Property watch: what moves you?
Moving from old premises to the new should be a linear progression, but it’s easy to underestimate deadlines. It could impact your ability to negotiate the best deal, as RODNEY TIMM reports.
The hard decisions have been made. Accommodation needs have been analysed, the market has been tested, alternative premises have been viewed, shortlisted and the best option has been decided on.
The net present value and revenue impacted financial model are done, the business case and board paper approved, and finally the heads of agreement signed. Time to relax? Not a chance – the hard work is only just starting.
Relocation challenges are linked to many variables, including accommodation size, number of the employees relocating, whether moving to existing or new fitout, the time period available and many other imponderables.
Once you’ve signed for the new space, the ‘drop-dead’ date is now unchangeable, unlike many other corporate projects. Detailed planning to ensure that nothing goes amiss is essential. And, as always seems to be the case, the time period for moving out of the existing premises and into the new, is less than the tasks required to be done.
FINALISE NEW LEASE
Despite having a signed heads of agreement – usually non-binding – and paying the lease deposit, there are still major negotiations required to finalise the lease agreement.
Receiving the landlord’s draft lease agreement can be a humbling experience. There will often be unexpected landlord try-ons, some ‘nice-to-haves’ and items that contradict the essence of the agreed commercial terms.
After marking up the unacceptable terms in the lease, and sending it back to the landlord, a period of tense negotiations will ensue, usually with the landlord aware that the shorter the period left for the move, the more malleable your negotiating team will become. But with experienced negotiating skills on your side, and hopefully a plan B carefully tucked away, progress will be made.
There will, however, probably be the need for some diligent management of the solicitor teams to ensure they stay focused on practical legal and risk outcomes, without trying to reformulate the commercial terms.
Eventually when the final agreed lease agreement arrives for execution, you need to make sure the required bank guarantees are provided and the appropriate delegations of authority protocols are observed, during the signing process. Once the landlord has signed, at last, you have a legally binding commitment by both parties.
PAIN POINTS FOR YOUR PEOPLE
In the interim, change management planning for the relocation needs to occur. This is essential to ensure that the relocation does not degenerate into a bad experience for all.
For most employees, after the move, many things are likely to be different. Getting to the office will change, new places to eat and coffee bolt-holes will need to be discovered, while the new retail amenity, local gyms and similar comforts all alter.
The change challenges for employees will be further exacerbated if a radically different workplace culture and layout is to be adopted. For example, it may be that office entitlement may disappear and assigned work points may no longer exist – all likely to be major concerns for the change sceptics.
But an office relocation decision is the ideal change enabler, and usually only presented by lease events, so it should be grasped whenever possible. Having said that, it needs to be planned meticulously, particularly if management includes other corporate changes to coincide with the move.
FITTING OUT THE PREMISES
Determining and planning a new workplace design and operating philosophy is a big topic in itself. Planning the office layout and implementation are similarly best addressed in a separate discussion, particularly for large new corporate and office environments.
A word of caution – don’t underestimate the challenges and the time required for these processes. The planning period, including budgetary and other approval processes, may need to be years rather than weeks or months – depending on the size of the accommodation footprint, extent of the adopted workplace culture changes, and whether the fitout is new or a refurbishment.
Even for relatively small premises that already have an existing fitout that is to be adapted, the devil is in the detail. Changes that appear to be relatively minor can be caught up in bureaucratic decision- making with outcomes being frustrated by intransigent landlords, rigid code compliance or even contracting bungles.
A key component in all workplaces is the information technology infrastructure. From the very beginning of the process, ensure that IT has been engaged, understand what is planned and is able to deliver all technical and specialist support needed.
DON’T MOVE YOUR CLUTTER
Even assuming that all the new workplace fitout changes are diligently being managed and meet the delivery program dates, there are many other components to the actual move. At an early stage it is prudent to clearly determine what components of the existing office infrastructure will be moved to the new premises, what needs to be purchased and what will be disposed of. This is the opportunity to declutter by archiving or destroying dated and unnecessary files, documents and business collateral. Without clear directions, it is likely that some unnecessary clutter will be moved to the new premises. Being ruthless by having minimal allocations per employee tends to focus the minds of all.
In most cases, the help of a professional removal service is essential. But once these services are procured, ensure that the removalists are fully informed in a walk-through so that specific items such as printers and copiers, and items needing to be dismantled, are agreed.
Creating a floor plan of the new premises will serve as the primary guide for liaison during the move. It is important to cover off on the smaller details as well, such as informing utilities and service providers about the move, making a reservation for the elevator in the new premises, and hiring a pre-occupation professional cleaning service.
Many components to setting up the new office are required, so that the relocation occurs seamlessly. Generally, the lead frustration in relocations is if the IT functions (especially internet) in the new office do not work. It is essential to engage early and repeatedly with the IT department and consultants.
If a new workplace philosophy is adopted, with no assigned workplaces, the working protocols need to be handled sensitively, but unambiguously within the change management plan. Even planning the new security protocols, providing access cards and alerting all employees to these changes, are critical elements that are sometimes forgotten.
EXITING THE EXISTING LEASED PREMISES
This is an added challenge that needs to be managed carefully. Your existing landlord may feel rejected by your decision to relocate, and this can result in some testy negotiations.
It is wise to review the existing lease agreement make-good and decoration obligations early in the relocation process, and you need to plan enough time to undertake the make-good before the end of the existing lease term. Hopefully, you will have retained evidence of the condition of the premises as at the original lease commencement date, as this will be to your advantage in negotiating the make- good obligations.
Sense may prevail and a reasonable outcome achieved, either in the form of a cash settlement or undertaking some relatively minor works. Often these make- good negotiations end up being contentious, however, with the landlord’s agent using many devices, particularly delaying tactics, to achieve an inflated cash settlement amount.
Commence these negotiations as early as possible, allowing for overlap in the old and new lease terms and always having a plan B. This may be the preparedness and lease period left to actually undertake the works, if the landlord is being greedy and intransigent. It is advisable to have professional assistance in undertaking the make-good.
Once this is all done, don’t forget to apply for your bank guarantee to be released and the lease deposit, if relevant, to be refunded.
At last, the big day arrives and the relocation plan is put into action. It is usually best that this occurs over a weekend, with the removalist fully briefed and minimal office personnel present other than the moving committee, at their delegated locations in the old and new premises. And, with all the great planning and change management initiatives implemented, the relocation is complete, ready to deliver the ‘wow’ factor to the employees come Monday morning.
Rodney Timm is director of Property Beyond Pty Ltd.
This article also appears in the June/July issue of Facility Management magazine.
Lead image: 123RF’s Shannon Fagan ©123RF