Firstly, What is Office Reinstatement and why does it matter? | Hong Kong
There are many ways to describe office reinstatement - Reinstatement, make good, restoration or return to condition. Either way, it refers to the process of which you revert the office to a particular condition set out by the landlord when the lease was signed. You will hand back the premises in the agreed conditions set out in the contract.
What can affect office reinstatement cost? | Hong Kong
The cost of office reinstatement can be affected in many ways, including the building of which your office is located, is it a Grade A building? Or a Grade B building. This will reflect the landlord’s requirements and level of expectations set out in the contract. It also depends on the type of renovation you completed in the office, the more partitions and alterations you made to the office the more it will cost to reinstate it. The cost of reinstatement is at the cost of the tenant and should include any repair work required under the lease that was not carried out.
As mentioned above, Office reinstatement cost can be impacted by a few things, The grade of existing renovation in your office, the grading of your building and the job scope / landlord requirements.
Renovation grade can be broken down into the following:
Premium - Luxury and extravagant with all first class finishing and furnishings. No expense is spared
Professional - Think business class on a plane. Has medium to high class finishing and furnishings has a professional outlook without the luxury additions.
Economy - Professional yet cost efficient with average finishing.
Budget - No muss no fuss. Low cost, only necessities.
The office reinstatement cost for offices with Premium renovation can range anywhere between $200 - $300 per sqft for an A grade premium building.
Typically Grade A office buildings are the highest of quality, first-class offices and are characteristically the standard for excellence in terms of specification. Building specifications include:
- Raised floor system, 150 mm - 300 mm
- Ceiling system, floor to ceiling height at least 2600 mm, with lighting panels
- Backup power system
- Green building certification (i.e. LEED, BEAM Plus, WELL Building Standard)
Since Grade A offices have the highest of quality, you can expect landlord reinstatement standards to also be high. For example, instead of replacing only the damaged ceiling panels Building Management may require you to replace the entire ceiling so that the colour of the panels remain consistent throughout the space. These kinds of costs can accumulate to a significant amount.
Grade B and C offices will also have reinstatement requirements that need to be met however you can expect these to be less challenging.
As mention above, Office reinstatement cost of a Grade A building can range from $200per Sqft - $300per Sqft. Its the level of renovation that determines how much work needs to be done. A simple rule of thumb to go by is, the more alterations are made the more restorations are required, the more expensive the fit out cost the more expensive the reinstatement cost.
Ways to reduce office reinstatement cost | Hong Kong
You can reduced the cost of office reinstatement in many ways, read below for tips on how to keep office reinstatement costs low.
Continued office maintenance
Offices with good maintenance and facilities management during your lease of the property will help minimize your end of lease liabilities by reducing the cost of repair work that will need to be carried out before you hand back the office to the landlord.
Any renovations including partitions, ceilings, floors, windows and doors made during your lease need to follow lease procedures and removed or replaced when your lease expires. Keep in mind written permission may be required from the landlord for any kind of renovation / alteration. If your landlord does not request removal you might not have to remove the alterations at the end of you lease, this is especially so if your landlord will lease out the office in “as is’’ condition.
Proper time management
Allowing sufficient time for your contractors to work is vital. There are many parties involved in an office reinstatement project. Your main contractor needs to coordinate with building management and nominated contractors to ensure the work is done correctly and the landlord’s requirements are met. Building management usually does not allow work that involves noise or odors to be conducted during office hours, leaving only weekends for work to be completed. If insufficient time is allocated contractor will need to work in the evening to meet the given deadline, this will incur night time charges.
The best time to reach out to a main contractor is 10 - 15 weeks before the premises need to be returned to the landlord. This allows enough time for screening, scope of work, quotations and approvals.
By providing your contractors with sufficient time to complete the work, you will be avoiding evening charges and any delay in meeting your deadline.
When inadequate time is allocated to carry out reinstatement work and the deadline is missed, as part of the contract the tenant is usually obligated to pay an additional settlement cost.
Common mistakes that can increase the cost of your office reinstatement project | Hong Kong
The cost of office reinstatement can be expensive especially if you aren't familiar with the in's and outs of office reinstatement. Below are common mistakes companies make that increases the cost of their office reinstatement.
- Failure to appoint a single internal point of contact / project leader
- Inaccurate assessments of reinstatement requirements
- Failure to leave enough time at the end of their lease to complete reinstatement obligations
- Appointing demolition contractors or inexperienced contractors to reinstate their office. Demolition contractors are NOT reinstatement specialist.
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