Do you like your staff??

This is a question I sometimes ponder when tenants tell me they want to cram more and more workers into less and less office space. It seems that common sense can only gain acceptance once it is confirmed by an academic study but real change only happens when corporates recognize the positive effect on their bottom line. A recent article from the NBR about the future of the workplace details a study from the British Office Council noting that some big corporates have discovered that improving air quality and access to natural light actually improves employees perception of their own productivity (they don’t measure actual output) and their cognitive function.

The answer to future workspace design it seems is fripperies. I had to look it up, a frippery is an unnecessary and ornamental feature, regardless I love the word as it is almost onomatopoeic. (I shall let you look that up if you don’t know it). Leesman an international workplace survey company conducted a huge survey of some 600,000 workers and found 40% of whom considered their place of work frustrated their productivity. Apparently there are at least 200 million of us who work principally in offices and improving the quality of workspace environment not only decreases the cost of sick pay but improves the wellbeing of the workers.

Landlords and developers have to do their part in providing better buildings… I have just found out that a Breeam score measures building sustainability but the big corporates employers are now also considering the wellbeing of the staff, Goldman Sachs apparently have workplace ambassadors responsible for the welfare of staff.

Pressure from increasing rents and costs as well as new workplace practices continues to bring down the average area per head but with design to make spaces more flexible, like offices which convert to meeting rooms, companies can make their offices better places for workers to spend their day. WeWork a huge global co-working provider designs their offices with smaller desks but provide places for workers to gather for coffee and informal and impromptu meetings plus they devote 3-4% of office area for fripperies like table tennis tables and the like. So embrace the frippery, your staff will love your for it!

October 24 2019 | Uncategorized | No Comments »

7 things to consider when looking for office space in Wellington in 2019 :

1. The budget needs to be at least $5k per head for average quality and $7 per head for prime quality office space.
2. If the space is air conditioned, will it cope with the density of people you propose to seat within the area.
3. As well as desk space, are there break out and places for collaborative meeting spaces (they don’t have to be separated meeting rooms).

Old Style Office Space – or what your old budget is going to get you

4. What does it feel like from where people might be seated, light, colour and aspect, could the space be described as comfortable and inviting in some way?
5. Consider getting a professional designer to provide colour, furniture and layout advice to give the space its difference and edge. Does it truly reflect the culture you want to project?
6. Does the location provide adequate amenity to your staff, are their food providers they like and other nearby facilities like gyms and bike parks.
7. You can always take a little too much space with a view to subleasing it, if you advertised a desk or two at $100 per week that’s $5k each desk to contribute towards your rental until you need to take the space over.

A recent exchange while I was walking around with a customer got me thinking: “what are office workers worth?” in the context of the cost of office space. This customer was the principal of a professional firm with 6 staff now and likely growing to 8 within 2 years, they have been around about 5 years and can be considered well established with good clients. What made me curious was why we were looking at spaces which were patently too small to provide for their future growth (to me at least) and trying to keep to a budget of under $4k per head. They compete to get good graduates and staff, I would guess at an average of about $80k per year and there seemed some disparity in the thinking about providing the cheapest possible space for the staff to perform and do their work in.

Businesses typically enter the market at either 3 or 6 yearly intervals in Wellington and this year particularly most customers I have met have struggled with the change in office market conditions namely that rentals have gone up 30-50% and that the number of options open to then seem rather limited. Firstly, this is on the back of an overall vacancy rate of 6.4% of all office stock and I know a good portion of that figure is not considered at all by businesses where the seismic rating is less than say 70% nbs. And secondly the same researchers claim that the total stock of office space has shrunk by some 16% since 2011 due to earthquake damage but mostly due to residential and hotel conversions.

Availability of office space in the Te-Aro city fringe is particularly dire where most of the residential conversions are found. This area has long been the source of cheaper office stock and it is interesting to observe that over the last few years (and most certainly post ’16 earthquake) how tenant’s requirements and tastes have moved too for seismic ratings, new light-weight ceiling tiles, new LED lighting, modern carpets and refurbishments. Office fitout costs have risen anecdotally by at least 50% over the last 5-8 years due to similar rises in materials and skilled labour from the national building boom.

