Most office leases will have a mention of a Cat A or Cat B fit-out. Unless you’ve dealt with commercial leases before, it’s understandable if you’re unfamiliar with the terms. The key differentiating factor will determine how much work is remaining and what portion of your budget will be consumed. So, it’s prudent to have a solid understanding of both terms before signing the lease.
Defining Cat A
The Cat A fit-out is the most basic level of office fit-out. The landlord will usually be responsible for this and will have it done prior to their tenant moving in. This would typically include the installation of raised access flooring, suspended ceilings, basic air conditioning, basic lighting and the main building services. The end result will typically be a space with a functional shell that is very clean, empty and ready for the tenant to build upon. Most of the office spaces that you will see in the market will be at least at a Cat A level of fit-out. While these spaces will look very finished in the images that you see of them, they are in fact not finished for the purposes of the future tenant.
What Cat B Includes
Once you get to Cat B fit-outs, the space becomes more fully functional for the office that your team will be working in. Cat B fit-out encompasses office spaces, breakout spaces, quiet rooms and meeting rooms. This also includes the installation of your brand’s flooring and office finishes, as well as the kitchen and tea-point.
Power and data installed where your desks actually are, not where we guesstimated.
Better or feature lighting. Something beyond the basic grid.
Furniture and fit and final décor.
Simply stated, Cat A is the canvas and Cat B is the painting. One is your landlord’s and one is yours.
Who pays for what
This is the section that sits on the budget. Cat A is normally the landlord’s cost and is included in the deal. Cat B is your cost. That is the cost you are budgeting for and is the cost that impacts your budget the most because that cost is highly variable and depends on the amount of changes you are making.
There is a twist though. It is worth knowing what the landlord is offering you to help cover the Cat B work. It could be a fit out offer or a rent free period. The offer could be a good deal to reduce your Cat B cost and you would benefit from asking. The worst they could do is say no.
Why it matters before you sign
Knowing which category you are taking on changes your budget and your timeline. A Cat A space means you are planning a full Cat B fit-out, and that will take many weeks and has to be designed in detail. If the space you are planning to take on has been fitted out to Cat B from a previous tenant, that will most likely only require a fit-out and furnishings from your company in which case the impact to your budget and your timeline will be minor. A few things to lock down before you commit:
- Ask what exactly is included in Cat A and what constitutes a “finished” space, as that is subjective and could vary from one landlord to another.
- You will also want to check the condition of the services. If the HVAC and wiring in the Cat A space is old and in poor condition that could also cost you in the end.
Get a realistic Cat B budget and timeline — before you sign, not after. You might want the lease start date and your move date to be the same.
Know about reinstatement. Everything you fit out in Cat B will likely be stripped out at the end of the lease. Know this now.
If you take any space that a previous tenant fitted out, you might be paying to remove a layout that you like. Walk it with a fit-out contractor before you decide.
Get the categories straight and the rest of the planning will fall into place. It’s the first question you should settle on any new office and the cheapest one to get right.
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