We have had a run of dental and medical fitout projects in new developments around Sydney this year. Our clients have been both owners of new lots and lessees. A number of them have experienced some surprise costs relating to their tenancy. We suggest you read your lease carefully and in most cases, we suggest you engage a specialist solicitor to review the documents for you. Many costs are justified but you need to make yourself aware of them at the beginning when you are formulating your budget. Here are a few to be aware of:
Fire provisions – Fire provisions are part of the base building but in some leases, the new tenant is required to pay for all the fire provisions to the tenancy. More common is for the tenant to have to pay for the adjustments or additions to the basic provisions as a result of their fitout. For example, if the tenancy is originally an open shell with two sprinklers to protect it from fire and the dentist divides the tenancy into a number of separate treatment rooms and a reception area, then additional sprinkler heads may need to be installed to protect each area or room. The same may be the case for smoke detectors. The work is normally carried out by the fire services company that looks after the building, but at your cost.
Shopfront – Some tenancies are sold or leased without a shopfront being included. This can be an expensive discovery if you wish to have a nice full glass shopfront. To make matters in worse, in some shopping centres, the centre’s design manager will specify what you must have as a shopfront and it may be very expensive.
Core Holes – Many of our dental and medical fitouts involve the drilling of holes into the concrete slab to facilitate drainage from wet areas and dental chairs. The drilling of core holes is a relatively simple task, however an x-ray of the slab is required to ensure safe locations away from any steel in the concrete. Most shopping centres and base building contractors will require that they do the drilling, but at your cost. And we have seen a great variety in the amounts they charge for core holes. Find out the cost before signing a lease. A major issue can also arise in some Strata buildings where the Owners’ Corporation requires a By-Law to be registered before allowing any core holes to be drilled. If you are in a Strata building, getting permission for core holes can sometimes be a major hold up and expense. We suggest you make contact with the Strata manager before making any commitments.
Air Conditioning – Many base buildings have an AC system in place that each tenancy can then connect to for ventilation. Check with the building manager or owner to see who will pay for any modifications to the AC system to allow it to work with your new layout. Some dental and medical layouts place a higher load on the AC system and upgrades can be very expensive. Again, this is a cost that might be organised by the owner or builder, but paid for by you. This leaves you in a vulnerable position in terms of the price you pay.