Cubicle farms and proof some employers think you are a number

But the biggest hit on the Wellington landlord’s budget has been commercial insurance with rises 50-300% post ’16 earthquake as insurers adopt ‘risk-based pricing’.

I found the above archive photo showing staff jammed in a rather dark and for all we know cold and dank room possibly without much natural light or aspect. Times have certainly changed, the banks and government departments do not offer ‘jobs for life’ anymore and gen Y’ers and millennials are mercenary relative to previous generations about their employers. The work place is where we spend most of our week, it is certainly in any employers interest to provide a comfortable and interesting work-space to encourage their staff to turn up on time or even early. Remuneration is no longer enough, employers are scrutinized on social aspects as well including offices. One business I am working currently with believes that at least 2 consultants offered employment refused because they perceived the office space provided was of an inadequate standard!

Looking forward I see no let-up on pressure on office rentals, I received instructions last week to put notice of early termination clauses on a listing for several floors in an office tower on The Terrace signalling the new landlord’s intention to shift this building into residential. It is true markets that go up inevitably go down and that many commentators expect a GFC style correction shortly, but I cannot see any deflation happening on The Terrace and beyond while apartment and hotel conversions are clearly so profitable to satiate housing demand. Add to that the fact that the costs for landlords to provide modern offices is unlikely change for the better either!

Your employees/staff are going to cost you more, of that I’m afraid you have little choice. What you can consider is what your staff are worth to you, dark and dank? Soul-less cubicle farm or somewhere they would like to spend their week?

For contrast a very modern quiet space corner or office space designed by and for millennials

August 22 2019 | Uncategorized | No Comments »

Whats shaking me…

Here we are 6 weeks later and my commercial property world still seems centred on the Kaikoura shakes, every second conversation seems to relate to earthquake ratings or what is happening in what damaged building etc. I like to think that I was unshaken by these events, inconvenienced yes, I lost sleep and a carpark. I did get swept up in a frenzy of anxiety which followed and got extremely grumpy around being displaced suddenly by the BNZ who leased all the space in the building my office was in. I discovered how much rubbish I hang onto in my office space and managed to clear much of it, I think I only carried one old phone book to my new office. I was the recipient of some tremendous kindness from several people who stepped up to help me move up to The Terrace and I have discovered this new fangled thing called VOIP which is extremely cheap. I had not previously considered this because of my own inertia to change. So upside only really.

A recent conversation with an economist has made me pause to think about my perspectives (there are NO short conversations with economists ). He claims that statistically speaking it would take 14 thousand years to be certain of dying in a motor vehicle accident and about 3 million years (YES MILLION) to die in an earthquake. What we can conclude from the recent event is that the relationship of damage to commercial buildings and seismic ratings is not linear in fact if anything the relationship could even be inversed. This irony is not lost on the many owners of ‘prone’ buildings around the CBD. Please be quite clear, I have benefited greatly from the business of locating tenants to buildings with higher seismic ratings so why should I now wonder if this is always the best idea. Of the buildings I manage, 2 had not a single paint or plaster crack and they are rated a middling 67 and 70%. Another newish building which is 100% sustained a heap of unsightly paint and plaster cracks. So do I conclude we need better engineers with better formulas and models to manage and predict building performance or do we need better plasterers?

What we can observe is that the buildings which were substantially damaged were not classed as prone and they are localised in around Thorndon and Courtenay Place. It might be more about the soils and levels of compaction but also we know that not all the buildings in these locations behaved alike. We are lucky because the big earthquake happened while we were in our beds. I may be wrong but I understand that in only one of those buildings which sustained substantial damage, someone may have been killed if they were sitting inside them at the time. I have learned that just because a building sustains damage does not mean it fails diabolically. So every earthquake is different and will have different effects around the city and every building will behave differently irrespective of rating and probably won’t kill me, the risks are well under the risk of driving on Wellington streets. Therefore I conclude that we cannot rely on the engineers and unelected council bureaucrats to absolutely keep us safe. Stepping out into dangerous territory now I think that any adult who chooses to live or work in Wellington has to accept the risk in this regard. If you don’t like it then it is really time to move out of town. Where in New Zealand is truly safe I cannot say so maybe across the ditch is best for you, but hold on, they’ve got ‘bities’. Things with big teeth that bite, hurt and kill you, now they truly terrify me!

