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April Blog #2__Why Companies Need a Tenant Representative When Negotiating with Landlords

Why Companies Need a Tenant Representative When Negotiating with Landlords

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When it comes to addressing corporate real estate needs, it is vital that you have a trusted authority who is on your side and representing your best interests. Landlords will always have representation, which is why it is equally important for tenants to have a representative too.

Why a tenant representative is the best choice

Tenant representatives assist you with negotiations using their knowledge of market trends and understanding of the laws that govern the real estate industry, helping you to avoid making mistakes and being placed in a position of disadvantage. They have a fiduciary obligation to ensure that the needs of the tenant are being met, and can also use their expertise to help you with future real estate needs, such as expanding into other locations, expanding or downsizing the current space that you occupy or renegotiating leases.

Qualities to look for in a tenant representative are those that have an understanding of the industry you’re in. But even more importantly, it is essential to look for a trusted authority who you know has many years of experience, and is someone that you can rely on and feel comfortable with.

How about dual real estate agents?

Dual real estate agents maximise their revenue opportunity in the marketplace by representing both landlords and tenants. While it may sound good to have just one external party acting as an intermediary between both you and the landlord, in reality this creates the very real possibility of a conflict of interest being created. As a result, they are restricted by the advice that they can provide to landlords or tenants, meaning that neither party may be receiving the best advice. Additionally, the fact that dual real estate agents straddle the fence means that they may not have the same level of expertise for either sides to the same degree that a dedicated landlord and tenant representative possesses.

The verdict

To avoid conflicts of interest and to ensure that you are always getting objective, professional advice at all times, hiring a tenant representative who is Australia’s No. 1 Trusted Authority in Real Estate Services is smart. They will represent your best interests free of the constraints that dual real estate agents experience, in order to ensure tenants are always receiving the best results for their real estate needs.

If you’re in need of tenant representation services, you’ve come to the right place. Contact us today to get the ball rolling!

 

mistakes to avoid

Office Fitout Disasters and How to Avoid Them

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Leading organisations are increasingly recognising that their employees are their single greatest asset. They understand that a good quality working environment is a key ingredient in attracting and retaining talented staff.

Research has shown that increased standards of design can have a substantial positive effect upon the productivity of the occupiers of workplaces — not to mention greater employee satisfaction. People who work in well designed, well located workplaces naturally feel more valued as an employee and as a result, are more productive and less likely to be thinking of switching companies.

If planned, budgeted and managed correctly there is evidence that a good fitout can dramatically improve operational efficiency, enhance corporate image and competitive advantage and increase your client base. Unfortunately, for every business that gets a good fitout, there is another company that does not.

Read on to find a list of the most common mistakes that companies make when trying to manage the process without a professional that can manage the entire project on their behalf…

 

  1. Attempting to fit-out without a clear project brief
  2. Biting off more than you can chew
  3. Flying solo
  4. Assuming that all fit-out partners are the same
  5. Being seduced by cheap sales tactics
  6. Believing your fit-out partner’s choice of sub-contractors will have no impact on the project
  7. Believing that an investment in a Workplace Audit will be a waste of time and money
  8. Selecting the wrong building
  9. Believing that building surveys are not worth the paper they are written on
  10. Failing to consider green issues
  11. Designing your offices for the business you have today, not the one you want tomorrow
  12. Thinking that improving the workplace will make no difference to productivity or staff efficiency
  13. Expecting the power supplies granted to you by the Landlord will meet your requirements
  14. Losing control of the budget
  15. Expecting that senior management and staff will understand and agree with every aspect of the project
  16. Assuming your new landlord will just ignore dilapidations as a gesture of goodwill
  17. Allowing the comms room to be an afterthought
  18. Expecting that the new era of digital telecommunications will mean phone lines and broadband can be installed within hours of placing an order
  19. Concluding that ergonomic desks and chairs will make the staff too cosy, comfortable and inefficient
  20. Selecting end of line furniture ranges to make sure you get the best deals – you can always mix and match later for a nice mosaic look
  21. Taking no interest in storage requirements
  22. Treating tax as an after-thought
  23. Taking for granted that you are fully insured every step of the way through a project
  24. Avoiding taking any responsibility for health and safety matters, and hoping that the OH&S will not interfere.
  25. Disregarding the need to look after staff welfare and well-being
  26. Pretending that the Disability Discrimination Act (DDA) does not exist or affect your business
  27. Thinking that vacating your existing premises is as simple as slamming the door and putting the key back through the letter box
  28. Assuming the physical move is best controlled by you
  29. Believing that drafting your own fit-out contract offers the best protection
  30. Taking for granted that most of the companies which share your office building will always be supportive, considerate and co-operative
  31. Taking your landlord for granted
  32. Ignoring statutory and other approvals until after the project has been completed
  33. Taking a back seat once the project goes live
  34. Accepting defects and snagging issues at the end of the contract
  35. Thinking it’s all over, but…..
  36. Failing to appoint CRCPG – Australia’s No. 1 Trusted Project Manager for Office Fitouts and Designs.
Episode IV. Return of the Landlord Market

