Looking for a New Tenancy

16 Oct 2018

Considerations when looking for a new tenancy;

  • Location.
  • Size.
  • Condition of tenancy;
    • Does it have enough power – 80amps is preferred.
    • Does it have air conditioning – new A/air conditioning could cost you $10-15K.
    • Ceiling grid condition – $8-9K for 100m2.
    • Sewer connection availability – if no then, additional costs for pumps would be required.
    • Condition of shopfront.
    • Condition of floor.
    • Is there existing lighting?
    • Does it have an existing toilet?
    • The condition of the tenancy will have a direct impact on the cost of the building works.
    • All m2 rates that get thrown around are for the fitout works only, they are based on a nice clean shell with all essential services being there (air conditioning, enough power, good ceiling, clean floor, no demo work required, good lighting existing).
    • Another thing to negotiate with the landlord is the cover cost to provide a nice clean shell.
  • If you are looking at a tenancy within a shopping centre complex;
    • They may have nominated contractors for essential services (plumbing, fire services and mechanical services).
    • Fire sprinklers are common in shopping centre’s which add additional costs.
    • They may request a higher level of project documentation and design, not to mention a high level of signage.
  • Contribution or incentive by the owner to entice you as a potential tenant;
    • A rent free period is most common, make sure you cover off on the time required for the fitout (6-8 weeks) as well as the time to design and document the works (4-6 weeks). Most building owners will only acknowledge the build time onsite for the amount of rent free period.
    • Depending on the market trends at the time (i.e. low vacancy or high vacancy) will depend on how much the building owner wants you as a tenant. In a high vacancy market, it’s not uncommon for a building owner to offer to contribute to your fitout costs. An example may be that you can ask for help to pay for air conditioning if it is needed as this item becomes a fixed tenancy asset that the building owner retains even if you move out.
  • PWD Access;
    • Stay away from tenancies that are split level (internal stairs), all internal fitout design needs to comply with AS1428.1 which relates to PWD access and circulation space. Internal stairs can affect the design, relaxation on this Australian Standard can be applied but will ultimately be subject to the building certifiers approval.
    • A step right at the front door – if your lease line for the tenancy is from the front door in, then the step is not taken into consideration for PWD access unless you are the sole occupant of the entire building (not tenancy, building). Although that being said, it does not actually help someone in a wheel chair.
  • Carparking;
    • Is there enough carparks – DA (Development Approval) consideration – carpark ratios to consult rooms.
  • Builders inspection of tenancy before you sign the lease;
    • All too often I see a client who signs a lease without having a tenancy looked at from a builder’s perspective, only to find the tenancy needs an air conditioning upgrade, power upgrade and there is no sewer connection, which leads to more cost for the fitout. These things could have been used in lease negotiations and got you a better lease rate or incentive.
  • Zoning;
    • Is the tenancy correctly zoned for your specific use – DA (Development Approval) may be required which can take 3-6 months.
  • Consultation/Feasibility;
    • The team at Benchmark starts every project by taking the time to gain a clear understanding of your design and fitout needs. We will walk you through everything you need to achieve success, including what can realistically be achieved with your budget to complete the works. We also conduct a site review to assess your location taking into consideration council requirements and access;
    • I highly recommend that you have a tenancy assessment carried out by your builder prior to signing a lease, this way you are aware of any potential hidden costs.
    • I would also have a draft design completed before signing a lease, this way you know how much your fitout will cost and how you can fit into the space before locking into a building lease agreement.

If you are interested the team at benchmark can help review a tenancy before you sign the lease for your new office fitout.