Common Mistakes Made When Leasing an Office in Malta

Leasing an office in Malta may be a challenging process for a company to undergo, especially if the office move is coming at a time when the company needs to allocate its resources to other aspects of the business such as recruitment, business development and so on. 

We have created this guide to help diminish the risk of making some common mistakes when looking for offices for rent on our warm and sunny islands.

1.   Lack of local market knowledge.

A common mistake when renting an office in Malta is that of not fully exploring the market before making a decision.  Whilst you may have a good option at hand, like for example an exceptional Sliema Office Space For Rent, it may not be too wise to take on a lease of a property before having at least discussed what other options there may be out there, like any other offices for rent in Sliema

Our recommendation is to at least start with an online search and where further details or information may be required, you may save yourself the search and discuss the current market environment with a trusted commercial real estate agency. 

Business associates and other corporate relations who may have recently made a move may also prove handy in sharing their experiences as to how their office search went and could give insights as to what current market conditions are like.

Something worth keeping in mind is that the market changes quite rapidly, and whilst one company may have found a lot of options available, their requirements may have been quite different from yours.  Apart from that, the best offices are the ones to go first.  So what is available in one week may not be available the following week.

In addition, whilst not entirely a seasonal activity, there are periods when commercial property searches are more in demand than others.  The result of this is that more urgency may be required when making decisions as there would be more clients out looking for offices than there would normally be.  On the other hand, certain months are quieter than others, and looking at spaces during these months may help to give a little more time to the decision-making process, and may also help to conclude the lease with more favourable terms if done without too much delay.

The conclusion to this is that whilst it is important to have good market knowledge, do not seek to go into too much detail at the cost of possibly losing the perfect space.  If that space is lost because of a decision that took too long, the opportunity may never resurface. And if after having evaluated the market and got a good understanding, you lost an office to another tenant,  it may be challenging to find a similar space or one that ticks all the boxes.

2. Lack of transparency with Landlords

Communication is at the basis of every healthy relationship, and it should come as no surprise that good, fluid communication with landlords is key to ensure that the office leasing process is free from hiccups and other surprises.

After having evaluated a variety of offices and potential options offered by your trusted commercial real estate agent, each one would be weighed for its pros and cons and how closely they match the requirements of your company.

A professional office leasing consultant will be able to advise on all the main items that need to be addressed and ironed out before the terms are agreed on. This information may be obtained upon meeting the landlord during the office visits, however, it is always advisable to have some written reference to what is discussed as this ensures that any information that has been exchanged is less likely to be misunderstood.

This is a good opportunity to get a preview of what the relationship with the landlord could look like.  Is he responsive to your requirements, requests, and wishes?  Does he share information easily and is he organised?  How welcoming is he to your queries?  Is he easy-going, or too busy to deal with you, and if the latter is the case, has he got a structure in place or has been provided contact details of a go-to person who may accommodate your requests when he is unavailable?

Keep in mind that this goes both ways.  If the landlord is constantly being bombarded with questions, and requests for unnecessary meetings that soak up a lot of his time unnecessarily, he may be put off and prefer to rent the space to another tenant.  Landlords who see that tenants may prove to be a handful are more likely to pass on the opportunity to lease to a less demanding tenant,

3. Focusing too much on the Office Rental Price.

Price is decisively one of the most influencing factors in making evaluations on the offices for rent that are being considered.  However,  making decisions based almost exclusively on price may prove costly in the long run.

For starters, when looking at price, one needs to understand the proportional relationship that exists between price and quality, and the opportunity cost that saving some money on rent will have on other elements of the office lease.

When it comes to factors affecting the rental rate of an office in Malta, the two most influencing factors are Location, and Specifications of the finishes.  The ‘quality’ of a location compared to another will help to highlight why the average price of one may be triple that of another office. 

Having said the above, an ultra-high-spec office in a less popular location may equate to the price of a mediocre office in a trophy location.

When looking at offices for rent in Malta, try and look past the price alone.  And when comparing between options, try to create fair comparisons between spaces. 

