straight answers to curly questions

should we stay or should we go?

Monday, June 11, 2018

 

How do you arrive at the best decision for you?

Chris Deering, managing director

Rosemary de Lambert, general manager

There’s always room for panic.  This rings true when it first occurs to you that a lease expiry is looming just around the corner.  Has it really been 7 years already, you might ask.  “Nearly”, replies the letter from your landlord or agent.  Reading further into the letter will tell you if a new lease is in the offing, whether you’re going to have to find a new home for your business or whether the rent will be dramatically increased (no, it never decreases and yes, dramatic increases usually mean you’ll be moving on).  There are a number of things to think about though and here are just 4 to get you thinking about heading for greener pastures or staying put.

How has your current space served you and your business?

Here’s a hint.  If this question causes an almost involuntary pursing of the lips and a shrug of the shoulders, followed by an, “aw yeah?” or “it’s fine”, think again.  When something is right, when the layout, design, branding and aesthetics have come together to help the business’s team “punch above it’s weight” in terms of efficiency and productivity, you’re literally in a great space.  If you have reservations.  If there are things you have long since learned to put up with, there is a very real opportunity to make some changes for the better.

The problem is that commercial office space leases are usually reasonably lengthy affairs.  Yes, some range in the vicinity of 3-5 years but 7-10 may be closer to what we would call typical – particularly in the 800-3000m2 CBD or business park scenarios we’ve dealt with over the past 27+ years.  During the duration of that lease, you can get used to a lot of things – even integrate them into a new way of working.  That’s not always for the best.  It’s not surprising when wasted space, slightly smaller-than-needed kitchens and lack of storage space become “just one of those things”.  In reality, these are things that should be considered on a regular basis however, many tenants simply get over it and get on with it.  Often, and in varying degrees, to their detriment.

What does your market and/or your business look like in the near future?

There are of course many examples of businesses flourishing in harmonious surrounds: all is well with the commercial office fit out and how it envelopes and enhances productivity.  This is music to our ears and to the ears of any skilled interior design professional.  But every silver cloud has a dark lining (not necessarily true by the way).  The danger here is that while enjoying this workplace nirvana, business can tend to lose sight of what’s next, what lies beyond the horizon.  Not necessarily in terms of trends in the marketplace, competitor activity and the like.  No, more along the lines of how any and all of those fluctuations and possibilities might alter the requirements of their physical workplace.

An upswing in market position, supply and demand or unforeseen opportunities may point to growth in terms of both business activity, the number of staff, pieces of equipment or storage.  Of course, these developments don’t always spring out at you from around the next corner without warning.  It is worth reminding yourself however, that 10, 7 or even just 5 years is a very long time in commercial enterprise and organisations alike.

Setting aside commercial soothsayers and futurists, it may be quite difficult, if not impossible to predict what will happen in your company’s field of endeavour half a decade or more down the track.  But what a forward thinking commercial interior designer can do is make provision for flexibility and adaptability within your current workplace.

Does your current space or even your current landlord, offer the scope and flexibility to adapt to changing demands?  Could you add 10 more operators to your call centre?  Could co-working or meeting areas be created if needed?  What happens if right-sizing three years from now meant decreasing team numbers but demanded more hot desks?

All things to consider.

Are we happy with the adjusted terms being offered?

More often than not, a new lease will mean a rent hike in one form or another.  After occupying a space for a number of years, it has to be expected.  However, thinking about the previous two questions in depth, and in relation to commercial considerations, the new asking arrangement may seem palatable if not agreeable.  Conversely, you may find that too much is being asked in terms of rent, terms of use and other factors.

It’s wonderful when you happen to see eye to eye with the landlord and have maybe even built a long-lasting, mutually-beneficial relationship and understanding but…

If not, what can/do we do?

This may not be the end of the line for your business and your current location.  You may want it to be, you might be very comfortable with moving to those greener pastures mentioned earlier but it doesn’t have to be a foregone conclusion.And here’s more potentially good news.  There really is such a thing as a “Stay Go” analysis or feasibility study which is part of a broader service – tenant advisory – that clarifies and shapes rational thinking so an informed, savvy decision can be made.In short, our tenant advisory services ensure that you are first in, the best address, for your business and its core functions.

