How to Rent and Lease Office Space in the Philippines

October 7, 2024

building in the Philippines shows how to rent office space

How a Business Can Rent Office Space in the Philippines

Renting office space in the Philippines is critical to establishing a successful business. Whether you’re a startup, an expanding SME, or a large multinational, finding a suitable office space involves several key considerations. This guide outlines how to rent office space, from determining space requirements to negotiating lease contracts and setting up essential utilities.

Determining Space Requirements

Before searching for office space, businesses must calculate their space requirements in square meters (sqm). The standard space per employee ranges from 4 to 6 sqm, depending on the nature of the work. For example, businesses needing cubicles or workstations typically require more space than those operating in an open office plan. Moreover, additional areas such as meeting rooms, pantry space, reception areas, and storage should also be factored into the calculation. As a rule of thumb, allowing 10-15 sqm per employee is advisable to ensure comfort and efficiency.

Understanding Office Space Grading

Office spaces in the Philippines are classified into Grades A, B, and C:

Grade A: Premium office spaces located in prime areas like Makati, Bonifacio Global City (BGC), and Ortigas. These offices offer top-tier amenities such as modern elevators, parking facilities, and backup generators. Grade A buildings also meet the highest safety standards and attract multinational corporations.
Grade B: These buildings are generally older but still offer good-quality spaces. They are often located in secondary business districts. They are more affordable but may have fewer amenities than Grade A buildings.
Grade C: These are budget-friendly offices, often found in less central areas. While they are functional, they may offer a different level of infrastructure and amenities than Grade A or B buildings.

Business Permit Requirements

Before signing a lease contract to obtain office space, businesses need to ensure they have the following essential permits:

SEC or DTI Registration: Corporations must provide a copy of the business registration papers from the Securities and Exchange Commission (SEC), while sole proprietorships must provide registration papers from the Department of Trade and Industry (DTI).
Corporate Bank Account: A corporate bank account under the company’s name is essential for paying bills, employee salaries, and taxes.
Business Permit: Secure a business permit from the local government where your office will be located. This involves submitting your SEC or DTI registration, lease contract, and other business documents.
Fire Safety Inspection Certificate (FSIC): Obtain the FSIC from the local Bureau of Fire Protection (BFP). This certificate verifies that your office complies with fire safety standards. As part of compliance, office spaces generally need one fire extinguisher per 200 sqm, but more may be required depending on the business activities.

Special Requirements

Depending on the business type, there may be additional requirements on how to rent office space :

Food Establishments: Must install exhaust fans and secure sanitary permits.
Tech/IT Businesses: Offices with server rooms may need halon fire extinguishers to protect sensitive equipment.
Parking Slots and Backup Generators: Businesses with frequent visitors or a significant workforce may need dedicated parking spaces. Additionally, buildings with backup generators are highly recommended to ensure operations continue during power interruptions.
Office Pantry: Most buildings allow pantries, but you should check with the building management to confirm if specific equipment, such as stoves or microwave ovens, is permitted.

Fitting Out the Office

Once the office space is leased, businesses may need to fit it out, primarily if it is delivered as an empty shell. Fitting out refers to installing partitions, ceilings, floors, and other fixtures necessary to operationalize the space. The process typically involves hiring architects and contractors to design and build the interior layout to meet business needs. Fit-out works should comply with the building’s regulations, and contractors often need approval from building management before beginning work.

Lease Contract Negotiation

Negotiating a lease contract is a crucial step. Most office leases in the Philippines have a minimum term of 3 years. When negotiating the lease, consider the following:

Advance Rent and Security Deposit: Typically, landlords require 2 months’ advance rent and 2 months’ security deposit before moving in.
Expansion Options: It is advisable to negotiate for first refusal rights on any new or larger space available in the building, allowing room for business growth without needing relocation.

Special Considerations

PEZA and BOI Registered Businesses: If your business is registered with the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI), it may only be allowed to operate in PEZA-registered buildings to qualify for tax incentives. This limits office space options, but these locations have benefits like income tax holidays and exemption from local business taxes.
DOLE Requirements: The Department of Labor and Employment (DOLE) imposes specific guidelines regarding the office environment, including safety standards, emergency exits, and workspaces that comply with labor laws.

Setting Up Utilities

Once the lease is signed, the next step is to set up essential utilities such as:

Water and Electricity: These services are usually applied under the company’s name to ensure that the bills prove the company’s operational address.
Internet: High-speed internet is critical for any business. Apply for internet services from reputable providers, ensuring coverage and bandwidth meet your business needs.

Setting Up Government Services

To operate legally, businesses must register their office address with the following government agencies:

Bureau of Internal Revenue (BIR): Register the new address with the BIR to ensure accurate tax filings and compliance.
SSS, PhilHealth, and Pag-IBIG: These agencies handle employee benefits, so ensure that the company is registered and that contributions are paid on time.

Start Business Operations

With office space secured, utilities set up, and necessary permits obtained, the final step is to hire employees and commence business operations. By ensuring the office complies with all government regulations and is set up to handle daily operations efficiently, the business is now ready to grow and thrive in the competitive Philippine market.

Is Assistance Available?

Yes, we can help. Renting office space in the Philippines is a multi-step process that requires careful planning and coordination with government agencies and building management. By understanding space requirements, securing the proper permits, and fitting out the office space, businesses can establish a solid foundation for operations. How to rent office space effectively involves negotiating a fair lease contract, considering PEZA or BOI requirements, and setting up utilities—all essential to success. With the office ready, businesses can focus on hiring and growing their operations.

Contact us to schedule an initial consultation with one of our Philippines’ office space experts to get your business operational ASAP. Use any of the contact channels below to set an appointment: