FAQs – Your commercial office space questions answered 1/3

What is the future of office space post-Covid?

There will be more emphasis on the selection of commercial buildings that have high standards of air quality and circulation, adoption of contactless access technology and within the office space itself, safe management practices including distance between work desks, measures to reduce the mingling of staff and implementing standard operating procedures (SOPs), which will reduce the risk of contracting and spreading Covid-19. It is also likely that the majority of staff will eventually return to the office with a small number of workers on alternate days and/or permanently working from home.

How can a tenant plan for future expansion?

Much depends over what length of period the tenant plans to grow. If the tenant leased a subdivided unit, then they can ask for first right of refusal on the balance space. If this is activated at a much later date, then the rental will be ‘the then market rate’. If another tenant offers on the adjoining space at an early stage, then the option holder will be forced to make a decision sooner rather than later. Another alternative is to lease space in a building that has a co-working / serviced office operator, which can take up the shortfall in space.

Can a tenant break his lease because of Covid-19, by invoking a ‘force majeure’ clause in the lease?

No. Nearly all commercial property leases will have a force majeure clause in, allowing both parties to break the lease in the event of an ‘Act of God’, such as an earthquake or terrorist attack. However, Covid-19 will not qualify unless the clause specifically refers to pandemics.