BRM
  • Home
  • ABOUT US
    • The BRM Experience
    • Our Team
    • Our Impact
  • Property
    • Tenant Representation
    • Corporate Real Estate
    • Accommodation Strategy
    • Compulsory Acquisition
    • Current Searches
  • People
    • Staff Engagement
    • Workplace Consulting
    • Change Management
  • Projects
    • Project Management
    • Interior Design
  • Our Blog
  • Our Work
  • Contact Us

OUR BLOG

RSS Feed

Do You Want To Reduce Your Occupancy Costs? There’s more than one way to do it.

16/7/2020

 
​The partnership between commercial landlords and tenants has never been more important. As we move deeper into unchartered waters, this partnership is likely to influence crucial decisions, and in some cases, present opportunity for both sides.
 
In the wake of substantial change to workplace circumstances, many businesses are questioning how they can better utilise their space and cut occupancy costs. In particular, those nearing the end of their lease in the next 6-12 months need to make the immediate choice to stay in their existing space or walk away
Picture
More landlords are recognising the dramatic shift in the market and responding accordingly.
How landlords approach their tenants’ situation will determine the viability of a much needed long term relationship. Rather than clinging to irrelevant or outdated leasing models, both landlords and tenants will be required to approach new leases with flexibility and fairness.
 
Largely, this seems to be happening. Retail aside, most landlords are responding fairly and adapting to the changing needs of their tenants. They know that if they don’t, the outcome will be detrimental to both sides.  
 
What does this new-found flexibility and good faith mean for tenants looking to reduce their occupancy costs? Rather than a simple “stay vs go” scenario, there will be multiple ways to assess space requirements and a variety of solutions available. This is good news for both tenants and landlords in such uncertain times.
 
The solutions available to you will depend on your specific situation and your landlord’s willingness to negotiate. Based on the advice BRM is  providing to clients, the following solutions are among those being discussed between tenants and landlords right now:
 
  • Rental Relief – the ability to negotiate a discount on your existing space, either through the formal channels of the Code of Conduct, or as an informal arrangement
  • Footprint reduction – the ability to hand back partial floor plates to the landlord, and reset the inter-tenancy wall locations creating a smaller tenancy. Egress, access to the amenities and supply of engineering services must all be compliant and achievable.
  • Assign Your Lease – the process of transferring your lease obligations to a new tenant
  • Subleasing – allowing another tenant to take part or all of your space by dividing up the floorplan
  • “Go” preferenced over “stay” – vacating your existing premises, meeting your Make Good and other lease handover obligations
 
Case Study:
 
BRM recently advised a long standing client whose lease was set to expire in the next 6 months. The client is looking to cut its occupancy costs by 30-40% and using our in-house designers and staff engagement surveys, opted for a footprint reduction from 500sqm to 350 sqm. In determining whether to stay in their current space or find a new premises, the client engaged BRM’s property team to present them with some ideas. We investigated a range of scenarios and presented projections based on current market trends to help the client reach an informed decision and achieve their desired outcome. Among the scenarios was the concept of dividing the existing floorplan and creating an intertenancy wall which would solve the problem of inefficient space for the tenant, while the building would remain occupied for the landlord. Another scenario was to leave the existing premises altogether and find a new 350sqm space that didn’t need major fitout alterations.
 
A year ago, such decisions would have been made differently. But the possibility to reduce an existing space is a reflection of how the market has shifted as part of a rapidly changing supply and demand balance. It’s also a reflection of the steps landlords will take in favour of losing long term tenants and risking an empty building.
 
It’s not only landlords who are becoming more flexible. The way companies are approaching their space has changed dramatically due to a largely successful working from home period. Disposal of unused or inefficient space is being heavily discussed as more companies consider a move away from the CBD into more affordable locations with reduced footprints.
 
The key, once again, is maintaining an open and fair relationship that allows for flexibility when approaching property portfolios and leases. Times have changed and our ability to adapt will make all the difference for how we setup and navigate our future office requirements.
 
If your lease is expiring in the next 6-12 months, reducing your occupancy costs is certainly achievable.  Landlords are more open than ever to flexible solutions.


Comments are closed.

    Sign Up To Our Newsletter

    Archives

    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    October 2019
    September 2019
    August 2019
    July 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    March 2018
    February 2018
    December 2017
    October 2017

    Categories

    All
    Accommodation Strategy
    Acoustic Options
    B Corp
    Change Management
    Commercial Lease
    Commercial Real Estate
    Commercial Tenancy
    Design
    Environment
    News And Events
    NFP
    Not For Profit
    Property Advice
    Property Strategy
    Recent Projects
    Staff Engagement
    Sustainability
    Wellbeing
    Workplace Consulting

    RSS Feed

BRM 

125 Union Street,
Windsor, Victoria
Australia  3181

Phone: (03) 9521 1007
​contact@BRMprojects.com.au
​
contact@BRMre.com.au

QUICK LINKS

About Us
Property Advisory
Compulsory Acquisition
Workplace Design
Project Management
Recent Projects
Blog

Picture
B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency, and dedicated to using the power of business as a force for good. B Corps are better companies – better for workers, better for communities and better for the environment.
Picture
  • Home
  • ABOUT US
    • The BRM Experience
    • Our Team
    • Our Impact
  • Property
    • Tenant Representation
    • Corporate Real Estate
    • Accommodation Strategy
    • Compulsory Acquisition
    • Current Searches
  • People
    • Staff Engagement
    • Workplace Consulting
    • Change Management
  • Projects
    • Project Management
    • Interior Design
  • Our Blog
  • Our Work
  • Contact Us