It is no longer news to anyone that there are many offers on the office market. Companies’ space requirements have been quite changeable in the turbulent economic environment of recent years, and the abundance of offers has made many consider looking around the market: could there be a more suitable space or a better deal than their current one?
Increasingly often, however, the search leads to the conclusion that there is no suitable space to be found. This does not only concern large offices, such as spaces of 1,000+ m², but also offices of 100–300 m². So how is it possible that there is said to be plenty of vacant office space, yet in reality there seems to be hardly any choice?
Vacant space does not always mean suitable space
One reason, of course, is that some of the available space no longer meets companies’ current needs. There is indeed a lot of vacant space, but it should be taken into account that much of it is located in older buildings. When relocating, companies usually want to take a step forward in terms of the working environment, not backward, which is why they generally prefer a newer and higher-quality space than their current one.
Space layouts have become outdated
In newer buildings, where the premises are in good condition, the issue is often an unsuitable layout. Around a decade ago, open-plan offices became the trend, which means that many spaces completed at that time no longer meet the needs of today’s companies. Now, companies tend to prefer offices where teams with different tasks can be placed in separate rooms.
Renovation is possible, but not always reasonable
In theory, spaces could be renovated according to the tenant’s needs, but this often creates an obstacle: construction is expensive, and many tenants are not prepared to sign a sufficiently long fixed-term lease for the renovation to make sense for the landlord.
The same applies to new developments: the tenant could indeed get an office that fully matches their wishes, but this comes with a fixed-term lease. In the case of new buildings, the waiting time must also be taken into account, which does not suit many companies.
The desire for flexibility narrows the options
In a rapidly changing environment, tenants do not want to choose a new space too far in advance, as they believe the company’s needs may change. For the same reason, they are reluctant to enter into long-term leases. Often there is no direct reason for this; rather, companies are being cautious just in case.
At the same time, such caution significantly limits the possibilities of finding a suitable office. This is how the market can have plenty of offers, while many companies still struggle to find a suitable space, because expectations are not entirely realistic.
Not all risks can be placed on the landlord
A landlord would certainly build a space that meets the tenant’s needs, but this is not possible if the tenant expects the entire investment to be made by the landlord while also wanting the option to terminate the lease at any time with only a few months’ notice.
In today’s tenant-friendly market, it is often assumed that an owner wants to lease out vacant space at any cost, because an empty space generates certain costs, such as heating. However, this cost is usually marginal compared to the cost of renovating the space.
If there is no certainty that the investment made for a specific tenant will pay off, it is more reasonable for the owner to leave the space vacant — there may be no income, but there is also no unreasonable risk of spending money on something with uncertain returns. Presumably, every entrepreneur thinks the same way when planning their business activities and assessing risks.
Why don’t landlords simply renovate spaces themselves?
For the same reason, landlords are not eager to massively renovate well-maintained spaces at their own discretion — there is no certainty that a tenant will be found for whom that particular layout is suitable.
Finding the right office requires compromise
Unfortunately, there are no easy solutions to this situation. It is understandable that many companies are cautious about taking on long-term commitments. The past few years have made planning ahead difficult, as one crisis follows another and the future constantly feels uncertain.
However, it cannot be expected that companies engaged in leasing out premises should, at the same time, forget all risks and start making investments with questionable returns. No matter how tenant-friendly the market may be, if the goal is to have an office built according to one’s own needs, it should still be expected that a fixed-term lease must be signed for at least a few years.