The Return of the Landlord Market

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The evidence is in and it is clear that the landlord market has returned.

According to statistics gathered through extensive research, the average rent across Australia has risen by around 20 percent, and this upwards trend is set only to continue unless managed expertly.

Don’t believe us? As a case in point, let us tell you about one of our clients here at CR Commercial Property Group. The client has 242 properties consisting of over 170,000 square metres, mostly in A and B grade buildings. Over the past 18 months, they have reported seeing their average rents increase by about 4 percent.

This is nothing like we’ve seen in years, and the rate at which rents are moving upwards is only likely to grow more rapidly. This is especially the case in Sydney and Melbourne, where already sky-high rents climb higher and higher as the markets become more competitive.

The flow-on effect of this is that landlords, seeing success on this scale and an even brighter future laying ahead, increasingly start adopting a ‘take it or leave it’ attitude. As a result, ‘gazumping’ becomes more widespread.

But despite all this talk of doom and gloom, don’t despair just yet. Follow our advice to make sure that you remain one step ahead in the game and always get a deal that is fair for you.

How to stop rising rent from breaking the bank

  • Think ahead. Don’t leave it to the last minute — if your lease is coming up soon, make sure that you start evaluating your needs in advance so you have time to plan your next move, and give yourself sufficient time to do your homework.
  • Talk with your tenant representative. A professional tenant representative will negotiate with your landlord to ensure that you are sheltered from the worst of the rise in rents. Landlords still make the majority of their profit from lease renewals, and the last thing they want is for loyal tenants to leave and for properties to sit unoccupied for long periods of time — thus losing them money.

By working with a real estate advisor, you are putting your landlord on notice that they must ‘compete’ for your business. The most desirable outcome is a win-win outcome, and a commercial custodial real estate advisor can help you achieve the outcome for you. And at CR Commercial Property Group, we work hard to ensure that our clients always receive an outcome that is fair and ethical.

SingingInTheRain

Understanding Upcoming Changes to Commercial Lease Laws

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Rules and regulations in the world of commercial real estate leases are always changing, and the upcoming development that everyone is talking about is the new set of accounting rules that are potentially coming into effect as early as January 2019 for public companies and January 2020 for private companies. If they do come to pass, they will have a significant impact on your ability to attract investors, receive loans and the amount of business taxes you need to pay.

The new accounting climate

The International Accounting Standards Board (IASB), which sets the standard globally for developing international financial reporting standards, is stipulating that all leases that are at least 12 months long are required to be recorded as an upfront liability on your balance sheet. Rather than designating it as an operating or capital lease, commercial leases will now have to be classified as a Type A or Type B lease.

So what should you do to protect your commercial leases? Read on to see the handy list of advice we’ve compiled for you.

Ensure you comply with the new rules

Step 1: Determine if your lease is covered (whether or not it is at least 12 months long)

Step 2: Classify your lease as either Type A or Type B

Step 3: Make sure the lease is properly accounted on your balance sheet

Make sure your company is protected

These are things that you will need to do and remember to ensure that the new changes do not have a negative impact on your business.

  1. Make sure that you fully understand how the new reporting requirements for balance sheets affects you. This is especially important for negotiating or renewing a commercial real estate lease.
  2. Shift payment obligations to non-reportable expenses.
  3. Ensure that all operating cost payments are based on actual costs, and not adjustments against a base year.
  4. Make sure that the owner is fully committed to financial transparency.
  5. Structure commercial leases as Type B rather than Type A leases. This is because Type B leases will allow you to combine both amortisation and interest expenses as a single lease cost on a straight-line basis.

