By Michael Wong 
 

Before you start searching for an office, it’s crucial to clearly define your business requirements. 

Leasing an ideal office in Hong Kong could be challenging to many startups and small to medium-sized enterprises (SMEs). 
 

The city’s competitive real estate landscape, coupled with various procedures and regulations, can make the process daunting. Nevertheless, with the right approach and understanding, you could secure a suitable space that meets your business requirements. 
 

Here are five essential tips to guide you through the process. 
 

How to determine what you need? 

Before you start searching for an office, it’s crucial to clearly define your business requirements. There are a few things to consider: 
 

Firstly it’s about the size. Determine how much space you will need based on your current team size and anticipated growth. 
 

A good rule of thumb is 100-150 sq. ft. net of office space for each person. This includes not just the desk but shared facilities such as meeting rooms, reception, storage etc. 
 

Secondly, it’s the type of space you’d need. Decide whether you need a traditional office, a co-working space, or a serviced office. Co-working spaces can offer flexibility and lower costs, which is particularly beneficial for startups that may not need a permanent office. 
 

Of course you’d need to consider the location – the proximity to clients, suppliers, and industry peers is essential from an operation perspective when you select the location. Traditional CBD areas like Central or Tsim Sha Tsui are prestigious but come with higher rental costs. 
 

Alternatively, consider emerging districts that may offer more affordable options and a vibrant community. 
 

What is Property Classification?

In Hong Kong, office properties are typically classified as Grade A, Grade B, or Grade C, according to the building specifications, facilities, and the management services as defined by the Government: 
 

For Grade A buildings, they are modern with high-quality finishes and flexible layouts, with effective central air-conditioning, good lift services and professional management. The floor plates would be large and spacious with well decorated lobbies. 
 

Whilst for Grade B buildings, they offer ordinary design with good quality finishes, with average-sized floor plates and flexible layout. Moreover, some landlords of Grade B buildings are more flexible in terms of the tenant mix and they would consider leasing to tenants operating wellness studios, education centres, medicals, boutique beauty salons to drive footfall. 
 

When renting office space, rent is usually based on the gross area, which includes shared spaces like toilets and common corridors. To know how much space you can actually use, ask for the usable (net) area—this excludes common areas and curtain walls. Always confirm this with an on-site measurement before signing the lease. 
 

How to calculate costs?

When you are working on the budget for the real estate, there are different costs to be considered, in addition to the monthly rent. 
 

For example, management fees could vary significantly between properties, so be sure to clarify them with the landlord. Other utility charges, such as electricity and air-conditioning charges may incur. 
 

Also, as a tenant, you may bear the Government Rates and landlord to bear the Government Rents respectively. But this would be subject to your negotiation with your landlord. 
 

What to negotiate in my lease?

Negotiating the terms of your lease is crucial to securing a favourable deal. 
 

When it comes to lease, the first thing to decide is the lease duration. The standard commercial lease length in Hong Kong ranges from two to three years fixed. Determine what works best for your business, especially if you anticipate growth or changes in your operations. 
 

As for the rent-free periods, many landlords offer rent-free periods to accommodate renovation needs to the tenant. Ensure this is clearly stated in the tenancy agreement, as it can provide significant savings during your initial setup. 
 

There is also a renewal option to consider. If you are leasing a bigger space, some landlords may consider offering a renewal option to the tenant, with an open market rent, or pre-determined renewal rent, subject to negotiation. 
 

Discuss who is responsible for various costs, such as maintenance and management fees, and ensure these terms are documented in the lease. 
 

When to do an inspection and what to look for?

Before finalising any lease, you should conduct a detailed inspection of the property. In particular, you should be mindful of the current condition of the space and look for any signs of damage or required repairs. 
 

You should also look at the building facilities and ensure the space meets your operational needs, including ceiling height, power supply, and layout, etc 
 

Last but not least, there should be a handover inspection conducted. During the handover process, document the condition of the space meticulously. 
 

Note any existing damages and ensure they are acknowledged in the handover document. A thorough inspection can help you avoid disputes later and ensure that the space is suitable for your business operations. 
 

Leasing commercial space in Hong Kong can be a complicated process, as you embark on this journey, you may want to consult with the local real estate to assist you through the leasing process. 
 

With the right approach, you can secure a space that not only meets your operational needs but also positions your business for future success. 
 

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