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One of the features of the UK letting market has been the practice of giving new tenants a rent‐free period at the commencement of a lease. Such rent‐free periods seem to fall into one of two types. First, it appears that, even in a very buoyant market, most tenants are able to negotiate a modest rent‐free period for fitting out or, where the lease is a head lease, for arranging sublettings. These rent‐free periods (even where they are a slice of a longer rent‐free period) can be seen to have their own characteristics. They can be viewed as a one‐off concession at the commencement of the lease. Second, in a poor market rent‐free periods are used as incentives, in the sense that they are a direct alternative to an explicit reduction in the passing rent, and often form part of a wider package of inducements. These have an obvious and direct bearing on true rental value. Critically examines the various devices which have been used by those drafting rent review clauses to deal with rent‐free periods at review and comments on how these have been treated by the courts.

Probably one of the most vital periods of any vessel's life is that which is known as the ‘fitting‐out’ stage. This period, from the time of launching until acceptance by the owners, frequently sees the development of corrosion attack which may adversely affect the whole of a vessel's future operation.

The most organisations in this high‐tech age the process of fitting out, altering and adapting space is a regular feature. What is more, it is no longer simply a case of new partitions and carpet and a lick of paint. The significance of the building services elements to the effectiveness of the workplace today cannot be overstated; these elements are costly and complicated and their design and costing do need a professinal touch.

The amortised cost of fitting out offices can form by far the greatest proportion of the total operating costs of office buildings.

In this second of the two articles covering fitting out costs, we shall concentrate on a detailed analysis of continual fitting out. This includes such areas of work as relocating sections of office interiors, creating totally new spaces within existing layouts and incorporating new technology equipment. As there are many variables under this particular heading we have compiled brief histories for our sample buildings to show the range of events possible throughout the life of the buildings (see Table One). Table One shows costs for Buildings A & B only. Costs for Building C would be of a broadly similar nature but of slightly higher cost in all cases.

This paper models the lessee's default options and estimates the economic value of the options for a lessee using a discrete time binomial American option pricing model. Results show a positive relationship of the option premium with the original rent and a negative relationship with the relocation costs. Finds that the default probability is higher for lessees who are more sensitive to rental changes and place less emphasis on the fitting‐out quality. Suggests that rental volatility and rental growth rate are two significant factors that have positive relationships with the default option values. The risk‐free rate, on the other hand, has an inverse relationship with the default option values because a higher risk‐free interest rate reduces the present value of rental savings. Lease term length to expiration has a positive effect on the default option value, implying that the default option premium will decay as the term to expiry is shortened.

Who foots the bill for adapting office buildings for new technology? Bernard Williams, FRICS, building economics consultant to the ORBIT research project into the impact of new information technology on office buildings, investigates further some of the crucial economic questions raised by the findings of that report.

British Telecom's Building Management Division (BMD) has its headquarters in the City of London, responsible for the management of 52 central London and 90 provincial headquarters buildings, housing a total of 19 500 staff. The division — now 1000 strong and possibly the largest single facilities management operation in this country — was formed in 1980, when British Telecom's services were separated from the Post Office in the run‐up to the 1984 privatisation. Initially the department was responsible only for maintenance works and the day‐to‐day running of the buildings, relying on other units to deal with communications and support services, property acquisitions and disposals, and major fitting‐out works. As a nationalised industry, BT relied heavily on the government's Property Services Agency (PSA) for all professional services and for the evaluation and purchase of furniture and other supplies.

The cathodic protection of ships against corrosion has a long history, for it was first applied in 1824 by Sir Humphry Davy for the protection of the copper sheathed hulls of British warships. Here the author describes the modern art of cathodic protection which can be used at every stage of a ship's life from the fitting‐out period onwards. Besides its main use for the protection of hulls, the method is applicable to propellors, stern gear, cargo compartments, etc., and it can result in very considerable savings in repair costs. The author also discusses the cathodic protection of other marine structures such as floating docks, mooring buoys, etc.

Property markets are considered efficient when the market price of a transacted property equates with its market worth. If this condition holds then identical properties should sell or let for the same price. However, properties are heterogeneous, and information and operational constraints exist. Consequently, events in the transaction process and factors like time on the market, buyer and seller psychology and agent behaviour influence property prices, whereas in a perfectly efficient market they would have no impact. This gives rise to similar units selling for different prices. This paper examines the relationships between commercial property prices and time on the market for property. Tests fail to find evidence of a direct relationship between time on the market and transacted rents, time on the market and asking rents, and asking rents with transacted rents. The reason for the insignificant results could be because landlords would rather offer potential tenants non‐price incentives such as rent‐free periods, rent break clauses, shorter leases or fitting‐out costs to achieve a faster let than discount the agreed contractual rent. A more detailed examination of the physical, location and market conditions that determine the expected time on the market for a property to let is undertaken. Results suggest that the state of the property market is an important influence on the time it takes to let a property, and concurs with the evidence found in housing studies. With the support of our empirical findings and evidence from the housing market, we conclude that including measures of non‐price incentives, landlords’ motivation, tenants’ characteristics, and search costs in our model may explain the relationship more fully.