Good Long Term Planning is King to Getting the Best out of Auckland’s Commercial Property market

As much of Auckland’s residential market is ‘going off’, so too is our commercial property as business confidence grows and space becomes more heavily in demand.

My recent experience in Auckland commercial property demonstrates that the property market is turning in favour of the landlord as we find them firming up on the rentals and reducing tenant incentives to lease space in their buildings.

For organisations that lease their premises, the honeymoon is now almost over. With more tenants chasing less vacant property, no longer can tenants pick and choose where they move to, or drive extraordinary lease deal.

Remember when you could spend a few minutes searching on the internet to find the next great property location for your business? Already those days are gone – to play effectively in this dynamic market we need to be more agile, better prepared and deeply thoughtful of what part property plays in your organisation.

It is not uncommon in New Zealand for major decisions (such as property matters) to be made in off-shore regional offices or headquarters. In a market where those tenants that are slow to make decisions miss out, we have assisted the local management in preparing business cases, market reports and opinions on the commercial aspects of leasing.Our New Zealand clients have found this approach has enabled their off-shore decision makers to make informed decisions faster.

Whether yours is an international corporate with hundreds of staff, a medium sized or smaller organisation, the principles of leasing are the same: Always know what’s in your lease and have a plan for how to deal with anything as it comes up.

As an example, here are four simple questions that you should know the answers to.
• How long until your lease term expires?
• Is it in the next six to twelve months?
• In the next twelve to eighteen months?
• Are there any rights of renewal in the lease?

 

(a) If your lease expires in six to twelve months you will need to take immediate action (see below).
(b) If your lease expires in the next twelve to eighteen months you need to set up a project and start thinking and planning what your business requires from the property. There’s really not much time.
(c) Decide if the organisation should Stay or Go, e.g. renew the lease or Relocate to a new place.
(d) If there are rights of renewal in the lease, the same process should still be carried out. What you find out may be useful if you wish to renegotiate the lease renewal terms and conditions.

Five Point Action Plan
Here is an action plan to get you started on developing the agility and readiness required.

1. Check your lease document to identify the lease expiry date.
2. Identify/ confirm your organisation’s property needs. For starters, ask yourself:  How much space do we really need? and How will the property support our business plan?
3. Get management/ Board support for setting up a project that reports monthly on these critical property matters.
4. It is critical to become smart and agile in this increasingly demanding property environment. Plan to acquire the resources to achieve these.
5. Get professional, independent advice.

I will be happy to assist you to develop the agility and knowledge required. Please feel free to contact me to arrange a get together to discuss your property needs and how to get the best out of the Auckland property market..

Kind regards
Peter Scott
Executive Director
Parallel Directions Ltd
pscott@paralleldirections.co.nz

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