As the property market has improved over the last 12 – 18 months we have begun to see a small amount of speculative development return to the market.
That said, for most schemes, developers (and their funders) will still require a tenant to be under contract to occupy space before committing to a build/refurbishment program.
For developers and occupiers alike, an important part of the agreement for lease or sale contract is identifying when an occupier is required to complete the lease and hence is committed to paying rent (or, at least specifying when the rent-free period starts running).
Typically, completion will be 5 or 10 working days after the developer’s monitoring surveyor signs-off that the building has been practically completed.
This is all well and good for a developer, but many occupiers will be reluctant to take occupation at this time of year as it will be very difficult to hire staff and/or start their internal fit out over the Christmas period. Occupiers do not want to waste several weeks of their precious rent-free period because the construction industry has largely shut down for the festive season.
To get round this, a tenant will often look to include a clause in the agreement for lease to the effect that, if the end of the 5/10 working day period triggering completion would fall in December, then the actual completion date is pushed back until early to mid-January.
… And the colloquial name of this clause that avoids having to complete a lease over the Christmas period?
Why, the ‘Santa Clause’, of course.
Merry Christmas from the Talking Property editors.