The advantage of independent tenant advisory services

That’s only part of the tenant advisory picture.  This service involves working with you to fully understand your needs now and into the future as well as consulting with owners, landlords and or agents to get what you need.  Our independent service ensures that our clients have the option of renegotiated terms or solid, documented evidence to suggest that the right location for them is waiting for them elsewhere.  That’s how you’ll know whether to stay or go - so don’t panic.

 

 

look before you lease!

Wednesday, April 26, 2017

What if I haven’t considered council zoning and planning?

Chris Deering, Managing Director

Leasing a commercial space and securing a home for your family to live in are vastly different endeavours.  Regardless of how much we consider our workmates to be family and a workplace to be home, the rules (and the consequences of breaking them) are very different.  Unfortunately, many people assigned the task of searching for and finding the right commercial space for their business, fall foul of council zoning and planning.  The consequences range from inconvenience and disruption to expense and devastating interruption to business continuity.

Spotting a cavernous commercial space with sprawling views, tonnes of potential, room to grow and a budget-friendly lease is only part of the answer.  Here’s the problem.  Sometimes, not all the time but sometimes, you will find that the union between the property you are eyeing off and your business was never meant to be.  From the very beginning, council and town planners may well have assigned a specific use for the buildings and indeed the area that you are looking at.  This is where a problematic conflict may occur.  Understanding their plans is crucial to moving forward with yours.

Location, location, location?  Not really!

When sales consultancies, real estate offices and law firms see an enviable location, nestled in a purpose-built business park, appropriately zoned for general office use, I breathe a sigh of relief for them.  This is a classic case of the right business in the right “type” of location.  All things being equal, we would enter into the due diligence phase (assuming the location met the brief) feeling “realistically optimistic”.  However, there are a lot of businesses featuring “non-deskbound” jobs, involving racks of data storage, warehousing, call centres and training facilities – all of which will attract varying levels of scrutiny from town planning, private certifiers and council.  To establish a clear view of the likelihood that your plans will conform to zoning classifications you’ll need:

  • Experience – simply knowing that a site is zoned 5B for example, will not be enough.  Yes, zoning stipulates what can be done, but understanding what may not be allowed is best left to those with years of specialised experience under their belt.  Finding out about limitations and exclusions after a lease has been signed brings with it at least three types of pain: expense, time and lost expectations/relationships/reputation.
  • Recognition – Knowing who’s who in the commercial real estate zoo and what they do and for whom, is necessary for perspective and expedience.  Understanding that leasing agents are there to secure leases and solicitors will focus on contracts and conditions begs the question, “who’s looking after your interests?”  By engaging a party with expertise in both sourcing and fitting out your new space, you have someone onside with a vested interest in securing all necessary approvals.  They will be motivated to do this so that the design and construct phases of the project will likewise, progress smoothly.
  • Due diligence – This goes several steps beyond merely casting an eye over the brief, nodding enthusiastically at floor plans and making educated assumptions about the interpretations of zoning and building codes.  The thinking here has to extend to three, four, or five degrees of consequence: if the data centre goes here, where does the cooling unit go?  If the 150 seat call centre is located here, where will this huge team park their cars or is public transport a viable option?  As an RTO, have we chosen a location that is safe for the public to descend upon en masse?  These questions may just be the tip of the iceberg.

The complexity of industrial complexes

Industrial and technology parks or complexes are an attractive proposition for businesses drawn to wide open spaces and large offices all under one roof.  Typically, an opportunity might exist where warehousing and offices are offered as a package deal within an estate.  The floor space ratio might hover around 80% warehousing to 20% office space – perfect for an expanding operation.

However, with increased building size, operational scope and staffing come questions and complexities around egresses and access, workplace safety, facilities and ventilation.  All of these aspects of commercial space acquisition demand the expertise and experience to work with codes and zoning as well as working with council, town planners and private certifiers if required.

Great results can be and are achieved for clients who need to spread their commercial wings.  It’s just that the same enthusiasm for creating an environment that is both functional and brand fit is absolutely required during the research or “discovery” phase.

An open discussion on the needs of the business is always a great place to start but it’s just as important to make sure you are talking to people who know how to look after you before you take that leap.