Let us take an example where one company may be comparing two commercial properties at different rates per square metre.  Some observations may  include:

  • Are both rates being evaluated and computed in the same way? Some landlords quote Usable area, whereas others quote Gross Floor Areas or GFA (thus making the rental rate seem cheaper by comparison) – What is the relative load factor of both spaces?
  • Are both offices equipped to the same extent? Is data cabling included in both? Or will the cheaper office be provided with basket trays/trunking but no cabling?  The same goes for AC units, and possibly mechanical ventilation.  Are they being compared equally or does one office unit offer something that the other office doesn’t thus reflect the higher/lower price accordingly?
  • What is the age of the building and finishes, and what are the internal maintenance obligations of the space on Tenant/Landlord. Are these included in the rate? Or will they be billed over and above?
  • Is the Common parts maintenance included in both, or does one property have additional fees related to maintenance – and how are these billed? As a percentage of spend calculated pro-rata? As a price per square metre, etc…?
  • Are both locations that are being evaluated offering the same experience? This is hardly ever the case. An Office in Sliema may be suitable for a firm but not another.  The same goes for offices in other parts of the islands. 
  • What are the increments included in the lease? do the property rental rates increment in a similar way or is one more aggressive than the other.  In which case, how will this reflect the price over the duration of the lease?

These are but a few of the considerations that one must make when looking at the price and its impact on the decision making process during an office lease evaluation.

4. Foregoing important Office lease agreement terms during negotiations.

When renting an office in Malta, there are several considerations to be aware of, especially when it comes to the agreement itself and the provisions included.  Some items to consider include

  • What are the rights of the tenant? Can they renew their lease at the same rate once the lease expires?
  • Will any improvements/additions to the property be compensated for?
  • Can the tenants break the lease prematurely due to company growth if required? And if so, will the landlord just let them go? Or will penalties need to be settled upon early termination?
  • What are the initial costs and formalities needed? How much deposit will be requested and what will the payment frequency be?

We strongly advise looking into every detail.  And wherever something is unclear it is best to discuss this with a legal advisor or experienced commercial real estate agent in order to determine whether there is anything that sticks out.

5. Not having a plan B for a Rental Office

It is great to have a good option that ticks all the boxes, yet it would be even more awesome to have two.  Searching for the ideal office space in Malta may result in your company finding two |(or more) really great options that will suit your business purposes equally well. 

This is a good situation to be in, especially when you consider that an office can easily go from being vacant to being rented within a few hours of having done a live viewing.  Always keep in mind that there may be a competing tenant looking for a space who could easily snap up your number one office space option. Ouch!

Having a Plan B will ensure that you’re not out in the cold if that had to happen.  It also ensures that no additional time needs to be allocated to finding another suitable space if you lose out on option 1.

In which case, efforts would need to be undergone to secure the second space soon, else you may run the risk of having to start the search and negotiation process all over again.

This is often a frustrating exercise that hardly ever results in a better solution for those involved, and may leave the potential tenants thinking about how they let their best option ‘get away’, and start comparing it with other, less suitable options making their task even harder than it needs to be.

Apart from the above considerations, one may also benefit from having a plan B as this may place the tenant in a very attractive position of having a choice that will enable them to get some leverage on the landlords.  This brings about the dynamics that are generally experienced in what is known as a ‘buyers market’.

Having more choice may allow the decision-makers to be more objective about their decisions as well as being less likely to feel pressured by any time constraints given by the landlord.

In addition, if negotiations with one option come to a standstill – which is also a reality that is faced every day by many businesses looking for offices in Malta – having a plan b will present the business with another opportunity to take action without losing much time because of having to restart the process altogether.

6. Not using a Trusted Commercial Real Estate consultant for your Office Leasing Search.

Looking for Offices in Malta can prove to be a challenging procedure for which you may not have lots of time to allocate.  More often than not, a quick chat with an office leasing professional will enable them to create a shortlist of properties that may be suitable for your business.  That chat (or client interview) could take as little as 10 minutes, and if the estate agent is on the ball and current with the market availability, he may even propose a live visit within hours of the initial conversation.  The market moves fast, and experienced commercial estate agents act accordingly to ensure the best opportunities for their clients.

Contacting a commercial estate agent will save you time, and headaches that you may encounter from dealing with multiple search platforms, time-wasters and other inconveniences that you may encounter as your office search unfolds.

A trusted professional will keep your company’s best interest at present and will help you find the best possible space in the shortest time possible.  Thus reducing costs, and will help you avoid the long-term problems that may arise from trying to handle the process alone of using the help of somebody with little or no experience in this somewhat complex field of real estate.

In closing, we advise that you rely on commercial real estate experts for a painless experience that will help minimise the chance of making mistakes with your office lease in Malta.

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