Making the right move. Four easy steps to ensure a successful office move

Making the right move Four easy steps to ensure a successful office move

Contents Introduction 4 Steps to securing your new office space 5 Determining your office space requirements 6 Assess your needs 7 Preparing a brief 8 Activity Based Working (ABW) 8 Sustainable workplaces 8 NABERS 8 Commercial Building Disclosure Program 9 Green Star 9 International Rating Tools 9 Finding the space 10 Relocation options 11 Start your search 11 Negotiating the terms of your lease 12 Incentives 13 Occupancy costs 13 Other costs to be aware of 14 Glossary of commercial terms 16 Building and moving into your new office 18 The time you should allow for a new fıt-out 19 Removal costs 20 Want to know more? 21 2.

Introduction Steps to securing your new office Determining your office space requirements Conducting a needs assessment and preparing a brief Finding the space How to search for a property and understand the relocation options available to you Most businesses accept that the current workplace is no longer just a facility. It has now evolved into an essential business tool that should meet both the physical and cultural needs of an organisation, delivering a bottom-line impact. Finding the right office space for your business can be a complex and daunting task, so we have created a guide to help demystify the process. This guide has been designed to help you coordinate and implement a successful office relocation and fit-out, engage your employees and enhance business productivity. At JLL, we understand what tenants want in a workplace and what investors need from their real estate. We will help you navigate the transaction process to enable faster negotiations and assist in building a lasting relationship between you and your landlord. Negotiating the lease terms Understanding commercial terms and associated costs Building and moving into your new office Planning the time you need for a fıt-out and relocation costs 4. 5.

Determining your office space requirements Assess your needs The first step to securing new office space is to decide how you would like to work and to assess the needs of your business. Your new office should support and enhance your business objectives, so consider how a relocation could affect those objectives. Once you have identified your reasons for moving and the outcomes you are striving for, you should then consider the location you would like to be in and determine how much space you will need. Will new office space help you: Minimise or reduce occupancy costs? Use space more effıciently? Attract and retain talent? Enhance staff productivity? Differentiate or reinvigorate your firm? Reinforce your business strategy and brand? Encourage better interaction with clients and customers? Manage the cost of growth? Use our handy space calculator to work out how much space you might need. Visit www.jll.com.au/spacecalculator 6. 7.

Determining your office space requirements cont. Preparing a brief A real estate brief will help you clarify and articulate what you need from your new workplace. It will also be useful if you decide to engage a Tenant Representative to help you source your premises. You can also use your brief to evaluate any premises you decide to inspect. What should be in your real estate brief? The amount of space you require The number of employees you expect to accommodate (minimum and maximum) Your preferred location The building services you need Opening hours of your business Your security and access requirements IT and communications infrastructure Any environmental/sustainability considerations Your fıt-out requirements Image/quality/aesthetics Your car parking requirements Lease structure preferences Timing Budget Proximity to public transport Other unique needs you may have Number of bicycle racks, showers, change rooms and lockers Activity Based Working (ABW) Activity Based Working (ABW) is a workplace strategy that provides people with a choice of settings for a variety of workplace activities. Rather than force individuals to undertake all their work at one setting, ABW allows people to physically locate themselves where it is most suitable for them to undertake their work. To learn more about ABW, visit www.jll.com.au/worksmart Sustainable workplaces Sustainability is an important consideration when planning a new office. This goes beyond the design phase to include the on-going management and maintenance of a building and its services. There are a number of potential benefits to selecting a sustainable office which include: Improved building performance Reduced operating costs Quality indoor environment Staff recruitment and retention Improved productivity Socially responsible use of space It is important for tenants to understand the potential impact of sustainability measures before entering lease negotiations. Questions you can ask about sustainability include: How energy effıcient is the building, and is there an energy effıciency plan in place? Is there a green lease schedule for this building? What is the NABERS rating of the building? What sustainability measures will be important to my staff? NABERS NABERS rates the operational performance of buildings. NABERS is best known for rating base building energy consumption, but can also be used to benchmark tenancy energy, building water consumption, waste generation and recycling rates and indoor environmental quality (i.e. thermal comfort, air quality, acoustics, lighting levels and occupant satisfaction). NABERS ratings are based on actual energy consumption recorded over a 12 month period or other relevant empirical measurements. The NABERS rating scale ranges from 0 to 6 stars in half star increments. A NABERS Office Base Building Energy Rating of 4.5 Stars is considered good practice, while a rating of 5 Stars considered best practice and 5.5 Stars is considered exemplary. NABERS ratings need to be recertified every 12 months. Commercial Building Disclosure Program The Commercial Building Disclosure (CBD) program is a Federal Government scheme mandated by the Building Energy Efficiency Disclosure Act (CTH - 2010). The CBD program requires building owners who are selling or leasing office space of 2,000m2 or more to provide prospective buyers or tenants with a Building Energy Efficiency Certificate (BEEC). A BEEC includes the building s NABERS Energy rating, a tenancy lighting assessment and general energy efficiency guidance. The NABERS Energy rating must also be prominently displayed as part of any advertising for the sale, lease or sublease of the space. The BEEC must also be uploaded on the publicly accessible Building Energy Efficiency Register website. Some buildings are exempt, including buildings which have just been built or are undergoing major refurbishments, and buildings which are less than 75% occupied. JLL advises affected parties to seek legal advice if unsure of your obligations under the Building Energy Efficiency Act. Green Star Green Star is an Australian voluntary environmental rating system developed by the Green Building Council of Australia, which rates the environmental design and construction features of buildings and communities. It is a comprehensive rating tool which evaluates a wide range of environmental attributes including energy, indoor environment quality, water, materials, transport, land use & ecology, emissions, management and innovation. The current suite of Green Star rating tools evaluate buildings at the design stage, as built stage, and during operation (Green Star Performance), and Green Star Communities assesses precinct level developments. Green Star has three rating levels: 4, 5 and 6 Star. A Green Star 5 Star rating is considered best practice in Australia, with exemplar projects targeting 6 Star. International Rating Tools JLL has sustainability staff accredited in a range of international Green Building rating tools including LEED, Green Globes, BREEAM, Green Mark, One Planet Living and Living Building Challenge. 8. 9.

Finding the space Securing the right space is critical to the success of your business. Once you have prepared your brief, the next step is to start actively searching for space. At this point, you should ask yourself: Can my existing premises fulfil my business needs? (for example, if a new fit-out were to be undertaken). If yes, you could seek to negotiate a lease renewal. If not, you will need to look for new premises. Relocation options The length of time required to plan your move will depend on the size of your premises, the specifics of your requirement and the prevailing market circumstances. The greater the period allowed, however, the greater will be the range of available choices. The table below indicates some of the different lease options you could take. The availability of alternative premises will also influence your final strategy. Start your search The easiest place to start your property search is online. Visit www.jll.com.au/properties for our available properties. Alternatively, contact a JLL agent in your city who will discuss your requirements and help you make the right move. Option Advantages Limitations Renew the lease at your existing premises Avoids disruption to your business No relocation costs Maintains the relationship with your existing landlord Dependent upon achieving a suitable deal with your existing landlord The office fıt-out may be tired or ineffıcient Renew the lease at your existing premises and undertake a new fıt-out Maintains the relationship with your existing landlord Involves some disruption and cost Move to an existing building with a suitable fıt-out An opportunity to improve your business location You will be able to commence work immediately Costs will be limited to relocation only The fıt-out you are inheriting will not be tailored to your business Move to an existing building and undertake a new fıt-out An opportunity to improve your business location A fıt-out can be tailored to suit your business requirements Some costs may be negated through incentives in your lease contract Depending on the age of the building, there may be some limitations in workplace flexibility or services Signifıcant cost and investment of time required Pre-commit to a new building Premises can be built to suit your specific business requirements A much longer time frame is required Construction risk = business risk for timing of move You would need to commit to a large space, so this generally only suits larger tenants 10. 11.

Negotiating the terms of your lease When the time comes to negotiate your lease, there are a few important terms that you should familiarise yourself with. We have included a summary of these terms in this guide. If you wish to seek further advice, you can speak to a Tenant Representative who can assist you when negotiating the terms of the lease (also called Heads of Terms ). You should also seek legal advice when finalising the lease document. Incentives It has become more common for landlords to offer incentives to tenants during the lease negotiation period. The scale of an incentive will largely depend on the market conditions at a given point in time and the eagerness of a landlord to lease space to a particular tenant. Incentives can take the form of rent-free periods, capital contributions towards fit-out or a reduction of the face rent. You may need to obtain tax advice prior to negotiating this aspect of your deal. Occupancy costs Before negotiating your lease, you should familiarise yourself with some occupancy costs that you may be responsible for. Outgoings/service charge This is the collective name for the costs associated with the general running of a building that the landlord charges to the tenant, including but not limited to: Building insurance Rates and taxes Air conditioning Water Management fees Maintenance This fee is charged to the tenant on a per square metre basis under a net rent arrangement, or included in the square metre rent under a gross rent arrangement. If outgoings are applied under a gross rental arrangement, then an audited annual statement determines any adjustment required. 12. 13.

Negotiating the terms of your lease cont. Utilities Electricity and telecommunication consumption of an individual tenant are metered separately and paid directly by each tenant. In some states, the landlord bulk buys electricity for the whole building and resells to each tenant at the prevailing electricity trust charges. Water rates are charged to the building owner and recovered from the tenants through the outgoings charge. Insurance Insurance for the building structure is arranged by the building owner and, in most cases, charged back to the tenants through the outgoings charge. Cleaning The majority of leases are exclusive of tenancy cleaning charges but this should be clarified when negotiating the lease terms. In most circumstances, the cleaning of a building is undertaken by a contract cleaner nominated by the landlord. Other costs to be aware of Tax Local government rates and land tax are charged to the building owner and, in most cases, recovered from the tenants through the outgoings charge. A Goods and Services Tax (currently 10%) is payable on all rents and outgoings. Legal fees Legal fees vary depending on the complexity of lease negotiation, the size of the premises or the amount of the annual rental. Tenants are responsible for their legal costs. The tenant has traditionally been responsible for the landlord s legal fees in drawing up the lease contract, but this practice is now changing with it becoming common for each party to pay their own legal costs. Make good new and old premises Most leases contain a make good clause, whereby the tenant is bound to restore the premises to its original condition prior to vacating. This obligates the tenant to remove any fit-out or other improvements to the premises and restore building services to their original layout. Bank guarantees/securities The landlord will generally require some form of security from the tenant to guarantee the latter s financial obligations under the lease. The security can take a number of forms, but the landlord will usually require the tenant to provide a bank guarantee. The amount of the bank guarantee will vary according to the market circumstances, but will generally range from three to nine months gross rental equivalent, plus additional security for associated incentive amounts. Agent fees The leasing agent s fee (normally expressed as a percentage of the average annual rental over any tenancy) is nearly always paid by the landlord. However, if a tenant uses the services of an agent or a tenant representative for themselves, a negotiated fee would be payable by that tenant to the retained agent. Tenant Representatives You may choose to appoint a Tenant Representative (TR) to represent your interests throughout the search and negotiation process. You should ensure that the TR is a licensed agent, and that he or she is fully retained by you and is not seeking separate payment from the landlord. You should vet and approve all correspondence issued by the TR on your behalf, and specifically ensure that his or her retained fee basis is communicated to prospective landlords and their agents. Car parking If car parking is available in the chosen building, there will be a separate charge over and above the rental for the office space. Car parking is usually under a separate license agreement and does not form part of the lease document for the office accommodation. Some local CBD councils have introduced a car park levy on top of commercial car parking fees. The landlord will normally pass this onto the tenant and include it in the monthly car park charges. The car parking charges are levied on a monthly basis and are generally subject to a review of the market rates at the licensor s discretion, normally on an annual basis. 14. 15.

