Offices, Covid-19 and Dilapidations

It is probably too early to assess the true impact of Covid-19 on the occupational office market at this stage. As building surveyors, our work has not stopped, we’ve continued to inspect buildings and create reports.

What is unique is how quiet the streets of our major cities have been, all those thousands of office workers, now working from home.

The return will come but what will it look like?

My suspicion is that all companies will look to reassess how they occupy buildings and will conclude they can manage with less space.

We have also seen increasing concerns about the waste that is created by office fit outs. It is unsustainable to throw away perfectly good partitions, doors, kitchens, light fittings etc into landfill, as they have no ongoing value or use. There must be a better way.

We have increasingly seen that agents are trying to let space with the benefit of some existing fit out, for re-use by new tenants. This is more easily achieved if that fit out consists of a meeting room or two, a kitchen, an IT room and not much else. These are the basic provisions all office users need.

In a post Covid world it is bound to be the case that open plan space, capable of being planned in a socially distant way, will be key. The era of the office with individual offices must be considered destined for the scrap heap.

One of the key pillars of dilapidations is reinstatement. It stands to reason that the less initial fitting out is done, the less lease end legacy works are required to remove those fittings. Obviously, it is cheaper and quicker to reinstate minor works. This has an ongoing benefit to the business in terms of the lease provisions that must be made for accounting purposes.

If you do take an office with some fit out already existing, then this needs to be properly recorded on the lease plan. The reinstatement provisions in the lease should also be adjusted so that removal is not required, for example, in the event that changes were needed and these partitions were removed, that there would still be no liability to put them back at lease end.

A move to a more open planned space, with limited fitting out, is much more environmentally friendly and will limit lease end liabilities.

Roger Watts
Executive Director
M: 07775 944662
E: roger.watts@tridentbc.com

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