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A pre-let is a contract between a potential tenant and a commercial property developer which allows the tenant to agree to lease a building before the construction has started. Most likely to occur when there is a shortage of commercial property buildings on the market, entering into a pre-let holds both pros and cons for the parties that are involved.
Pre-lets are usually favoured when a tenant can no longer find a suitable property in their search area. The advantage of pre-letting an off-the-plan build is that it may allow the occupier to have some influence over the build design, therefore creating a space tailored to their business’ needs. Businesses may also turn to pre-lets as they are typically cheaper to lease than an already existing property. Pre-lets sometimes include agreements for discounted or rent-free periods.
Tenants that tend to benefit from a pre-let are usually the larger, more influential businesses. These types of organisations generally have the ability to commit to a longer leasehold that a pre-let building requires. However if a tenant is already bound into an existing lease, the tenant cannot enter into a pre-let unless there is a break or expiry in the lease.
There are three main types of construction methods: the Traditional Method; the Design and Build; and the Construction Management Process. These methods all focus on different priorities. The traditional method allows the occupier to have some control over the design and specification. In this type of construction, the emphasis is usually on the quality of the finished result rather than the cost of the build.
The design and build method is when the plan is designed on the main requirements of the parties involved. This is usually the case when the build is formed on the cost rather than the quality.
The third method, the Construction Management Process, allows construction on the building to begin before the design of the building is complete. The main focus of this method is usually time over cost.
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