Lease Term & Renewal Option
The most common lease term is 3 years, though 2 year leases are also possible. 5-year lease terms are also possible with companies who have long-term strategic plans and have no wish for relocation disruption but landlords are generally reluctant to sign a lease of more than 3 years. The standard renewal option would be 2 or 3 years though other terms may be possible. Renewal rates will have to be negotiated again nearer to the expiry date. A cap on future rental increases is generally frowned upon by landlords but is possible if the tenant is leasing multiple floors. Smaller tenants are almost never able to enjoy this privilege.
Gross Rental Rate
In the Singapore office rental market, the gross rental rate is made up of 2 separate components - Base rent rate & Service charge rate (both in per square foot or per square metre basis), subject to GST which is currently 7%.
Base rent is the rent for the space while service charge is a fee levied to maintain the common area and Delete infrastructure of the building. Typically, the service charge is non-negotiable and ranges from $0.80psf to $1.50psf and may fluctuate during the lease term. Therefore, what we normally negotiate on is the base rental rate. The Gross Rental Rate also includes central air-con usage during office hours.
Landlords typically require a tenant's paid-up capital to be equal to 6 months rent or a minimum amount of S$100,000 to qualify for a 3 months security deposit scheme. Otherwise, it would be at least a 6 months security deposit.
Rent-free Renovation (Fitting-out) Period
Landlords normally provide one month rent-free period to renovate a bare premises. During boom times, some landlords are known to withdraw this goodwill gesture but during economic downturns, rent-free periods can be as long as 6 months.
Administrative & Legal Fees
Different landlords charge different fees and may range from $800 to $3000, depending on the legal documentation complexity. In Singapore, tenants are required to pay for the landlord's legal fees unless otherwise agreed mutually. If the landlords engage their own in-house counsel, then the legal fee may be waived.
Reinstatement of Premises to original conditions
All in-coming tenants who take over a bare or renovated (fitted) unit will be required to reinstate the unit to bare condition upon the expiry of the lease, unless a new in-coming tenant or landlord wishes to retain the fittings and fixtures.
Goods & Service Tax (GST)
In Singapore, the current GST rate is 7%. GST will be levied on the monthly rent but not on the Security Deposit.
Utilities & Telecommunication Bills
Tenants are required to pay for their own electricity and telecommunication bills. If the building or shophouse does not have a central air-con system but instead utilises a split-unit or VRV system where the tenant is able to control the operation hours, tenants would be required to pay for their own air-con usage.
Typically, central air-conditioning operating hours are from 8am to 6pm weekdays and 8am to 1pm on weekends. Extension of hours would be chargeable and costs vary from building to building. For VRV systems, tenants have full control of the operating hours but the tenant will have to bear the cost of the air-conditioning bills.
Season parking lots are normally allocated according to the area of the space leased, for e.g. 1 lot per 1500sqft leased. These lots are not free with monthly charges ranging from $50 to $350. Some building do not have inhouse parking lots so tenants will have to source for alternative lots at nearby buildings or dedicated multi-storey car parks.
Restrictions on Types of Businesses in Hi-tech Industrial Buildings or Business Parks
Singapore Urban Redevelopment Authority (URA) and other government bodies have placed certain restrictions on the types of businesses that can be allowed to lease a space in industrial buildings or Business Parks. Tenants are responsible for complying with the regulations and applying for necessary permits. More more details, please contact URA at
6223 4811 or visit www.URA.gov.sg.
Final Advice and Disclaimer
On first look, tenants will be shocked at how biased the agreement is. It favours the landlords tremendously. There are some clauses that landlords will never change and most tenants will have to accept them. However, the landlords are also fair to a certain degree and most tenants will be happy to lease commercial properties from them eventually. We advise all tenants to engage a reputable and knowledgeable property lawyer in Singapore to assist them in understanding the complexity of the lease agreement.
As usual, all informations and opinions herein are provided by the writer in his best judgement and good faith based as far as possible on data or sources believed to be reliable hereto. They are intended for reference purposes only, and users agree to use them entirely at their own risk and with full responsibility. Notwithstanding, OfficeCompass and the writer disclaims any liability for any damage or loss which may arise by the use of these contents.
We hope that our Office Rental FAQ section has helped answer many of your questions about renting an office in Singapore. If you have any further questions, please contact us directly and we will be happy to answer them.