Generalisations have their uses, but in the haste for simplification the individual nuance is often lost.

Today’s narrative is that businesses are handing back office space, hand over fist. Many indeed are, but generalisations don’t work in my game. What’s important for me is to understand the underlying drivers of change, because that’s what informs forward-thinking decisions. To this point, I recently interviewed a Senior Partner from a large Commercial Law Firm to gauge how the sector’s business conditions were impacting their property decisions. Below is what he told me. But first, some brief property stats from Australian Law Firms, to tee up the conversation. Australian Commercial Law Firms have reduced their office footprint by around 20-25%, over the last decade.

Examples of this reduction, using Sydney data only, include:

• Herbert Smith Freehills: 20,000sqm in 2014, to 15,000sqm in 2024, via 1 building move
• Minter Ellison: 13,000sqm in 2010 to 9,500sqm in 2024, via 1 tower move.
• Allens: 12,500sqm in 2019 to 8,500sqm in 2024, via 1 building move
• Ashurst: 15,500 in 2015 to 13,700 in 2024. Recently committed to 10,000sqm from 2025, via a new building move. Now to my interview, with a delightfully honest Partner, whose name and Firm shall remain anonymous.

Q:Why the space reduction? WFH?

A: It is not work from home that’s been the greatest driver of space change, but two other factors. Firstly; a cultural change; many Partners and Senior Lawyers now prefer to be on the floor amongst their team, rather than tucked away in a lonely office. So all that dedicated office space is now surplus to need. Secondly, a technological change. Partners used to have the assistance of their own EAs, then as technology became pervasive Partners relied less on their assistants for day to day matters. EA to Partner ratios have gone from 1:1 to 4:1 over a little more than a decade, with the obvious space requirement reductions.

Does the sector remain profitable enough to warrant the expensive office real estate?

For the most part business is relatively steady for the large Firms, and while there are peaks and troughs of demand, such as the recent softening of M&A, when you look at the largest Firms, last year they averaged over $500,000 of annual revenues per lawyer, which is considerable given the major Firms all have well over a thousand lawyers.

What shifts do you see in the sector regarding work trends that concern you?

From the perspective of someone who’s done this for many years, the biggest threat to the sector is this notion that skills can be transferred equally in a remote working environment, when this simply isn’t the case, and a notable skills gap is starting to appear. This is the iceberg ahead of the Titanic for the emerging generation. It’s all well and good saying let’s do a few days at home each week, if you’ve already gained the experience, but to reveal my true feelings, I think it is negligent of Partners and Senior Lawyers to deny juniors the experience that they themselves have benefited from.

What about the threat of AI?

Everyone is talking about AI as if it’s the end of lawyers. There’s no doubt that volume work, like conveyancing or drafting financing arrangements, are examples of work streams that will be disrupted by AI in the near future. But in the current moment AI is really an efficiency tool, for tasks like summaries of documents, or for researching points. Today the results from AI are incomplete, and real lawyers have to review and amend to final versions. I’m not saying that AI won’t change the legal workforce numbers, I’m just saying it hasn’t yet.

What is the role of office in Law Firm’s War for Talent?

People who choose to take up Law do so mainly because of the career and financial opportunities that it offers. There’s little delusion about the long hours and hard work required to stay the course. So the criteria for talent in selecting a Firm, regardless of experience, is market reputation, subject specialisation and career enablement. Therefore, while office environments are important from a functional perspective, they are perhaps less important for Law Firms than for other sectors. With all that said, Firms invariably have prime office locations, with quality interiors, and the high views. But this has as much to do with the clients we welcome to our office, as it has to do with the lawyers themselves.

Any last comments?Firms should always be thinking of the next generation and their career experience, because they will be servicing the clients of tomorrow So there you have it folks, a genuine and informed perspective, that sounds entirely logical to me.

Are Flagship Stores are out? Why uplifted local stores are winning in 2024.

Flagships are a statement of brand potency and experience. They’re ostentatious and bold, like a peacock fanning its feathers in the evening light, demanding its rightful attention.

For retailers, the Flagship Store is the ultimate shopwindow, a luxury of the senses, where architecture, artistry and product meld into a cocktail of delirium and fantasy. 

