Are you looking to set up a new office?

Although moving offices can be a challenging undertaking, CBRE’s guide can help you make the move without unnecessary stress.

21 Apr 2020

By Michael Young

Are you looking to set up a new office

The 10 most frequently asked questions by office occupiers:

1.Can I locate anywhere in Dubai despite my business activity?
In Dubai companies have 2 options when setting up a new entity, free zones (also known as “offshore”) and non free zones (also known as “onshore” or “Dubai Economic Department”). Dubai alone as more than 30 different free zone locations and each zone has its own laws and regulations. Entities established in free zones have 100% foreign ownership whereas a non free zone entity requires a 51% local UAE shareholder.

2.How long should I allow for moving offices?
One of the most important factors that is often overlooked, is the amount of time it can take to find and secure the right office solution. The market search and due diligence, licensing set-up, commercial negotiations and lease signing can take between 3 - 6 months to complete. In addition, if the space is not fully fitted and ready for immediate occupation, more time needs to be factored in for fit-out works and occupational approvals, which can take a further 3 - 6 months. If a tenant is relocating from another office, attention needs to be given to their exit, as there may be reinstatement obligations of the existing premises which can take another 1-2-month period.

3.What costs are associated with setting up a new office?
The rent and operating expenses such as service charges, DEWA & chilled water etc. are not the only costs to consider when setting up an office. There will also be additional licensing, visa, security deposits and potential fit-out costs to factor in, which will vary according to the office space and location.

4.What will the Landlord require as security for the lease?
In Dubai Landlords typically require post-dated cheques guaranteed upfront for the entire lease term, with rental payments typically made in 1 to 4 instalments per annum depending on the Landlord. However, more and more Landlords are showing some flexibility in this regard by accepting wire transfer payments in advance but, may still insist on a bank / parental company guarantee as security.

5.Is it beneficial for us to relocate or should we remain in our current office?
The market has changed significantly over the last 2-3 years and we expect favorable conditions for occupiers in the foreseeable future. By appointing Chartered Surveyors such as CBRE, we will undertake detailed stay vs relocation financial and qualitative comparative analysis, that will help support any decision to stay in your current office or relocate. Furthermore, CBRE would compare each commercial offer on a like for like basis (i.e. gross vs net areas, lease incentives such as rent free, rent / service charges being inclusive of utilities or not, and any other incentives etc.). During this analysis we will also review your existing lease obligations and determine whether we can achieve any commercial savings in your current office.

6.What size office space should I be looking for?
When considering how much office space is required to accommodate your business operations, careful consideration needs to be given to the current size of your workforce, visa ratios, municipally & Dubai Civil Defence regulations, and any future headcount growth.

7.What are the most important factors when selecting an office and its location?
Occupiers need to consider many factors with some of the more important criteria including; budget, business licensing, proximity to clients & industry peers, good public transport links / accessibility / car parking provisions for employees & visitors, retail amenities, vertical transportation (i.e. lifts), good building specification (i.e. power, air conditioning) & efficient floor plates.

8.What is the typical lease length in Dubai?
Historically, one-year leases were standard practice across Dubai. However, 3 to 5-year lease terms are more common in today’s market, with some Tenants & Landlords willing to agree longer lease commitments of up to 10 years. For longer term leases, Tenants typically require some flexibility via Tenant break options / clauses throughout the lease term.

9.What is the typical handover condition of offices in Dubai?
There is no standard practice in Dubai however, most offices are initially handed over in a shell and core condition (i.e. floor to ceiling concrete slab with service provisions capped). Some new developments are offering offices in a ‘Category A’ handover condition (i.e. raised flooring including floor boxes, suspended ceilings with lighting & all MEP provisions). As the real estate market matures and Tenant’s relocate / upgrade their offices, there is more supply of second generation fitted offices available for lease in the market. CBRE always recommend that Tenant’s undertake Technical Due Diligence of any second generation fit out, to ensure the space complies with the latest codes & regulations and the MEP is in good working order.

10.Is there a measurement standard for offices in Dubai?
There is no single standard measurement practice used in Dubai, however with some of the newer office developments in Dubai providing space on a Net leasable basis (i.e. useable area), there is now the potential to negotiate the measurement standard and / or the commercial terms accordingly.