Power Play

Shanghai Phoenix Property Agency Managing Director Jan Flohr tells us how the current economic climate is affecting rents and tenant / landlord relationships in serviced offices.

City Weekend: Who would you say has a stronger position of power right now? Office and serviced office providers, or tenants?

Jan Flohr: I would say that tenants are in a much better position now than they were six months or one year ago. But this does not mean that the landlord doesn't have a bottom line--landlords still have to consider how giving new tenants better terms will influence their relationship with the tenants they already have.

How can prospective tenants benefit from the current situation?

Lower rents and higher vacancy rates make it easier for tentants to find the space they are looking for. There will be a lot of renovations going on in half empty buildings as new tenants are moving in, but on the other hand, it will be easier to get the space you require in a building with many available office units and it will be easier to get a relatively low rent.

Is there anything prospective tenants should be wary of?

There are a couple of things to consider such as how much it will cost to terminate a contract before expiry if necessary. Also, if the company has expansion plans in the near future it may be wise to rent a bigger space than needed as there are many costs involved in shifting offices and you'll lose the investment you've made in office renovations. If you don't know how much space they'll need in the future it may be a good idea to rent a serviced office to save costs.

Tel: 6240-4052, www.shanghai-realty.com