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REAL ESTATE

Moving office a hazardous affair

Given the current economic climate, there is not a great deal of mobility in the office sector at present. Companies are tending to stay put in their current accommodation while waiting for better times.
When economic conditions improve, the demand for new office space will inevitably rise both as a result of new companies coming in to the country and existing companies looking to upgrade and/or expand their operations.
The Slovak government would like to join the EU by January 2004, according to recent reports. Some argue that this date is optimistic, but if it is correct, it is another indicator that growth in demand for high grade office accommodation is just around the corner.


David Arneil

Given the current economic climate, there is not a great deal of mobility in the office sector at present. Companies are tending to stay put in their current accommodation while waiting for better times.

When economic conditions improve, the demand for new office space will inevitably rise both as a result of new companies coming in to the country and existing companies looking to upgrade and/or expand their operations.

The Slovak government would like to join the EU by January 2004, according to recent reports. Some argue that this date is optimistic, but if it is correct, it is another indicator that growth in demand for high grade office accommodation is just around the corner.

If this is the case, are developers and contractors ready to provide the type of flexible office accommodation that is demanded by today's blue chip tenants? Indeed, are they flexible enough themselves to adapt to the type of tenants that expect a flexible approach up to and beyond the moment they move into their new accommodation?

Having worked on several office relocation projects, I have had firsthand evidence that the landlord-tenant relationship is often adversarial. The situation can be managed and improved in several ways.

1. The first and most important step towards a good working relationship is a clear understanding of what is to be provided by the developer/landlord to the tenant. This may seem so obvious as not to be worth mentioning, but it is amazing how often misunderstandings arise, and the financial implications can be considerable.

2. Both parties should understand each other's point of view. The developer is constructing a building for which he has a set budget, and changes in tenant requirements will inevitably entail additional costs. The tenant is paying rent for a space which must suit his requirements, meaning that alterations to the developers' base building are almost always required. Flexibility on both sides is a must.

3. Agreement should be reached on what work the tenant may be allowed to carry out on the building before moving in. In many cases, work should be carried out by the original installer to avoid invalidating warranties.

4. A procedure for valuing variations should be agreed before any contracts are signed. It is all to easy for costs to get out of hand. When the developer's contractor is carrying out tenant work, what motivation does he have to keep within reasonable costs?

5. Before starting tenant works, a survey of the building's conditions should be carried out to avoid future disputes over damage caused by the works.

These are just some of the points that can be addressed by cost and project management services. With careful management and a flexible approach, both sides will have a much easier time.

David Arneil is Associate Director of Cost Management at Capita Beard Dove. His column appears monthly. Send comments or questions to d.arneil@capita.cz.

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