Letting a commercial property in 9 steps

The step-by-step guide

1. Request rental valuation advice from three commercial real estate agents.
2. Choose a commercial real estate agent and formalise the letting instruction, including the fee and duration.
3. Document the property's specifications: NEN 2580 measurement report, energy rating, floor plans and a building services check.
4. Determine the letting strategy: a single occupier or subdivision into units, base rent versus incentives.
5. Presentation: professional photography, drone imagery or floor plan drawings, property brochure.
6. List on Funda in Business and engage prospective tenants within the network.
7. Viewings and screening: who is the tenant, and how creditworthy are they?
8. Negotiate base rent, service charges, a rent-free period and a fit-out contribution.
9. Draw up the ROZ lease, arrange security and prepare a handover report.

Documents you need

• Proof of ownership and Land Registry details, including any easements.
• NEN 2580 measurement report showing the lettable floor area (VVO) per unit.
• Valid energy rating; at least C for office space.
• Occupancy permit, environmental notification or environment and planning permit, and the designated use under the local environment plan.
• Condition of the roof, floor, overhead doors, heating and sprinkler system.
• Overview of service charges with a substantiated advance payment amount.

Rent, incentives and value

The base rent per m² per year determines your investment value: at a gross initial yield of 7%, every euro of rent per m² equates to approximately fourteen euros of value per m². Permanently reducing the base rent therefore also reduces the value of your property. A one-off rent-free period of two or three months or a fit-out contribution costs you far less in value than a one-euro reduction in rent, and persuades the same tenant to commit.

Lease and security

• Make a deliberate choice between 5+5 years, 3+3 or a shorter term with a break option: a longer term increases value, while a shorter term increases your flexibility.
• Specify indexation (usually the CPI for all households) and whether a minimum of 0% applies.
• Bank guarantee or security deposit equivalent to three months' rent, including service charges and VAT.
• Address the VAT position: VAT-taxable letting requires the tenant to use at least 90% of the premises for VAT-taxable activities.
• Agree maintenance responsibilities using the schedule of responsibilities: who handles building services, who handles the roof, and who handles minor maintenance?
• Prepare a handover report with photographs, meter readings and the condition of the fit-out.

Vacancy costs more than a rent reduction

Three months of vacancy in an industrial building of 1,000 m² with a rent of €70 per m² per year costs €17,500 in lost rent, plus ongoing owner's costs, insurance and security. A rent that is one euro per m² lower costs €1,000 per year. Compare these scenarios before rejecting an offer from a serious prospective tenant.

Common pitfalls

Three classic mistakes: letting without a measurement report (leading to disputes over the rent afterwards), promising broader permitted use than the local environment plan allows, and accepting a tenant without checking their creditworthiness. The last of these costs the most on average: insolvency halfway through the term means another vacancy period plus costs to repair the fit-out.