Repairs The landlord is liable for external and common parts maintenance, with costs charged back to the tenant through the outgoings. The landlord is responsible for all repairs of a capital nature. We have provided a short explanation of some common commercial terms you may encounter. Quotation of floor area Net Lettable Area (NLA) is measured from the internal finished surface of permanent walls and the dominant portion of permanent outer building walls. Columns and window frames are included. Stairs lifts and common areas are excluded, unless they are part of the tenant s fit-out. This method is used for calculating areas and carrying out operating cost analysis in commercial office buildings. Gross Lettable Area (GLA) is measured from the outside face of external walls and to the centre line of inter-tenancy walls, partitions or common areas. This method is used for measuring warehouses, industrial buildings and offices within those buildings. Lease period New leases are generally an initial term of between three and ten years. Further terms or option periods can also be negotiated. Net rent and gross rent The rent payable on a property includes the rental amount and the outgoings charges. A net rent amount does not include outgoings and these charges are payable in addition to the net rent amount quoted. If a gross rent is quoted, outgoings charges have been included in this figure. Rent reviews Rent reviews are generally conducted at one or two yearly intervals throughout the term of the lease and at the commencement of any option period. Rent is usually reviewed to a market value figure no less than that being paid at the time of the review, although the market value can vary according to local market conditions. Alternatively, there may be a fixed increase or an increase linked to the Consumer Price Index (CPI). The tenant is responsible for the internal repairs to their premises. A redecoration clause is usually included, requiring a tenant to paint all internal walls at specified intervals. Sub-letting and assignment Leases usually allow the tenant to dispose of the premises through the assignment of the lease or sub-letting, provided that the new tenant and the terms are acceptable to the landlord. The landlord usually cannot unreasonably withhold consent. The tenant would normally be responsible for the landlord s costs in approving the assignment/sub-letting. Early termination Early termination of a lease is not usually provided for, although this provision may be accommodated, subject to a suitable penalty payment. Security of tenure In most cases, tenants do not have any statutory rights to renew the lease at the end of the term. The only way of guaranteeing a new lease is to negotiate an option in the initial lease negotiation. Hours of operation Most commercial office buildings offer security and tenant access 24 hours per day, seven days per week. Public access is generally allowed between 8am-6pm. After hours charges are normally applied for the provision of air conditioning outside 8am 6pm. Stamp duty There may be stamp duty consequences that flow from the lease. We suggest that you speak to your tax advisor for further information about stamp duty in your state. 16. 17.

Building and moving into your new office The final phase in securing your new office premises includes the fit-out of your space, if required, and organising the relocation. 200-500 sqm 501-2,000 sqm 2,001-5,000 sqm 5,001-7,500 sqm 7,501 sqm plus The time you should allow for a new fit-out It is important to allow significant time for the fit-out to avoid costly mistakes. Detailed design management will reduce the cost of unexpected variations at the construction phase. Fit-out times can be compressed if sufficient resources are allocated by your own team, the designer and the contractor. The following table indicates the lead time you need to consider. Detailing your requirements (Brief) 2 2 2-4 4 4 Design phase 6 8-10 10-12 Tender and construction Approximate overall duration 8-10 12-18 16-18 22-30 18-28 30-44 12 12-14 26-32 42-48 32-36 48-54 These time frames are approximate and intended as a general guide only. 18. 19.

Building and moving into your new office cont. Want to know more? Removal costs You will generally be responsible for all removal costs associated with the office move. Once you have secured your new office, you should contact a recognised removalist capable of transporting all of your office equipment. If you need more assistance, please contact a member of the Leasing team at JLL. With locations in all of the major CBD markets, we can offer expertise and tailored solutions to ensure you make the right move. Adelaide 08 8233 8888 Appropriate transport insurance should be arranged before the actual move, and all equipment leases should be reviewed to ensure that you have the right to disconnect equipment and relocate it. In certain circumstances, the equipment can only be moved by the manufacturer. To establish an accurate cost of relocation, you should take into account: Brisbane 07 3231 1311 Canberra 02 6274 9888 Glen Waverley 03 9565 6666 The time of relocation (e.g. weekday or weekend) Mascot 02 9693 9800 Access to loading zones at both the old and new location Access to lifts Building caretaker and security involvement Rent at two locations Transit costs Identifıcation of equipment, such as computers, safes and furniture IT consultant costs Physical removalists Make good costs Builder s works Melbourne 03 9672 6666 North Sydney 02 9936 5888 Parramatta 02 9806 2800 Perth 08 9322 5111 Sydney 02 9220 8500 www.jll.com.au/makingtherightmove Perth Adelaide Melbourne Brisbane Sydney Canberra 20. 21.

Notes Disclaimer The material herein is intended as a guide only. No liability for negligence or otherwise is assumed for the material contained herein by JLL, its principal or its servants or its agents. No material contained herein shall form the basis of or be part of any agreement and no warranty is given or implied as to the accuracy of the whole or any part of the material. Prospective tenants should not rely on the material, but should make their own enquiries and satisfy themselves of all aspects of the material. Any liability by JLL, its principal, its servants or its agents in any way connected with the brochure, whether or not such liability results from or involves negligence, will not exceed AUD 1,000. JLS0293 22.

www.jll.com.au/makingtherightmove