Dior-Paris, Burberry-London, Tiffany-New York, Prada-Tokyo, and too many more incredible temples of experiential retail to mention. 

But the point-of-sale system might accuse them of being little more than a vanity project, that connects more with the retailer’s ambition, than they do with the customer’s need.

In today’s omnichannel shopping experience, does the Flagship Store justify the cost, and what incremental value can you expect to achieve in brand association and customer acquisition?  

The Case for Flagships:

There’s a valid argument that in today’s age of astronomical digital ad spends, a flagship is a powerful way to connect directly with consumers, create content and build brand, at a fraction of the cost for the same cut-through and engagement.

Retail is as much about emotive purchases as rational purchases. Emotion is what drives our industry, and flagships run on pure emotion. The flagship is the ultimate marketing project, and there is so much that can occur after a shopper has left a flagship, even empty-handed, that it cannot be contained within a store’s P&L. Scrutinising its value through dollars and cents is fundamentally missing the point – and the true value.

Big brands like Lego, Mecca, Nike, Dyson and Camp USA, have near perfected the flagship model, with oases that pull crowds in, and reverberate out, as the experiences are re-told again and again. Locally, Rebel’s new award-winning Emporium Melbourne Flagship is a masterclass in bringing the fun, movement and engagement of their products directly into the store experience.

The Case Against Flagships:

Yet Flagships fail most when they are created at the expense of the rest of the store and omni-channel network. As if one child in a large family was given more nutritious food, and packed off to the top school, while the others just got by. And worse still, that privileged child somehow ended up with the lesser grades. Or in the retail world, negative profits.

The Shift to Local Stores:

In Australia, local shopping centres are increasingly where retailers are seeing the highest margins and most consistent footfall.

37% of Australians now regularly work from home, and this will trend up as the current student population transitions into the workforce. Going into our city centres now has a defined purpose, not just our pre-2019, automatic 7.55am train ride. Our days are for scheduled meetings, active socialising, and absorbing the working vibe of the surrounds. Office workers no longer have an idol hour to kill each day for their “lunch-break” so perusing the aisles of a massive store now seems like time-lost, not experience gained.

We are living in the flexible work era, and our shopping time-allocation has emphatically transitioned from the centre to the suburb. With this new shift follows a new demand; our local stores can no longer be the lesser experience. It is also the perfect vehicle for the hyper-personalisation we’ve all become accustomed to online: we want someone to know our name, remember our previous purchases, and welcome us back like the loyal, valuable customer we believe we are.

What better way to do that than in local store hubs? Personalisation can be very expensive at scale, but in a local store, great retailers already have personal relationships and connections with their customers, and it costs little more than a smile and some old-fashioned hospitality.

Camilla understand this well, and refer to their stores as a place to socialise, not shop. Their customers come in for a wine and a chat, and accidently walk out with a kaftan. Retail Prodigy Group do this by measuring whether staff learn their customers’ names when they walk into a Samsung store. Neither of these things cost a fortune, but they create huge lasting impressions and foster genuine warmth and connection with these brands.

On a slightly grander scale, but by no means the expense of a Pitt St Flagship, Australia Post deliberately went to Orange, a local community crying out for services, and built the first of their community hubs that meets their customers where they are, and with services that they were asking for. Work-hubs, showers, barista coffee, all while you pick up your ecommerce parcels. And they recognise that their stores, services and product offerings will continue to be very different from town to town, city to city tailored to their customers. What better way to drive both acquisition and retention than with a local format that embraces and respects the community it contributes to.

5 Guiding Principles for Flagship’s in 2024

Assess, in honest detail, the following to inform your Flagship decision.

1.     From a customer view; does your brand have a compelling reason for grand experiential retail? 

2.     What is its real purpose? Explicit front-line sales, or Implicit brand & marketing?

3.     Is your Flagship stand-alone and separate to, or fundamentally integrated with the rest of your store network?

4.     What is its proximity to your customer base? Are you located where they do their shopping, or must they travel to you?

5.     Where is your customer? Are you meeting them where they are, with what they need, or are you channelling your inner Kevin Costner: “Build it and they will come”

To flagship store or not to flagship store, perhaps the answer is not yes or no, but why, and at what cost? We all know consumers shop across all channels at different times for different purposes, and the experience must be of a comparable quality across the network. Flagships have incredible power to delight, inspire and connect, but it is local stores – done well - that have the most power to drive loyalty, long-term relationships and the best R-word in retail: retention.

