Although there is no standard definition, the industry has traditionally referred to Category A standard fit-outs as being the basic specification that a landlord or developer will offer to potential tenants to indicate how an office can/will look.  

Typically this will include:

• Raised floors;
• Suspended ceilings;
• General lighting;
• Extension of the mechanical and electrical services above the ceiling from the riser across the lettable space;
• Finishes to walls;
•  Window blinds.

It is also common for the landlord/ developer to make a contribution to the tenant for the floor finishes and floor boxes/ grommets, which are provided as part of the tenant's Category B fit-out.

Typical levels of contribution that tenants can expect are:

• Carpet tiles £23 - 28m2;
• Floor boxes (based on 1 per 20m2) £70-80/unit.

At fit-out stage, contractors generally tender for a Category B fit-out to cater for an incoming tenant's specific requirements, i.e. cellularisation via partitioning, data and power installations, communications rooms, staff/welfare facilities and fully controllable air conditioning by zones, etc. In these recessionary times, the practicality of landlords and developers undertaking large scale Category A fit-outs has been brought into question and the problem has been further debated due to the adverse environmental impact of waste.
 
With bespoke tenant requirements being the norm for many work spaces, a large degree of Category A finishes that are installed at letting will be wasted/scraped. Even if the tenant is ultimately happy with ceiling and carpet finishes, the need to provide extensive data cabling and air conditioning installations, etc., means that ceilings have to be disturbed/taken down and replaced and carpet tiles have to be lifted to access floor voids. 

The costs of such works are therefore entertained twice; firstly by the landlord at Category A fit-out stage and secondly by the tenant at Category B stage; therefore it is easy to see there is considerable waste occurring in the industry. Although no published data exists, evidence suggests that this could be anywhere between £100.00 to £120.00 per m2 for a typical City office Category B fit-out.

In recent years, the rapid development of high quality renderings and walkthroughs via computer aided design and graphics packages, means that it is possible for an interested party to see a virtual representation of potential space before it is completed. With this in mind, perhaps landlords and developers should be focusing more time and investment in ensuring that such images and representations are on hand to illustrate what can be achieved at Category B stage. The British Council of Offices (BCO) has spent some considerable time over the past couple of years working on an update to the BCO Specification, a publication recognised within the industry giving guidance on how offices should be designed and built. Within this redraft, greater emphasis will be given to the importance of looking at the marketing of space at shell and core stage.

Smaller occupiers and one off tenants, without in-house property expertise, will find it more difficult to develop Category A space from shell and core and therefore, may always favour a property with a degree of Category A fit-out already provided.  Larger multi site companies with a corporate image may benefit from the lower costs of taking on shell and core space and fitting out to their own bespoke requirements. Therefore, there needs to be a degree of choice in the market. Avoiding waste from Category A strip out as part of Category B fit-out, is a subject that needs to be taken on board by the industry now, both in terms of sustainability issues, simple economics and dealing with the ever more regulated disposal of waste materials. 

Where BREEAM ratings for fit-outs are desirable, tenants need to consider the fact that stripping out Category A materials will make meeting the minimum waste targets very difficult. Therefore, it is essential to make the best use of what is there and only remove Category A fit-out work if absolutely necessary.
 

To summarise, in the long term, there could well be a shift away from general development to Category A stage and more emphasis on marketing shell and core with landlords and developers making greater tenant fit-out contributions available. This contribution will need to more fully reflect the expected Category A fit out costs against the savings through minimising waste at Category B stage.

For more advice please contact:

Terry Bartholomew
at our Orpington office
T  01689 888222
E  tbartholomew@calfordseaden.co.uk