December 19 2016 | Uncategorized | No Comments »

Why sign a Deed of Lease

I have been getting quite a bit of push-back lately from tenants who don’t see the value in signing off a Deed of Lease. Firstly most don’t realise that the Agreement to Lease is not “The Lease” and secondly I suspect they don’t appreciate being obliged to spend more money on legal fees.
A Deed of Lease by it’s nature encompasses more detail and covers for more eventualities than a standard Agreement to Lease. When I first started it was common to use the BOMA format which was 38 pages and then over the years various versions of the Auckland District Law Society form have become standard (15 pages including cover) with increasingly more tenant friendly clauses.

Tenants are contracted to sign a Deed of Lease by virtue of a clause in every Agreement to Lease, and if they are lucky a good agent is able to negotiate out of having to pay the landlord’s legal costs for this. I think it is simply prudent if the tenant understands his obligations and responsibilities when committing to a lease arrangement. Most tenants enter into a lease contract in good faith and expect to pay the rent for the term but I suspect few know what happens when they cannot pay or when they wish to leave. Rent reviews are a major minefield and tenants should understand how to best navigate through this process. Many people do not know the difference between a Right of Renewal and a rent review and I assure you they are very different things. I used to describe myself as a ‘bush lawyer’ where I might do my best to explain the differences of these items but these days under the current regime it is dangerous to offer such advice and I always advise potential tenants to discuss the terms with their lawyer.

A Deed of Lease provides certainty of contract, it encompasses numerous events like what happens when you leave or are struck by a disaster like an earthquake. The Agreement to Lease which an agent usually prepares, covers the commercial terms and the major and pertinent points. Agents strongly prefer prefer not to engage in the minutiae of the Deed because it will usually bog proceedings down into the fine detail and they prefer the Deed to be negotiated by the 2 lawyers acting for each side. May I suggest you make sure that the Agreement to Lease expressly declares that the Agreement and the Deed shall not merge and the Agreement shall remain in full effect which simply means that the Agreement sits on top of the Deed and where any item in the Agreement will prevail over the Deed.

Lastly a signed Deed of Lease is a more easily enforceable document should the need arise. It is not common that a tenant needs to take legal action against a landlord but it certainly does happen in cases of failure to provide quiet enjoyment, maintenance issues or to enforce due process for an “unreasonable” rent review.

Tenants sign your Deed!

August 06 2015 | Uncategorized | No Comments »

Stack ’em in…..

A few weeks ago I took a call from a woman wanting a space of just 60 – 70 sqm. After asking a few more questions I established we were looking for space for 7 people! As usual I didn’t hold back in offering here the benefit of my vast experience and knowledge on the subject (surely we are looking for 150 sqm at least being 15 – 20 m2 per head etc.). Apart from anything else surely so many bodies in close proximity would be a bit whiffy ( I described it as a teenager’s sock). Of course my caller ignored my advice, she ended up staying in the same spot of 55 m2. Perhaps it was a budgetary constraint or perhaps it was payback for staff she didn’t like?gap

A piece in the a Sunday paper caught my eye about an Auckland design company Spaceworks who have done some really interesting work polling employees about work place characteristics, while none of the findings are surprising I think they bear out the need to consider the office space as a key element in worker satisfaction and productivity. Some 8 out of 10 believed the physical workspace and provision of natural light had an impact on their wellbeing. In addition the interior layout has a substantial impact on recruitment and retention.

Some modern work practices like hot-desking may not be the greatest thing in the real world with 91% of respondents wanting their own personal desk space and room for personal items. Design elements like colour and meeting spaces add greatly to satisfaction ad opportunities for collaberation and creativity.

Stacking workers into desk farms in the cheapest space you can find is a short sighted strategy, most people require a pleasant and comfortable environment to keep them productive and coming back to the job. Get advice from a good designer to turn your drab office into fab!