Rest assured that the professionals at CR Commercial Property Group have the expertise to ensure that our clients are always receiving an ethical deal and the best solutions for their bottom line.

Blog Image 1

Temperature in The Workplace: How It Could Be Costing You Money

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Recently, a number of full-time employees in Australia were asked what they hated the most about their workplace environment. And, surprisingly, the answer that came out on top wasn’t their colleagues — it was the temperature of the office.

Room temperature may not be the first thing you think of when it comes to employee satisfaction and productivity, with things like human resources and agile office layouts being issues that take centre stage when it comes to workplace management. Yet the temperature of your workplace can have a major impact on the productivity of employees — workers feeling uncomfortable at work will inevitably experience a drop in productivity, and may even cause adverse health effects too.

Why office temperatures are greeted with a frosty reception

Here’s just a few reasons why the temperature of the workplace could lead to employee dissatisfaction:

  • Inability to control temperature. Sometime in the ‘50s, property developers decided that 22 degrees was the optimal workplace temperature regardless of conditions outside of the office, and nothing has changed since then. The 22 degrees’ rule is so engrained that it is often legally written into leases. It is said that 22 degrees is the optimal temperature for 44-year-old males, which leads to our next point…
  • Temperature discriminates. As with any one-size-fits-all solution that is designed as a compromise for many different people, it is impossible to satisfy everybody in the office when it comes to temperature. Human beings come in all different shapes and sizes — for example, studies have shown that women produce around 30 per cent less heat than men, meaning that having the office temperature set comfortably for male employees may leave female colleagues shivering at their desks. The difference in preference between men and women can be as much as 3 degrees.

Ending the heated debate

The answer is surprisingly simple, which makes one wonder why it has taken so long for people to cotton on. Businesses across Australia are gradually shifting towards a ‘19 to 25’ model — essentially, making sure that temperatures are kept between these two levels throughout all seasons of the year. This is so that temperatures are consistent with the environment outside the office, and also encourages managers to continuously adjust temperatures to the optimal level. To ensure that employees feel comfortable and truly enjoy being at work, keep a watchful eye on the thermostat and consider implementing regular feedback loops to determine what your employees truly want when it comes to the office temperature.

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Office Fitouts: A Checklist of Essential Planning Items for Tenant Project Managers

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When it comes to your office fitout, a tenant project manager must be engaged to oversee the process from beginning to end to ensure that all goals and objectives are met. To achieve this, an important component for success is that the planning process behind the project is thorough and all-inclusive. Understandably, with a task as major and complex as office fitouts it is always likely that one or two planning items may be overlooked — so we’ve compiled a handy, comprehensive list of planning items that need to be covered for the success of the project, broken down into what, who, how, when and (most importantly) how much.

What?

  • What is the project’s Background?
  • What are the project’s Objectives?
  • What are the project’s Success Criteria and how will the Achievement of the success criteria be Measured?
  • What is the Scope of the project?

Determining the purpose of the project is essential for all involved, so that everyone is on the same page. It provides an overarching guideline as to what outcomes are being strived towards at all stages of the project.

Who?

  • Who fulfils the Key Project Roles?
  • Who is responsible for the Project’s Governance?
  • Who are the Internal Resources (client resources) on the project?
  • Who are the External Resources (non-client resources) on the project?
  • Who are the Internal Stakeholders on the project?
  • Who are the External Stakeholders on the project?
  • Who will receive Project Communications?

Clearly defined roles increases efficiency by ensuring that double handling is kept at minimal levels, and that all people involved know exactly who to turn to for specific issues — vital for effective communication and reducing ambiguity over the course of the project.

How?

  • How is the project being Approached?
  • How will the project Risks be identified and controlled?
  • How is the Project being Controlled?
  • How is the project Procurement being planned?
  • How will the Project be Closed out?

It is important that all processes are thoroughly planned out and followed, in order to mitigate risks and have clearly defined tasks to follow at all stages of the project.

When?

  • When are the Project Milestone Dates?
  • When are the Meeting Dates?
  • When are Key Decisions due?

Working to a timeline is essential for guaranteeing when deliverables will be presented to the various stakeholders involved.

How Much?

  • How much money is available in the Project Budget to achieve the set objectives and fulfil the success criteria?

A clearly thought out budget ensures that costs don’t end up blowing out, and that funds dedicated to completing the project are allocated appropriately and efficiently — and of course, providing the optimal financial outcome upon completion of the project.