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What is a "speculative fit out"? Spec fit outs, as they are now known, are new fit outs constructed by landlords without any pre commitment to the space by tenants. They offer standard facilities in a range of colours, finishes and sizes. When your lease finishes, you simply need to do minor paint and patch up work before handing the keys back. The spec fit out is considered the "Pret-a-porter" of the office leasing world.

How did the spec fit out come to be? Right now, it's the spec fit out's time to shine. In a post pandemic world, where working from home is still supported, vacancy rates are high and landlords are looking for ways to attract quality tenants. Competition is fierce, so they started to offer speculative fit outs - a cheaper and more flexible fit out option for the tenant, who no longer wishes to spend big money on a custom fit out.

Who are spec fit outs right for? For those businesses who are not looking to commit to a lease beyond 3 years, spec fit outs can be a great option. Often there is more flexibility around the term of the lease so for businesses in their infancy, or experiencing rapid growth, this is a major drawcard. It wouldn't be financially viable for these tenants to design and deliver their own fit out for anything less than 4-5 years. Spec fit outs don't only appeal to start ups. As working from home still remains acceptable, more companies are choosing a smaller footprint in higher quality buildings, with high quality fit outs that are funded by the landlord.

What are the benefits of a spec fit out? Financially, they are a more attractive option. Practically, they will save managers a lot of time by not having to deliver their own fit out and from a business point of view, the spec fit out makes sense, particularly in regards to flexibility of office space and leasing terms.

Is there a downside to spec fit outs? Like with any other aspect of a commercial lease, you need to know what you are committing to. As the landlord is constructing the workspace, you will need to compromise on the layout of your office as it will not be purpose built for your requirements. Furthermore, the tenant cannot be entirely certain that the quality of fittings and furnishings is up to scratch, especially since they are completed prior to leasing campaign. All of these risks can be mitigated by the tenant if they understand the contractor and quality of work and can catch the fit out before completion.

Things to look out for in a spec fit out: Understand your needs first, before you are drawn in by the attractive colours and finishes. Not all spec fit outs are the same and serve the same purpose! Understand the bones of the building, the contractor doing the fit out, and beware of pseudo spec fit outs designed to dazzle and distract. Also remember that even if the fit out is good to go, the Heads of Agreement, lease, insurance and bank guarantee all take time.

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