May 12 2015 | Uncategorized | No Comments »

A whole new world

Like most real estate agents I glance at the commercial pages of the DomPost every week and recently noticed an unusual trend, namely that there are a number of good buildings on the market for sale. For the last few years the pages have been filled with mortgagee sales and distressed stock. By distressed I mean buildings suffering from a loss of tenants due to a lack of maintenance or poor seismic rating and an owner offer suffering from liquidity problems. Now however we have a number of larger sales with buildings like Grant Thornton off Featherston St and more to come as the Precinct portfolio is being marketed currently. The buyers are usually names we know well but occasionally a new face like a certain ‘overseas buyer’ who happens to currently live in Whitby.

For real estate agents they generally have to make minor adjustments to their databases to note who manages what but for tenants of these buildings, they can enter ‘A whole new world’ to quote Paul Hastings, the godfather of commercial real estate agents in Wellington. Paul is a tenant in such a building, having been recently sold to a new owner and seeing the effects of a new focus and new capital expenditure.

When a commercial building changes hands office and retail tenants can have significant change forced upon them. A new owner may have a completely different agenda and a new and large mortgage to pay. A new owner will almost certainly have their own service providers and so those maintaining the lifts, air-conditioning particularly may get replaced with new service people who will take their time to learn the eccentricities of the equipment. In addition the occupants will have to get to know and work with new building managers who will operate with different accounting systems.

Tenants often find out that any goodwill they may have amassed over time with the previous owner has disappeared as new owners are often keen to maximise building value at rent review time. The upside is that new owners can often bring new life and capital to tired common areas and facilities, foyers and facades.

Tenants might want to bear this issue in mind when they choose their commercial space, landlords know that tenants come and go, therefore the reverse can be true too!

Lastly I have just become aware that these pages have been spotted by someone in the US, this is the 85th most popular real estate blog in the english speaking world apparently, I don’t know if I should be insulted or congratulated!
<img style="max-width: 100%;" src="" alt="Top 100 Real Estate Blogs"

An infographic by the team at Rebates zone


November 21 2014 | Uncategorized | No Comments »

If you build it they will come!

This attractive starry lit promenade is Hastings Street in Noosa, IMG_1990 certainly one of my most favourite places in the world! A recent holiday there started me thinking about the ‘Field of dreams’ maxim for developers above in regard to how to create an attractive shopping street where people will want to go. Contrasting Hastings Street with the numerous For Lease signs in Willis Street and Queens Drive, I decided to pose this question to Allistar Cox, Wellington architect and designer of numerous hip restaurants and bars including the Mojo coffee chain.

I met with Allistar in his very modernist studio over a tasty brew and he enthusiastically showed me some pictures of one of his favourite cities Tokyo, again the same fairy lights providing a soft welcoming glow but 50 times the scale of Hastings Street. ‘Shopping districts are for pedestrians and people not diesel buses!” he claimed forcefully. “Retailers pay huge rates and are getting short changed because councils are not providing customer friendly streetscapes…” He raved about the need for friendly lighting (as opposed to the new lighting on Courtenay Place), seating and meeting places. Shopping is our number one leisure activity therefore councils and building owners must help retailers compete with malls and online retailing by providing a pleasurable experience intertwined with eating and meeting friends.IMG_1947

The conversation flowed towards the contribution required of the retailers. I also had a photo of a trendy eatery and bar from Hastings Street called Miss Moneypennys. IMG_1951The name went over my daughters head but it reminded me of the beautiful and playful character in Sean Connery era James Bond films. Obviously because of the climate, diners spilled out over a wide pavement and so the business was part of the street in a way. Back to the point though, I realised canny retailers recognise they must create a memorable and fun experience and even a sense of theatre. Shopping is the number one leisure activity, you want people to be entertained and come back for more!

I walked home on a cold winters night along Willis Street, there were plenty of people around and the stretch between the BNZ and Mercer St has a long line of fashion boutiques, all had expensive fitouts and beautiful stock to sell but at 6:15pm on a friday evening half were shut! Attractive shopping strips require creativity and good design, building owners and council must contribute their part and the retailers have to pull together with nice stores, update their offers and stay open when shoppers are at leisure! Allistar was right, the whole chain is only as strong as the weakest link.

