossary of Terms for help with this).
Once finalised, you will be expected to pay a deposit of one (1) month’s rent,
whereupon the landlord will instruct their solicitor to prepare the formal lease documentation. -
Sign Documents
Sign Documents
The final step is to execute all formal documentation.
Your solicitor will help review the lease documentation and your bank and insurer will know what is required to prepare the bank guarantee and Certificates of Insurance.
Size, Fit-Out, Budget
Review your current office as a starting point and decide what changes you would make in your new space.
Next, head to Caden’s Office Space Calculator to get an idea of how much space your business needs. Our Suites pages also have a Rent Calculator to estimate your rent based on your lease term — the rule of thumb is you pay a higher rate for flexibility, with longer leases being more cost-effective, but not as flexible.
Search for Space
Caden’s Search Function (above) allows you to search at speed and easily find tenancies that suit your size and budget. If you are not sure how much space you need, jump into our Office Space Calculator!
*Tip – Widen your search parameters in both size and cost. It pays to challenge your thoughts and expectations by looking at spaces that might sit a little bit outside of your exact parameters.
Inspect Properties
Armed with a list of office space options, it’s time to run some inspections. This is a critical (and fun) part of the search process.
Getting out and inspecting tenancies is the best way to get a true feel for size and value. There is often a stark difference between a space that may look good on a floorplan or in photos, to a space that works well in practise.
It is common to view a handful (5 – 10) of properties at once, before shortlisting your favourites and inspecting them for a second (and maybe a third) time.
Negotiate Terms
With your preferred office options decided, it’s time to ask for an Offer to Lease —prepared by the landlord, these are not legally binding and set a platform for terms to be negotiated, prior to engaging solicitors.
They will include the landlord’s standard terms for the building and the commercial terms (see Caden’s Glossary of Terms for help with this).
Once finalised, you will be expected to pay a deposit of one (1) month’s rent,
whereupon the landlord will instruct their solicitor to prepare the formal lease documentation.
Sign Documents
The final step is to execute all formal documentation.
Your solicitor will help review the lease documentation and your bank and insurer will know what is required to prepare the bank guarantee and Certificates of Insurance.
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Frequently Asked Questions
Starting your Search
If I don't need the space immediately should I delay my search?
Not necessarily. In the current market many Landlords would prefer to capture a Tenant (assuming the lease terms are acceptable) even if the commencement date is not immediate.
For example, it is not uncommon for a Landlord to lock in a lease and rent commencement date 4-6 months beyond when a Tenant is prepared to begin a lease. This timeframe could be longer if the space has been sat vacant for quite some time.
Larger space occupiers will find that prospective Landlords are prepared to commit to a lease further in advance than they would for smaller space occupiers. An experienced Leasing Agent will be able to advise you on this.
How much space do I need?
Every business has their own unique requirements, but many companies are now preferring to have their staff occupy largely open plan, collaborative working environments.
The majority of open plan office spaces are designed to accommodate staff at a ratio of approximately 1 person per 10m2 – 12m2 (of space). Tenants that have requirements for a greater number of offices (legal firms for example) will generally design their tenancies at a space per person ratio of more like 1 person per 15m2 – 18m2.
It is best to start by determining the number of people that you are looking to house. An experienced Leasing Agent will then be able to provide a size range for you to work with.
It is important for tenants to get out and have a look at some premises early in their search as it often helps to give context around the sizing of space.
If a Tenant has a strong preference to do a new fit out rather than find a tenancy with an existing fit out, it is then organised for a designer to do an indicative space plan to ensure the search is focused on tenancies of the right size.
What initial costs are involved in taking out a lease on an office space?
1) Most Tenants will engage a lawyer to negotiate a lease on their behalf and therefore incur legal fees;
2) A Tenant may be required to pay the cost of any Title Searches or other supporting documentation required to support the lease;
3) A bank guarantee is generally required (by the Landlord) as security against the performance of a lease. Most financial institutions will charge a fee to coordinate and produce a bank guarantee;
4) If the Tenant needs to update their insurance policies (as per the lease) to comply with the lease their insurance company may charge a fee for this.
