How an intermediary can take the pain out of your move
Article3min06 March 2018
Anyone who’s done it knows that finding a new office location can take a lot longer than they might think.
With corporate success comes growth, and along with growth in revenue and profits, a successful company is also likely to expand its workforce and need new premises.
Moving to a new property can be an expense, especially when there is overlap between the current lease and the new lease. And, even if the company doesn’t relocate most will want to undertake an office refurbishment.
With a range of things to consider, companies are turning to a growing tenant representative service that is committed to negotiating the most appropriate premises strategy or commercial property lease.
They will discuss all the options with their clients such as whether they should stay in their current location or find new premises, how much space they will need and assist in creating the premises brief bespoke to the organisation.
They can help negotiate a fit-out deal, and in some cases, offer a range of additional service such as financial modelling.
This benefits the owner too, as they want reliable tenants who fit within their building identity and will provide the right mix for that location. Building owners will often accommodate specific needs to accommodate the tenant’s needs in order to find the right tenant.
Finding a new office location, and then moving to it, is a process that should not be rushed.
Where to start?
“From an owner’s perspective, tenant representatives can get to the market much quicker and know who is out there looking,” Peter Messenger, principal at Independent Corporate Property, says. “We can help align values and find the right mix of tenants for that building.”
There are a lot of factors for a tenant to consider when weighing up whether to move to a new office.
“There is the location for a start,” says Tim O’Connor, JLL head of office leasing, Australia.
“Then you have to take into consideration building size, floor space, public transport, car parking, food amenities and what you actually need within that space.”
Finding a new office location, and then moving to it, is a process that should not be rushed.
This is something that needs to be planned both logistically and financially. IT upgrades, new fit out, removalists, and even lost productivity, need to be taken into account.
“It can actually take years to move if your company has more than 1,000 staff,” says Messenger.
“I started looking for Sydney office space with PwC in 2009 when they wanted to move from Darling Park. They only moved into their Barangaroo location in 2017.
“Even for a small company of up to 20 people, the search can take up to nine months.”
"The trend now is that companies want flexibility in the space that they lease in order to incorporate future needs."
A range of services
Messenger, who has more than 35 years’ experience in the industry, says that the role of the corporate or tenant adviser has changed over that time, as have occupiers’ needs.
“We have gone from a traditional office, where people work 9am to 5pm, through to activity-based working and now agile working,” he says.
“Companies today want a range of services, including designers and project managers, as part of the service that we offer to help them with their move.
“Often tenants, especially big corporations, find it easier to change a company’s work culture by moving office rather than staying where they are.
“Furthermore, the trend now is that companies want flexibility in the space that they rent so they can incorporate future changes in their business.”
“It is not just a transaction,” says Tristan Gannan, CBRE director of advisory and transaction services.
“Often, now, clients will want financial modelling, workplace strategy in terms of floor space use, right through to final delivery. Typically, a tenant adviser in the past wouldn’t have had to undertake profit and loss analysis on how a new lease agreement will affect the balance sheet.”
Gannan has a team of seven people, each with different skill sets, to enable him to provide a complete service to new and existing clients.
“The whole process of seeking new corporate accommodation has changed drastically in the past few years, and international clients, especially, want a sophisticated service that will attend to all of their needs.”
A tenant representative can help align values and find the right mix of tenants for a building.
Negotiating optimal outcomes – it’s not so simple
O’Connor, who has more than 20 years’ experience in the office leasing space, says that the challenge is meeting the client’s needs while balancing the desires of the owner of the property.
“For owners, they want the right quality tenant, good covenants in place, and alignment of their strategy and brand with the client – especially in retail. Those criteria aren’t always easy to achieve.”
Gannan adds, “We work on long term partnerships and the hardest part in the Sydney CBD right now is that supply is low. The backfill of companies that have relocated to Barangaroo has largely gone now. In addition, with some stock withdrawn for major refurbishment or redevelopment, and some converted to residential, the options have narrowed.
“It will be two years before any new supply comes onto the Sydney CBD market so early action by tenants is paramount.”