Category A or Category B? What a Landlord Fit-Out Leaves You to Do

A space described as fitted can mean a bare serviced floor or a ready office. Knowing which one you are being offered changes the price of the deal.

A category A fit-out is the landlord's base provision: a finished floor plate with ceilings, lighting, basic cooling distribution, fire protection and a serviceable finish, ready for a tenant to work with but not ready to occupy. A category B fit-out is what makes it yours: partitions, meeting rooms, joinery, branding, a reception, kitchens, data and furniture. Confusing the two is how a tenant signs a lease believing the space is fitted and then discovers the whole occupier fit-out is still to come.

Taking a category A space at a glance

You take a floor that the landlord has brought to a serviceable base condition and carry out the occupier fit-out yourself. You control the layout, the specification and the contractor selection within the building's rules, and you can build the space around your own headcount and working pattern. You also carry the programme, the approval process, the coordination risk and the capital cost. The advantage is that the result fits your organisation and the specification is yours to set; the disadvantage is that you are running a construction project alongside whatever else your business is doing, and the time between signing the lease and occupying it can be considerable.

Taking a space with a category B fit-out in place at a glance

You take a space that is already partitioned, serviced and often furnished, whether fitted by the landlord, left by a previous tenant or provided as part of a managed arrangement. You can occupy quickly, the capital outlay is lower or absent, and the cost usually sits in the rent instead, which changes it from capital expenditure into an operating cost. The trade-offs are that the layout was designed for somebody else, the specification of both visible and hidden work is whatever the previous occupier chose, and you may inherit a reinstatement obligation covering alterations you did not make. You also lose the opportunity to coordinate the space around your own equipment and headcount.

What you are actually being handed

Taking a category A space: A serviced floor plate with ceilings, lighting, cooling distribution and fire protection, and nothing that defines a workplace.

Taking a space with a category B fit-out in place: A working office with partitions, rooms, data, kitchen and often furniture, configured for a previous or notional occupier.

Time to occupation

Taking a category A space: Long. Design, approval, tender, construction and furniture lead times all sit between signature and occupation.

Taking a space with a category B fit-out in place: Short. Often limited to cleaning, minor changes, connecting your systems and moving in.

How the cost is carried

Taking a category A space: Capital expenditure by you, sometimes offset by a landlord contribution or a rent-free period.

Taking a space with a category B fit-out in place: Usually in the rent, so it becomes an operating cost spread across the term.

Control of the specification

Taking a category A space: Full, within the building rules, including the hidden work that determines how the space performs.

Taking a space with a category B fit-out in place: None. You inherit the previous specification, including anything that was value engineered out of it.

Fit to your organisation

Taking a category A space: Designed around your headcount, working pattern, meeting requirement and equipment.

Taking a space with a category B fit-out in place: Dependent on how closely the previous occupier resembled you, which is rarely closely.

Reinstatement exposure

Taking a category A space: Defined by what you install, recorded against a condition report you take at handover.

Taking a space with a category B fit-out in place: Potentially inherited, so the obligation may cover alterations somebody else made, which needs checking carefully.

Flexibility during the term

Taking a category A space: Higher, since you know what is in the walls and ceilings and hold the as-built records.

Taking a space with a category B fit-out in place: Lower, since altering an inherited fit-out starts with discovering how it was built.

When taking a category a space wins

• The organisation has specific requirements for meeting rooms, acoustics, laboratory or clinical space, or equipment.
• The lease is long enough for the investment in a bespoke fit-out to be recovered through use.
• Brand presence in the space matters and a generic fitted office would not deliver it.
• You want to control the specification of hidden work rather than inherit someone else's.
• You have, or can appoint, the capacity to manage a fit-out project properly.

When taking a space with a category b fit-out in place wins

• You need to occupy quickly and a construction programme is not available to you.
• The headcount is uncertain and committing capital to a bespoke layout would be premature.
• You prefer the cost in rent rather than as capital expenditure.
• The existing layout genuinely suits how your organisation works.
• The lease is short, so a fit-out investment could not be recovered.

How to decide

Decide on term length and specificity. If the lease is long and your requirements are specific, take the category A space and build it properly, because you will live with the hidden work for years and the fit should follow your organisation rather than someone else's. If the term is short, the headcount uncertain or the business cannot carry a construction project, take a fitted space and accept the compromises. In either case, the decisive commercial step is the same: establish in writing exactly what condition the space will be handed over in, element by element, before the rent is agreed, since the difference between the two categories is a substantial sum that belongs in the negotiation.

Ask for a written handover specification listing, element by element, what the landlord will provide: ceiling, lighting, floor finish, cooling distribution and its zoning, electrical capacity to the floor, fire detection and protection, and the condition of the toilet cores and the lift lobby. Then walk the floor and compare. For a fitted space, ask for the as-built drawings, the test certificates and the commissioning records of the existing installation, because a fit-out without records is one you cannot safely alter. Have a licensed legal adviser review the alterations and reinstatement clauses and confirm whether you are inheriting an existing obligation, and confirm the approvals applying to your intended use with the relevant municipal and civil defence authorities, since those requirements are periodically revised.

Domira designs and delivers interiors as part of the building, not after it: the finishing schedule, the joinery and the services coordination that decide whether a space looks built or assembled. Share the space and Domira will tell you what it would specify and what it would leave out.