The second rent

The rent gets negotiated for months, line by line. Then the lease is signed, and in the same weeks a fit-out project worth nearly two years of rent — 750 per m² against 400 — is approved with a fraction of the attention. It is the office's second rent: paid entirely on day one, and at expiry the fixed works stay with the landlord.

This calculator makes it visible: it spreads the non-recoverable share of the fit-out over the certain years of the lease and calls it by its name — shadow rent. Its ratio to the real rent is the page's index: how much extra rent you are paying without any contract naming it.

The reference — 750 per m² of fit-out, 400 rent, six certain years, 500 m², 10% recoverable — invests 375,000 and pays a shadow rent of 112.5 per m²: index 0.28, 28% more rent.

The formula: the spend spread over the certain years

From the investment you remove what survives the expiry (the transferable 10%: furniture, equipment) and divide the rest by the certain years: 750 × 90% / 6 = 112.5 per m² a year. It is straight-line amortisation without discounting — the right convention for comparing and negotiating, not a financial exercise.

The index is the shadow rent divided by the rent: 112.5 / 400 = 0.28. Dimensionless and currency-neutral: it works in Milan, London and Warsaw, because it compares two quantities of the same contract.

The third number is the one that should command the choice of building: the true occupancy cost — rent plus shadow, 512.5 per m² — which no real estate brochure prints.

How to read the index

Below 0.15 the fit-out is light: it weighs little, and the negotiation plays on rent and services. Between 0.15 and 0.30 is the typical territory of an office fit-out on a medium-term lease: a real, physiological weight to keep in the occupancy count.

Between 0.30 and 0.50 the fit-out is heavy: at this level it is a fully-fledged negotiation variable — landlord contribution, rent steps, options that stretch the amortisation. Above 0.50 it is literally a second rent: half the rent or more, paid in advance — and before signing, the alternatives must be explored.

The same spend changes category by moving a single variable that is not in the quote: the years. It is the next section's reveal.

The scale of the term

The table keeps project, rent and residual fixed and moves only the certain lease years — the variable the fit-out contractor's quote does not contain.

The exact same project is a second rent on the short lease and a footnote on the long one: from 0.56 to 0.11, a factor of five, without changing a wall. The pen that signs the term decides the price of the fit-out more than any negotiation with the contractor.

The reading works in both directions: whoever has already decided on a major fit-out has a quantified reason to lengthen the lease; whoever cannot commit long has an equally quantified reason to fit out light.

What screws in and what gets plastered

The residual value is the count's moral variable: everything that screws in you take away, everything that gets plastered you gift to the landlord. Furniture, monitors, shelving and freestanding phone booths survive the move; drywall partitions, false ceilings, raised floors and embedded systems become his on handover day — when the lease does not outright require demolishing them at the tenant's expense.

The project's composition therefore moves the verdict: the same budget spent on transferable elements instead of fixed works raises the residual and lowers the shadow rent — the residual table, further on, quantifies it row by row.

It is also the design criterion for those planning to grow: the company that will change offices in a few years fits out "nomad-style" — quality on the screwed-in, essentiality on the plastered.

The landlord's contribution

There is a structural reason why the landlord's contribution to the fit-out — the tenant improvement allowance of Anglo-Saxon markets — is negotiable: the fixed works the tenant pays for stay with the landlord, who will hand future tenants a better space. The fit-out is an investment in his building made with someone else's capital.

The page's count sizes the request: a 20% contribution on the reference takes the index from 0.28 to 0.23 — and in soft markets much larger contributions are routine, often traded against term or rent.

The mature negotiation puts everything on the same table: rent, term, contribution and rent-free months are four forms of the same money — and whoever negotiates them separately pays them twice.

The true occupancy cost

The shadow rent exists to be added: rent + shadow = true occupancy cost, 512.5 per m² at the reference. It is the number that makes candidate buildings comparable — because the "expensive" pre-fitted building and the "cheap" one to be fitted often swap places when the fit-out enters the count.

The classic example: 450 of rent with the space delivered fitted against 400 bare — on paper the second wins, but with the reference's shadow rent the first costs 450 and the second 512.5. The market for "plug and play" space and flexible offices lives exactly in this gap.

The full comparison then descends to the desk: the occupancy cost per m² times the m² per desk gives the cost per workstation — the twin count of the cost per desk, which adds real attendance.

