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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.

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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.

Awards Season Update – Our Recently Completed Project “Collection House Limited” Nominated for State & National Awards Categories

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We are proud to announce that one of our recently completed projects – Collection House Limited’s head office in Brisbane, has not only been placed as a finalist in the State awards category but also the National awards category for Best Workplace Project as well as the 2017 State Development of the Year in the Property Council of Australia and Rider Levett Bucknall’s Innovation & Excellence Awards.

View our nominations here:

                http://media.wix.com/ugd/bb7690_c03cf73c17fc415aaaf5dae71c27260f.pdf

                http://www.propertycouncilawards.com.au/2017-finalists

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