2015-11-06

What the landlords need to be ready for, while talking with public occupiers?

  • The most important decisive factor in case of public institution seems to be the stability and the level of the total cost. The public office is obliged to look for the cheapest and the best offer. Sometimes they should use the state buildings and therefore they need to prove the advantages of using private ones. The public budget units need to plan exact costs in advance and they need to know what will be their total expenses next year. The agreement should exactly state the level of all payments. Therefore no volatility is possible and the rent cannot depend on exchange rates and needs be stated in PLN. The preferred indexation should be pre-defined (sometimes calculated every three years), the final service costs should be limited or capped. However, sometimes there are public institutions, financed by EU, where EUR can be accepted.
  • Such elements as fit-out or refurbishment of the space are of less importance, although public offices more and more often need to meet some standards (i.e. ISO standards) and are more aware of the market possibilities. They expect fit-out costs to be included in the rent.
  • As total costs are the most important, all rent-free periods and financial contributions are welcome, however they should be spread across the lease lengths and included in rent.
  • In some cases public employees need a large number of parking places, but it depends on the institution and some of them might need none of them, although occupying a whole building. The landlord needs to find a way to use the owned space effectively and not to be left with 200 empty parking spaces.
  • Public tenants are open to sign long term agreements even up to 15 years.
  • Fit-out needs to include only partly “open space”, still the rooms are necessary on at least half of the space. It is the best when fit-out and furniture is included in the rent.

Both from a developer and public occupier the whole process is very complicated and need market and legal knowledge and experience to make the both sides satisfied. Therefore it is worth looking for a professional support from an experienced real estate advisor.