The right denominator is the term to the first possible exit: a break option at year six makes six — not twelve — the years to amortise over, because everything after it is an option, not a certainty. Amortising over the optimistic horizon is the count's most common mistake, and it is always discovered in the most expensive way: at the early move.

The symmetry is virtuous: if the stay really stretches, the shadow rent falls on its own — the already-paid fit-out spreads over more years, and every year beyond the first exit is a gift of the calendar.

For the same reason, renewal is the moment to redo this count: a fit-out still in good shape on a renewed lease is the cheapest combination of the whole real estate cycle.

Inside the quote: where the money goes

The reference's 750 per m² typically split into three layers: the works (demolitions, partitions, ceilings, floors: a good half), the systems (climate, electrical, data, lighting, security: a third) and the loose (furniture and equipment: the rest). Only the last layer has a true residual.

Inside the systems lives a choice that deserves its own count: well-sized lighting — fixtures, lux, controls — is the fit-out item that keeps paying for the whole term, in bills and comfort; the LED retrofit count holds at fit-out stage too, where the quality jump costs only the difference.

The mature quote's rule: every line classified by destiny — stays or transfers — before signing, because that classification IS the count's residual value.

Mistakes that distort the count

The first is the optimistic term: amortising over twelve years a lease with an exit at six artificially halves the shadow rent — the certain years are those to the first exit. The second is the incomplete perimeter: moves, IT, permits, design fees and months of double rent during works belong to the project as much as the drywall.

The third is the inflated residual: used furniture resells at fractions of new, and the honest residual counts only what will really transfer to the next office. The fourth is negotiating rent and contribution at separate tables: they are the same game.

The last is one of role: the count is a straight-line, undiscounted convention, built for comparing buildings and negotiating — it replaces neither the specification, nor the bill of quantities, nor the financial appraisal of a complex project. And the cost it measures is the project's: what it costs to use it badly, with empty desks, is its twin's count.

The rent scale: the cheap-city paradox

The first table keeps project, term and residual fixed and moves only the rent — from the secondary city to the business district.

The paradox is served: the same fit-out weighs most precisely where the rent costs least — drywall and systems cost nearly the same downtown and in the provinces, but on a provincial rent they become a second rent. Whoever relocates "where you save" and fits out from scratch often hands half the saving back to the occupancy count.

The strategic reading: in low-rent markets it pays to favour pre-fitted space or generous contributions; in expensive markets the fit-out dilutes on its own — which is why flagship offices can afford projects that would be indefensible elsewhere.

The residual scale: the screwed-in table

The second table moves the project's transferable share — from all plastered to almost all loose.

Between the all-fixed project and the nomad one runs half the shadow rent, at equal total spend: moving the budget from partitions and ceilings towards furniture, movable walls and freestanding phone booths does not change the quote — it changes who owns the result at expiry.

A high residual has a second dividend the count does not show: internal flexibility. What screws in gets reconfigured when teams change; what gets plastered demands a new worksite at every reorganisation.

The four currencies of the negotiation

Rent, term, landlord contribution and rent-free months are four forms of the same money, and the shadow rent is the exchange rate between them: six rent-free months on a six-year lease are worth 8.3% of the rent — more than many hard-fought discounts; a 20% fit-out contribution is worth five index points; one extra year of term, at the reference, cuts the shadow rent by sixteen per m² (from 112.5 to 96.4).

The immature negotiation handles them in sequence, with different counterparts at different moments — and whoever negotiates them separately pays them twice. The mature one arrives at the table with this page's count and trades the currency that costs the counterpart least against the one worth most to itself.

The practical rule: the landlord with months of vacancy concedes rent-free months and contributions (one-off costs) more easily than rent (which fixes the building's book value) — the same concession, asked in the right currency, comes more willingly.

Cat A and Cat B: the three states of space

The market describes space in three states: shell and core (structure and central systems: the raw), Cat A (floors, ceilings, distributed climate: the lettable "white" office) and Cat B (partitions, finishes, furniture, identity: the habitable office). This page's count typically measures the jump from Cat A to Cat B — the tenant's fit-out.

The classification is the who-pays-what map: Cat A is almost everywhere on the landlord, and the exact boundary between A and B is contractual matter — the same ceiling can sit on either side of the line, and moving it by a clause is worth tens per metre on the quote.

