Many foreigners want to know the best ways to negotiate for relocating a new office building in China. The following will give some tips.

  

1. Appoint a reputable real estate agent to act on your behalf. This will send a clear message to all landlords/developers that you are aware of the latest market transaction and have researched all possible relocation alternatives. In our experience, this approach provides strong leverage for securing the most favorable financial and non financial terms in the lease agreement including first right of refusal, option to renew with cap rate, early termination without penalty, handover condition, reinstatement, sublet and assign, rent free period, fit out period, discount on utility cost, etc.

 

2. Hire a reputable interior design/fit out company in advance to better understand all new building issues, as a majority of the building's systems will not have been fully operated and utilized. The fit out company has the capability to provide a thorough building due diligence which will identify many issues related to "potential cost increase and saving".

 

3. Verify the incentive policy provided by the district government and city government. In Beijing, each district government provides different industry incentives for all corporations. For instance, in Xi Cheng District, where the financial street is located, the government provides rental deductions for tenants who are in the financial industry such as banks, securities, insurance, etc. Tenants must meet the requirements in the policy to enjoy such privileges. If tenants qualify, they will be able to receive assistance from the government to get more information about the new building's status in terms of accurate building completion, signage right and developer's creditability.

 

These tips are only part of the office relocation process though. With China's continuing growth in first, second and third tier cities; corporations must be very cautious when determining premises location and building quality.