What to look out for when leasing office space in Romania

Romania’s office space offering is constantly growing and shifting with the major cities Bucharest, Cluj, Iași and Timișoara seeing the most extensive building developments.

Whether you are looking to rent Class A office space in Bucharest or more cost effective Class B / revamped working spaces, watch out for the following points when negotiating office space lease agreements:

1. Location and parking

Bucharest is one of the most clogged-up cities in Europe, so the best office space is being developed around underground train stations such as Pipera, Aviatorilor, Grozăvești, Preciziei and Unirii. Employees enjoy a short commute and the underground is the best way to travel at rush hour.

Those driving to work face the problem of very limited public parking. Bucharest Town Hall just raised parking prices by up to tenfold in certain central areas, so negotiating an appropriate amount of parking spaces with the landlord is something to keep in mind. If you plan to have visitors to your office, you should aim to rent at least a couple of reserved spaces as during busy days it can be very difficult to reserve a space, even if the landlord offers general visitor parking for all tenants.

2. Fit-out contribution and permitting

Long-term leases in modern office buildings are usually offered with a fit-out contribution which the landlord offers to pay the tenant in order to perform the initial fit-out works or renovate after the former tenant.

Something to bear in mind that most renovation jobs (especially those that involve re-compartmentalizing certain offices) may require obtaining a building permit and updating the fire safety permit. With the works being the responsibility of the tenant, the problems that may arise if certain permits are not obtained include administrative fines, interdiction to use the space for commercial activity and the landlord holding out payment of the contribution. Always check with specialists if the office space (along with the envisioned fit-out) is up to code.

3. Don’t rent until ramp-up

While the pressure to secure decent offices may sway some investors into renting even before starting operations in Romania, it’s important to note that for having an on-paper office or an initial administrative base there are much cheaper options on the market.

Lawyers can set up businesses on paper at the law firm’s address for modest fees. Shared workspaces and business hubs are a growing market in Romania, with some centers offering spacious areas and attractive shared meeting rooms for growing businesses.

The perfect time to move into larger office spaces is when ramping up with staff. Due to administrative burdens in Romania, this may only start to happen a few months from the initial company set up. Changing company headquarters is a relatively simple process.

4. Mind the break options

Romanian civil allows the tenant to break the lease agreement in case of hardship or other unforeseen circumstances only in exceptional and limited conditions. Therefore, negotiating a break option for the benefit of the tenant after a few years might be sensible.

If such an option is not on the table, one should note that sub-leasing and lease agreement transfers are usually only allowed with the consent of the landlord. The wording around such clauses might prove to be a budget saver in times of crisis.

5. Taxes and service charges

When computing lease costs one should take into account that, besides the rent, the tenant must pay utility costs and services charges. Lately, services charges are becoming capped, however the tenant should always read the fine print, or have their attorneys advise regarding the same matter.

Besides the service charge the tenant may have to pay liability insurance, however property taxes are almost always paid by the landlord. Almost always rent, utilities costs and services charges are subject to VAT.

6. Security deposit

Even landlords renting out the smallest of office spaces require a security deposit from their tenants. This is usually in the form of a cash deposit (very common for smaller developments) or an unconditional bank letter of guarantee.

Make sure to carefully document the state of the office space at hand-over, including, if possible, by photo and video documentation of the premises. Verify that the bank letter of guarantee model proposed by the landlord does not have unusual clauses, such as validity surpassing agreement termination.

Document the state of the office space again, after lease agreement termination. Remember, after you leave, you will most probably not have access to the space to gather evidence in case of a potential claim.

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Last updated august 2018.

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