To know the truth, look below the deck

On the stage, at the big property event, the well-known landlord Exec will talk of the importance of understanding the nuance of asset bifurcation. They will talk through the data, proving that flight to quality is real and very much alive. They will talk about the accelerated population growth that skilled migration brings to Sydney and detail its projected impacts on office uptake. They will talk about the tide-turning, as workers come back to offices in droves, citing Opal Card data or other. And they will talk about the considerable office stability that Australian cities have in comparison to other gateway cities, such as London, New York and Toronto. It is understandable and right for them, in their role, to present this narrative.

Behind the scenes, where the real stuff gets done, the people who assign the money, the lenders, are offering a different narrative, by way of their lending appetite.

• Only 10% of Australian lenders now categorise Office as a favourable asset class.

• Industrial, Build-To-Rent, Build-To-Sell, and Alternative Assets are now, respectively, the top 4 lending asset classes across investment grade real estate.

• Office is currently ranked below Retail.

• Most Lenders now require a pre-lease commitment above 60% for Office to be considered, while Industrial requires no pre-lease commitment at all.

• In 2023 Australian banks reduced their exposure to Office debt to its lowest mark since 2010.

To say that Office is an investment concern is a bona fide understatement. A better simile would be to say it's a boat with a gaping hole in its hull, and the captain and crew members are quietly suiting up with life jackets.

And while in the short term this Office paradigm does indeed present tenants with a powerful bargaining chip to secure quality office with high incentives, in the long term it means that the overall product, particularly lower grades, may deteriorate through lack of available investment. It may also mean that fringe and suburban Office Hubs, like Mac Park and Chatswood, become dingy and soulless.

Many landlords have provided an excellent service over the years, and no one wants to see them fail, but Office, in its post-industrial era form, is radically changing. Crucially, however, the businesses and people that used to congregate within them, are not.

They are very much here and thriving and are just looking for new environments to suit a new purpose.

For many of us, this transition from past to future will be a struggle. Today's entrenched leaders are unlikely to be the right people to lead tomorrow's workforce, as the temptation to go on another "in my day" rant may prove too great.

And so, as autumn turns to winter, eventually the green shoots of spring will arrive, and a peaceful rhythm will settle in once more.

Scentre Group threatens to lock out David Jones

This week David Jones is again in the news because of a breach of lease across their Scentre Group portfolio. After a stoush that has been unfolding over at least the past month, Scentre have now issued a formal breach notice on 8 stores (out of a total of 19), because a change in control has occurred without their approval.

DJs was acquired in March 2023 by Anchorage Capital Partners, who have a mixed record on retail acquisitions, with the ill-fated Dick Smith 2012 purchase and subsequent collapse, and the more recent voluntary administration of Scotts Refrigerated Storage, sitting alongside success stories such as Brand Collective (who own Superdry, Volley, Shoes & Sox).

According to the AFR, “Scentre is not convinced Anchorage is a satisfactory counterparty to the lucrative long-term leases it has signed with David Jones and has refused to agree to the change of control”.

What is a Change in Control?

Change in Control is a lease term often overlooked by smaller retail tenants, but very surprisingly so by a major like David Jones. Essentially, change in control refers to a situation where the ownership or control of the tenant changes hands. This can occur in several ways, such as through a merger, acquisition, or sale of the business.

Most tenants don’t assume that their landlord could dictate if and to whom they sell their business. But this clause effectively allows this, and it can come as shock to both little and big retailers alike.

Typically, landlords seek to include this clause in case the tenant is acquired by another company that may not have the same financial strength as the original tenant. This could potentially impact the tenant’s ability to meet their rent, refurbishment, or other obligations to the landlord under the lease agreement. 

To protect the landlord’s interests, a lease agreement may require that the tenant obtain written consent before any change in control occurs. The landlord may also reserve the right to terminate the lease if there is a change in control without their consent, as is the current scenario with David Jones, or to require the new tenant to provide additional financial guarantees or security deposits.