June 06 2014 | Uncategorized | No Comments »

Enhancement or Desecration

A few months ago now I spotted a slight adjustment to the alloy statue on Midland Park called Woman of Words which is a tribute to Katherine Mansfield. Ok I am intending to be controversial here but I do think it rather ugly, I have spoken to several people gazing up at it and am yet to find anyone find it beautiful but who said art must be beautiful?IMG_0234a

Anyway the adjustment was a woollen knitted flower placed in the statues hand, it lasted a couple of days but I consider the homespun aspect of the flower actually made the hard metal alloy statue somehow attractive! Now I do not encourage anyone to alter or even take it upon themselves to enhance public art works in any way, you should get prosecuted but in this case I just note…. what a nice change a little silliness makes….

October 31 2013 | Uncategorized | No Comments »

The future of Main Street retail?

Location location location was the old maxim for successful retail in days of old but what of the new era in post GFC 2013? Aren’t the fastest growing retail brands all located the cloud, wherever that is? It’s true that by turnover the most popular online stores used by kiwis are Air New Zealand, Trademe followed by Amazon. Several New Zealand sites like Fishpond and Torpedo7 have a huge Australasian following but the point is that while New Zealand business are prospering and participating in the online global economy, all these noted here are taking business away from traditional main street retailers using commercial real estate to operate.

A recent US survey claims that 45% of respondents in Generation Y also known as the ‘Millenials’ spend more than one hour per day shopping online! It astounds me they have so much spare time, no wonder the traditional TV stations are trending downwards. The gist of this particular report was that big shopping centres in the US were remodelling to provide more food and entertainment options as 25% of respondents of the same survey say they dine out more than once a week.

Anyone walking Wellington streets can observe a good number of ‘For Lease’ signs littered on empty windows in virtually every street block. It shows e-tailers are winning, right? Reports from Retail Trade Surveys published by Statistics New Zealand suggest pretty modest increases in retail spending for 2011-2012 of just over 1% no doubt accounting for a similar movement with inflation.

Yet many brave entrepreneurs open shops against all the odds and have a go. Yesterday I saw a new hair salon with a coffee bar, and a bicycle shop with a full café inside its doors. New ideas come and go, I have leased shops to some who have succeeded and some have faltered and even failed. Maybe that’s why so many, particularly the younger ones,are prepared to try new things, if only on short term two or three year leases.

I have recently become involved with marketing a small retail site of about 50 m2 with a fairly full asking rent and I am astounded how many enquiries I have received on it, within a week we got a good offer on it and now we have three other parties ready to pounce should the first guy fall over.

So this made me wonder about the long term vacancies and whether they would lease if the rent was brought back, or is this a sign of a larger structural issue. For example, in Lower Hutt’s deserted (or is it devastated) High Street and Queens Drive, where so many empty shops are bigger than 150 m2 you could well ask if they would be more attractive and therefore lease-able if they were smaller.

Recent commentaries from PWC on online retailing predict that in NZ online retailing is currently worth $3.2 billion and likely to increase by 14.9% compounding every year. Some 1.9 million kiwis spend on average $1,659 on online purchases and this is turnover local retailers would have traditionally enjoyed.

But against this online tsunami I recently leased a large site in Willis Street which I can recall has seen the downfall of at least four or five previous tenants. I was able to encourage one brave soul to make an offer at two thirds the asking rental set by a valuation. Fortunately he was met with a pragmatic owner prepared to accept far less than what was once considered ‘value’ at a level which we all hope will enable the new business to survive.

In closing it’s true that some are prepared to pay up to $3,000 per m2 for Lambton Quay and $1,500 per m2 or more for Willis Street. It is also true that a cluster of vacancies are of very similar size and price ranges. Yet I am convinced there are keen and brave entrepreneurs out there willing to give it a go and retail not e-tail. Maybe landlords aren’t going to thank me for this opinion; but if your shop has been vacant for more than a few months or even years, then think about changing the size and shape if you can, you may have to render areas past 10-15 metres depth as storage space or garage. And now living really dangerously you may have to throw away your old valuations and consider why the last tenant left and if they survived, then ask a few prospective tenants what can they really want and can afford to pay?

May 24 2013 | Uncategorized | No Comments »

Here’s to the crazy ones…

Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs

April 02 2013 | Uncategorized | No Comments »

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