Note* It is important to check with the Landlord should they require any other payments, particularly if you are undertaking a fit out within the premises. It is also important to check with your solicitor should there be any other costs applicable under the lease.
Can I cancel the lease if I no longer need the space?
Unless you are able to assign the lease to another company on the same (or better) terms of your current lease and have the Landlord surrender your obligations, there is generally no way of being able to walk away from your obligations.
Typically, the best way to generate cost recovery on a space that you no longer need is to sublease the space but that could be at a significant discount to your current passing rent.
In a rising market (for the Landlord) a building owner may look to take back a space if they have another Tenant that wants it and is prepared to commit to the space on better terms (higher rent, longer lease term etc). Typically a Landlord will still require a penalty payment of some description.
If you need to exit your lease it is important to communicate with your Landlord just in case they have another Tenant that may want the space or are looking to reclaim the space for another purpose (i.e to create further Tenant amenity within the building such as a Business Centre, for example).
Detailed Information
What is a ‘Heads of Agreement’ document?
A Heads of Agreement, properly drafted, is a non-binding document which sets out the key terms of a proposed agreement between parties.
A Heads of Agreement is provided to a Tenant prior to formally entering into a lease and Landlords will require a signed HOA before instructing their solicitors to prepare a lease.
Will a prospective landlord request information about my business?
Most Landlords will request ATO approved financial statements for the previous 2 – 3 financial years to understand the financial status of the company.
They may also run a company search to find out more information about the specific entity that the lease will be in such as:
• When the company was incorporated;
• Who the current Directors are;
• Whether there have been (or currently are) any insolvency procedures against those Directors; and, • A personal finance statement.
A prospective Landlord may also require other information (at their discretion) to satisfy themselves that the Lessee is of sound financial footing. A Landlord may also want to see a detailed business plan, particularly if the company is relatively young.
In summary, a Landlord is interested in your assets v liabilities so they can make a fair assessment as to whether the a company can meet the obligations of the lease.
What happens if the landlord is not satisfied with the information?
In this instance, the Landlord may request a meeting with the prospective Tenant to understand more about their business in order to make an informed decision as to whether to proceed with the lease.
If the Landlord is not totally satisfied that the Lessee can fulfil the obligations of the lease they may decide not to proceed.
Alternatively, the Landlord may decide to request that the Lessee provide a greater level of security (i.e an increased bank guarantee, personal guarantees or both).
How many properties should I inspect before choosing a preferred space?
This largely depends on the individual. Some Tenants like to look at a range of properties/tenancies and others prefer to look at a lot less.
Market conditions at the time of the search may also dictate how many properties are available to inspect. If vacancy is low there may only be a few viable options, whereas if vacancy is high there could be many.
The vacancy rate within the Brisbane CBD is currently trending above the long-term average and therefore options are aplenty.
In general terms, many Tenants don’t have an exact brief at the beginning of their search.
Therefore the process of inspecting tenancies is important in assisting them in making decisions as to the size of space, appearance and budget.
Ultimately there is no right and wrong answer to this question. An experienced agent will show a prospective tenant as many spaces as is required for them to be sure that they are making the right decision.
How many access passes am I likely to get and do I have to pay for them?
Access passes are solely at the discretion of the Landlord. In general terms it would be fair for a Tenant to expect to be provided with an allocation of access passes free of charge. This allocation is normally based on a ratio of passes to NLA (Net Lettable Area) and, beyond the initial allocation, the Tenant would pay for any additional cards.
Although this is the most common structure, it is not a blanket rule and it is important to check with the agent exactly how many cards the owner is prepared to provide at no charge (if any) at the commencement of the lease and what the charge will be for additional cards.
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