What do you mean by rent free fit out period?

A rent free fit out period is a short period of time that a property owner gives to their tenants before the beginning of the Leave and License Agreement.

The fit out period is mostly given in commercial properties. However, on some rare occasions, I have seen fit out period relaxations on residential properties. Rent free fit out period is given only for renovations. Most commercial properties come in box spaces i.e. what you see is what you get. Everyone likes to make their offices, shops & showrooms based on their business operations and style. It is not possible for an owner to keep on making the same property based on the tenant’s business format. The tenant needs to make the commercial property as per his requirement. It is for this purpose that the owner gives a grace period which is rent free.

→ How Long is the Rent Free Fit Out Period?

The fit out period depends on the size of the property and negotiations between the property owners and the tenant. Rule of thumb for smaller properties, say around 300 to 500 square feet, ranges from 7 days to 15 days. In larger properties, say 1000 square feet plus, it ranges from 15 days to 30 days. In even larger properties of 5000 square feet and more it can go as high as 45 days. In some cases, I have also negotiated deals with 120 days of rent free period. These properties are usually massive buildings in excess of 50,000 square feet or the purpose of business is unique such as schools, service apartments or hospitals where the entire dynamics of the property is changed. Majority of the times rent free period ranges from 15 days to 45 days. Once the fit out period ends the rent should begin immediately.

→ Do You Get a Rent Free Fit Out Period for Furnished Spaces?

In case of furnished offices, there is no fit out period. It is the owners responsibility to make it as per the clients requirement. A company looking for a furnished office does not want to spend time in renovating. They want to just come in with their computers and start functioning from day one. It is therefore the property owner’s responsibility to make sure that the property is move in ready. The tenant’s rent begins immediately on the agreed upon date.

→ Should You Negotiate the Rent Free Period?

There are scenarios where banks and large corporate companies come with a specific sheet that they say are confirmed terms and conditions. These, though might sound intimidating to owners, are also negotiable. There are larger established companies that come with a list of requirements which are usually one sided. Owners should know that they can negotiate on those terms also. It is always a thin line as to how much can you negotiate and if you are OK to let go. One thing to keep in mind, in corporate scenarios, you are dealing with employees who might not be with the company few years down the road. Always remember, if it is too overwhelming or one sided deal, then it is better to let go of the deal than to suffer the consequences of a one sided deal for next few years.

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