Bangkok Office rental - Example lease terms

STANDARD OFFICE LEASE CONDITIONS The following conditions normally apply to office leases in Bangkok: 1. Office Lease Term Generally, leases for commercial office space in Bangkok are for three years. Options to renew are available for a further one or two term of three years. The rental for the renewed lease terms is subject to mutual agreement. It is possible to have an office lease term for longer than three years. However, this requires the lease to be registered, and the payment of a registration fee and stamp duty equivalent to 1.1% of the rent payable over the lease term. 2. Basis of Measurement Most office landlords quote areas on a net lettable basis, measured from the window to the core area including columns but excluding common corridors, washrooms and plant rooms. 3. Deposit 3 months’ gross rental, non-interest bearing, refundable upon expiry of the lease 4. Rent-free Fitting Out Period This depends on the sizes of the office space leased. For example, a tenant with 1,000 square metres should be able to get a two month rent-free period for fitting out. 5. Other Expenses In addition to the rent, there will be other costs as detailed below: Electricity The standard rate is 4.50 - 5 Baht per kilowatt per hour and bills are paid directly to the landlord. The amount consumed will vary depending on the air-conditioning system in the office building.   Air-conditioning Almost all offices for lease have central air conditioning systems; however, there are two common systems used in Bangkok. The type of air-conditioning system will affect your total occupation costs. If the building uses a water-cooled package, tenants will pay for the electricity consumed by their package units, adding 40-50 Baht per square metre per month to the rental. If the building uses a central chiller system, the landlord absorbs the cost of providing air-conditioning.   Air-conditioning after hours (overtime air-conditioning) Normal office hours at most buildings are 8:00 a.m. to 6:00 p.m. on weekdays. If air-conditioning is required outside of these hours, the tenant will have to pay a charge of 2.00 Baht per square metre per hour.   Telephone lines Office tenants usually apply directly to the telephone service provider for the installation of the lines required, but will pay a non-refundable installation charge to the landlord. Bills are paid directly by the tenant to the telephone company.   Car parking Most offices in Bangkok have been built to a minimum standard set by the Bangkok Metropolitan Authority (BMA). This is one space for every 60 square metres of lettable area. There are very few office buildings that provide a more generous parking provision than that set by the BMA.  Tenants will normally receive one space free of charge for every 100 square metres of office space leased. Extra spaces can be rented on a monthly basis, if required and if available.   Management Fees, Service Charges and Local Property Tax These are usually included in the gross rental which is quoted for leased office space. The gross rental will be split between two or three contracts to reduce the landlord’s liability for household tax, which is payable on the rental of space by the landlord. Up to 60% of the gross rental will be allocated for services or rental of equipment for which 7% VAT (Value Added Tax) is levied. No VAT is payable on the rental of the office space itself. Usually household tax of 12.5% per annum (based on the rental of commercial office space) is paid by the landlord, though some buildings’ landlords make the tenants pay.   Fitting Out Costs The capital costs of fitting out, including loose furniture but excluding office equipment such as the PABX, will be 12,000 – 18,000 Baht per square metre. Normally, the leased unit will have to be reinstated to its original handover condition upon expiry of the lease. Most landlords will provide the leased office space with a suspended ceiling, air-conditioning, ducting and diffusers, lighting and sprinklers. The floor finishing may be vinyl tile or concrete screed.   Special Requirements Some offices have sufficient capacity on their emergency generator to allow tenants to connect for their own emergency back-up power requirements, while some buildings also have a separate cooling water supply to which tenants can connect for 24-hour air-conditioning.