"Cat A+" — space delivered already habitable in a neutral standard — is the market's answer to hybrid work: shorter leases, smaller tenants, zero appetite for works. Its price is appraised exactly with this page's true occupancy cost.

The second-hand fit-out

The fit-out that is "worth zero" at expiry for the leaver can be worth a lot for the joiner: taking over a pre-fitted space — compatible layout, compliant systems, wired meeting rooms — saves the new tenant most of the project, which is why spaces handed back with a recent Cat B let sooner and better.

For the leaver, this is the residual's last card: the fit-out cannot be taken away, but it can be negotiated — the "as is" handback that avoids reinstatement costs, or the direct successor who buys furniture and equipment. The lease that requires reinstatement to original condition instead turns the residual into a cost: demolishing what you paid for.

The reinstatement clause must therefore be read before signing, count in hand: on a heavy fit-out it can be worth a year of rent.

The project that ages

A fit-out has its own useful life — typically 7-10 years for finishes and layout, less for IT — and on long leases it ages before the expiry: a ten-to-fifteen-year project must budget a mid-course refresh, lighter than the initial fit-out but not free.

Then there is functional ageing, faster than the physical kind: teams change, the desk-to-room ratio shifts, hybrid redraws the uses — internal churn (moving, reconfiguring, recabling) is a yearly item facility managers know and business plans forget.

Both reward the same choice already seen: the screwed-in share of the project updates at low cost, the plastered one demands worksites. The project that ages well is the one designed to be moved.

Frequently asked questions

How much does an office fit-out cost per m²?

The complete fit-out — works, systems, furniture and IT — typically lives between 400 and 1,500 per m² depending on level and market: the page reference uses 750. But the number to watch is not the total: it is the shadow rent, the spend spread over the certain lease years.

What is the shadow rent?

The annual non-recoverable share of the fit-out per m²: investment minus residual value, divided by the certain years. The reference — 750 per m², 10% residual, 6 years — pays 112.5 per m² a year: a second rent no contract names.

What is the index on the rent?

The shadow rent divided by the real rent: 0.28 at the reference means you are paying 28% more rent. Below 0.15 light, up to 0.30 physiological, up to 0.50 heavy, beyond that it is literally a second rent — and the negotiation must treat it as such.

Why is the lease term so decisive?

Because it is the denominator: the same 750-per-m² project is worth an index of 0.56 on 3 years and 0.11 on 15 — a factor of five without changing a wall. The pen that signs the term decides the fit-out's price more than any contractor discount.

Which years do I use as the term?

The CERTAIN years, to the first possible exit: with a break option at year six you amortise over six, not over the optimistic horizon. Everything after is an option: if it materialises, the shadow rent falls on its own.

What counts as residual value?

Only what will really transfer to the next office: furniture, monitors, freestanding equipment — typically 10-30% if the project is designed for it. Partitions, ceilings and embedded systems are worth zero: they stay with the landlord, or worse, must be demolished at the tenant's expense.

Can I get the landlord to pay for the fit-out?

Partly yes, and it is structural: the fixed works you pay for stay with him, so the contribution (the tenant improvement allowance) is a legitimate request — 20% takes the reference index from 0.28 to 0.23. In soft markets you get more, often traded against term or rent.

How do I compare two buildings with different fit-outs?

With the true occupancy cost: rent plus shadow rent. The pre-fitted building at 450 beats the bare one at 400 (512.5 with the reference fit-out) — brochures print the rent, the real count is this sum.

Does a fit-out pay off more on long leases?

Yes, mechanically: the same spend spreads over more years. The operational corollary: whoever has decided on a major fit-out has a quantified reason to negotiate more term; whoever stays briefly must fit out light and transferable — or look for ready space.

What belongs in the project's perimeter?

Everything that exists because the move exists: works, systems, furniture, IT, permits, design fees, the physical move and the months of double rent during the works. The contractor's quote alone is typically 70-80% of the true count.

Should the amortisation not be discounted?

For comparing buildings and negotiating, the straight-line undiscounted convention is the right one: simple, symmetric, defensible at the table. The full financial appraisal — discounting, tax, lease accounting — is the next step, on the chosen project.

Does this count work for shops and restaurants too?

Yes, with more extreme numbers: retail and food service have higher fit-outs per m² and often shorter leases, so indexes easily exceeding 0.5 — which is why term and renewal are THE clauses of those contracts, and why chains standardise transferable fit-outs.

Updated July 2026