The Difference Between Existing Fitout, Spec Fitout And Turn-key Fitout
When it comes to leasing an office, there are three main types of fitouts to choose from: existing, speculative (spec) and turn-key. Each has its own advantages and disadvantages, so it’s important to understand the differences before deciding on which office you lease. We’ll take a closer look at each type of fitout and discuss the financial implications for tenants and landlords.
What Is An Existing Fitout?
Existing fitout means that the workplace has already been fitted with basic fixtures and fittings – for example, desks, chairs, meeting rooms etc. Generally, these offices have been previously tenanted so there may be signs of wear and tear.
The landlord can write off most or all of the residual value of the fit-out, allowing potential tenants to take advantage of a larger proportion of any incentive as a rental reduction / rental abatement.
If you’re happy with this level of finish and don’t need any further work done, then this might be the right option for you. However, if you want to update your office space or add features such as partition walls or conference facilities, then you might be better suited for either a spec fitout or a turn-key fitout.
What Is A Spec Fitout?
Speculative (spec) office spaces are constructed by the landlord without any pre-commitments from a tenant. In an effort to combat high levels of vacancy, spec offices are becoming more popular for landlords in Brisbane CBD and Near City areas to stand out in competitive markets.
The benefits of a spec fitout for a tenant
- When inspecting spec offices, tenants can visualise how their company and employees would fit in the office before they make any commitments.
- Tenants can touch, feel and see the quality of the office because it is already built.
- It minimised tenants’ out-of-pocket expenses for design, construction and finishes.
- If the tenant commits in the early stages of the spec fitout construction they may be able to give some input into the design and finishes.
- Generally, furniture and appliances are the only things the tenants need to contribute to move in which can reduce months off the move-in date.
What Is Turn-key Fitout?
A turn-key fitout is a type of office refurbishment in which the tenant appoints a contractor to take full responsibility for delivering a fully finished product. This includes everything from installing the necessary wiring and plumbing to providing furniture and décor, so the office is ready to be occupied immediately.
Turn-key fitouts are popular among businesses that want to imprint their own identity on the tenancy and have it completely fit for purpose. However, this type of fitout can be quite expensive, so it’s important to consider taking a longer term lease of minimum 5 years in order to have the incentive cover as much of the fitout cost or all of the fitout cost.
How To Choose The Right Type Of Fitout For Your Business
Choosing the right fitout for your business comes down to understanding your needs, budget and availability in the market. The type of fitout you choose should be based on the level of finish needed, as well as how quickly you need your office to be up and running. If you want something that’s ready-made with minimal disruption or risk involved in the fitout process, then an exiting fitout or spec fitout may be suitable. However, if you have some flexibility with time and are willing to put in the effort to transform your office space into something special, then a turn-key fitout may be worth considering.
Ultimately, finding the right office for your business should involve a bit of research and a lot of thought about what’s best for you, your employees and your budget. Consider the financial implications of each type of fit-out carefully before making any decisions.
TACTIC is committed to connecting businesses and their people with their perfect space. We offer an end-to-end service so we can support our tenants throughout their whole office leasing journey.
If you need help with finding office space, planning your office design, or fitting out your office our team at TACTIC can help. Contact us for a complimentary consultation here.
Please note that this is for general informational purposes and is to be used as a guide only. See full disclaimer here.