RE: VISITED – The Great Office Occupier/Developer Debate follow-on series brings together some of the key themes from our 2021 debates, alongside reflections of the past year and how the real estate industry is evolving to meet the new challenges around the issues of sustainability, lease flexibility and wellbeing.
Part two in our six-part series discusses the lease flexibility challenge for occupiers. The concept of ‘flexibility’ from a leasehold perspective can take many forms and within that there are degrees and differing perspectives. In the coming years, occupiers will increasingly demand greater freedoms in their leases around their exits, expansion and contraction and the ability to temporarily share space with others. We foresee a relaxation of assignment, subletting and sharing rights for tenants, though how these will manifest remains uncertain at this stage. There should be lower thresholds to meet, and greater automation when it comes to such transactions. A lease should stipulate parameters that must be met and, if they are, that transaction should proceed without delay. In the case of sharing with other businesses, this should be viewed with less suspicion and recognised for what it is: a useful means for tenants to increase revenue, work with companies for short periods (such as key client projects) or to divest themselves of surplus space during fallow periods.
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35% of corporate occupiers surveyed in Knight Frank’s (Y)OUR SPACE survey cite the inability of landlords to offer flexibility as their top frustration as a customer in global real estate markets.