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The first thing to realise when you are about to enter into a lease for a commercial property is that there is no such thing as a standard contract.

I get concerned that many individuals and organisations believe that commercial property leases are standard [they are not] and that any “standard” variations are simply the preserve of the landlord [they are not].

It is easy to think this is the case when you are presented with a formal document. Now don’t get me wrong – there are carefully worked out legal components to a lease agreement as laid out by professional bodies such as the Auckland District Law Society.

But it is important to realise that there is a lot more that is negotiable in a commercial property agreement than simply the length of the lease and the net rental.

So here are some tips to consider when entering into a commercial property agreement before you put ink to paper…

1. Parties. It is important to establish clearly who the contract is between. Is the landlord named in the contract the owner of the building, a head tenant who  is sub-leasing some of their space, or perhaps individuals trading as an entity?
   It sounds simple, but clearly establishing who the parties are is critical, as is getting clear about who will act as guarantor for the lease. From my experience, the guarantee is always the subject of some debate when negotiating a commercial property lease agreement.
2. Lease Term. Carefully consider how long you want to lease the space for and recognise that – much as when you buy a house or get married – you are entering into an agreement for better or for worse. You are locking yourself into something that can change your life.
3. Right of Renewal. When you are considering the right term for you, it is also important to be aware that you can negotiate a right-of-renewal at the end of the term. If you negotiate this correctly, it is not simply an option – it is a right, as long as you have not breached any terms and conditions in the lease.
4. Important Dates. It’s not just the lease term and right of renewal date that’s negotiable either. The timing of rent reviews is also negotiable. There is no standard or legal requirement to have rent review dates fall on a specific date defined by the landlord.
5. Total Occupancy Cost. A trap for young players is to fixate on the net rental but blindly accept the operating costs. There are always operating costs to take into account… and negotiate! Examples are such things as car parking, landscaping, cleaning, power, security and other associated costs.
   You need to know the total occupancy cost. It is very easy psychologically to think, “Oh, my rent is $6,500 a month”, when really by the time the other occupancy costs are factored in, your outgoings on leasing the space are $7,500 a month.
   You should also note that changes in these additional occupancy costs (operating expenses, or opex) are not limited to rent review dates. They can go up and down on an annual basis.
   At Parallel Directions we think tenants should only pay a fair share of these operating expenses. It’s such an important factor that we offer a specific product, an Opex Audit, in order to gain a very clear handle on these operating expenses and where there is room for negotiation.
6. District Plan. Before signing on the dotted line of a commercial lease agreement, make sure there are no restrictions on operating your business at the premises you are about to lease. You need to know the District Plan’s zoning for the premises and whether there is any resource consent required or bylaw that might inhibit you operating your business.

If in doubt, you know who to call!

Source:  http://www.officeblog.co.nz/negotiating-a-commercial-property-lease-agreement

The University of Auckland would appreciate you taking part in a an online survey on the above named research topic. It is an opportunity to contribute to the findings that could effect changes on issues and problems relating to the seismic retrofit implementation in New Zealand. This study will benefit your organisation as it aims to propose incentives appropriate to seismic retrofit implementation in New Zealand and ensuring the safety of communities that are susceptible to earthquakes in New Zealand.

This research is funded by Foundation for Research, Science and Technology, to produce a quantitative tool that will demonstrate the economic, social and environmental benefits of seismic retrofit implementation, aid decision-making processes when assessing various degrees of retrofit intervention and devise plans and strategies for dealing with earthquake prone buildings. The knowledge developed from the study will provide useful information to all stakeholders involved in retrofits decision.

Your contribution and participation is highly valuable to this research as you have been considered as one of the significant stakeholder’s seismic retrofit decisions.

To participate in the survey click on this link: http://www.surveymonkey.com/s/75GJGP8

Thank you for your time and providing valuable feedback.

If you would like further information regarding the on-going research, please do not hesitate to contact Egbelakin Temitope – [email protected] or visit www.retrofitsolutions.org.nz.

Christchurch commercial real estate company – Cantcomm has been taken over by Bayleys.

Founded by Harry Von Tongeren 15 years ago who now assumes the position of Commercial Sales Manager for the merged company.  The company will initially have a staff of 19, though this is expected to grow to 25 in the coming months.

The following items are the main topics covered Issue 57 of the Commercial Property New Zealand issued by Peter Hamling of Sigma Group Partnership.  The newsletter is supplied on a subscription only basis.  You can contact Peter on 09 436-1564.

Informed news and commentary for property professionals

• Are darker days lightening up?
• Auckland region awash with vacant Industrial space
• Vacant industrial properties bring pressure on rentals
• A view on the construction sector
• People in business
• Commercial property deals
• Industry events

Reprinted from Parallel Directions.  View the original post HERE!

One of the key impacts on the currently flooded commercial property market is the number of large corporate tenants moving to new buildings.

In Auckland, there’s a growing list of large banks, insurance companies, management consultants and engineering firms moving to bigger, better, brighter and greener premises.

Banking
The ANZ, ASB and Westpac banks have, or soon will, move to highly rated green-star buildings around Auckland’s up and coming waterfront precinct.

Insurance
Likewise, ING and IAG in the insurance industry have moved downtown, and on the North Shore we’ve seen Sovereign move from Takapuna’s retail strip to a state-of-the-art building in the Smales Farm technology office park.

Telecom
Telecom is moving from several buildings around central Auckland to one large complex overlooking Victoria Park.

Others heading towards the cooler environs of downtown include the large engineering practice SKM, which has relocated to the new office park built over the ex-rugby league grounds at Carlaw Park.

When the boom was booming loudest
I am often asked why these large organisations are moving when the global economy is still in turmoil. Simply, the decisions to move were made several years ago when the boom was booming loudest.

I was told last week by an executive of one of these organisations that if they had to make the same decision today, they wouldn’t be moving.

Anatomy of oversupply
These large corporations leave a large gap behind them when they move to new premises. But at the same time, as anchor tenants in new buildings, they don’t fill every floor of the new complex.

So we have vacancies in the new buildings they move to, and bigger vacancies in the buildings they vacate. The result is an inevitable oversupply.

Pitfalls
While tenants seeking new commercial space may appear to be spoilt for choice, there are some pitfalls for those taking up space in the buildings recently vacated by the large corporates.

For a start, prospective tenants will most often be smaller operations than the large banks, insurance companies and consultancies. As they require a smaller area than the bigger companies, they don’t hold quite so many bargaining chips.

Likewise, they don’t have the grunt of well-organised and practiced property departments behind them like the larger firms.

Tough landlords
It is critically important to have the support of professional advice because the professional landlords are tough negotiators used to dealing with tough opposition from the bigger firms.

Tough negotiators
It’s an area that we at Parallel Directions specialise in, so don’t hesitate to give us a call if you are considering taking up space in one of the vacated buildings.