The other concern shopping centre owners tend to have is in regard to the new tenant’s reputation and retailing skill. The change in control carries a potential risk of negatively impacting the centre tenancy mix, brand credibility and overall customer experience.

What can tenants do to better protect against a change in control clause?

Whilst they are often tedious to read, and harder to understand, it’s important not to gloss over a change in control clause. This applies even if you are not currently considering selling or listing your business in the future. It’s apparent now that David Jones may not have thought they would ever sell, when some of these breached leases were signed in the 1970s.

Depending on your position, and your landlord’s priorities and concerns, there are a number of different strategies that may be applied in order to reduce your exposure and increase your operating flexibility.

In new lease negotiations, it is often possible to remove this clause altogether, or substantially reduce the limitations it can have on your future dealings. Mitigating this exposure could include seeking an assignment of the lease to the new entity without the need for the landlord's consent, provided that the new tenant meets certain financial criteria. Alternatively, ensuring a change in control only triggers at a certain percentage of ownership (typically 50% or more), or does not apply to an IPO.

If you’d like to learn more about change in control strategies, or other ways to mitigate your leasing risks, reach out to me or any of the team at Franklin Shanks for a chat.

Jaymie Rowland

Head of Retail

Snap Print & Design engage Franklin Shanks for a lease renewal

As the go-to specialists in business printing for over 120 years, SNAP provides an end-to-end printing service, with the ability to implement every aspect of printing requirements, from the initial brief and graphic design through to printing and the finishing touches.

Franklin Shanks work closely with Snap on their property portfolio, and in this instance were engaged to secure a critical renewal for their largest CBD print centre nationwide.

Key Challenges

Renewing in the midst of Covid recovery in early 2022, Snap were faced with uncertainty about whether a renewal would be offered by landlord. Franklin Shanks worked directly with the Landlord’s representative and the Franchisee to ensure all parties were assured and confident in making a commitment of a new 7 year term.

A further challenge presented in the commercial terms, which were offered at a materially higher rate than the previous term, and compounded by aligning with the natural end of a two year covid rent waiver/deferral period.

Outcome

Franklin Shanks provided a stay-go analysis, benchmarking the rent and incentives, and conducting a financial review of the offer against feasible alternative options. The best option was to renew the lease, due to complexities in relocating machinery; however, benchmarking showed that whilst face rent was aligned with the market, effective rent was out of step due to soaring incentives in CBD markets throughout 2021-22.

 A market rate incentive was then successfully negotiated, incorporating clearing remaining covid deferral payments, and providing a significant abatement period. This allowed the franchisee to ease back to the face rent value in line with their covid recovery trajectory.

“My advice to any business with property leases not just high-risk ones: When it comes to portfolio security and ensuring you are receiving the maximum benefits, engage the experts and call Franklin Shanks.” – Glenn Jarrett, CEO Snap Franchising 

If you would like to speak to Jaymie Rowland about your upcoming lease negotiations, reach out directly on +61 405 342 598 or [email protected]

The Holding Space Collective engage Franklin Shanks to secure a new space

The Holding Space Collective is a boutique private psychology practice that opened in September 2020. A Centre of Excellence (COE) offering a range of services that meet the needs of both individuals and families who have experienced trauma, grief, and/or loss. The Founders chose the name 'The Holding Space Collective' from a belief that this is the single most important aspect of any therapeutic journey - a safe, warm and supportive space for individuals and families to explore and express themselves, both their struggles and how they give meaning to their world.

Our Engagement

Franklin Shanks was engaged to deliver a practice space that echoed and supported their mission, as this was vital to THSC for their client’s wellbeing and successful therapeutic outcomes.

The Brief

To secure c.200sqm of office or retail space within Sydney fringe. Essential drivers were easy access and street carparking, a quiet, discrete space with a warm and inviting feel, good security, and natural light. THSC were looking to create a calming home environment, balanced by security for both staff and clients that an office/commercial building could better provide than a standalone house.

The Challenge

Finding a commercial space that didn’t feel like an office, or an open plan warehouse conversion. Small, private rooms and good internal soundproofing were essential and challenging to locate. Further, as a new business entering their first commercial lease, during the 2021 lockdown period, minimising fit out and occupancy costs was highly desirable.

The Solution

The initial range of inner west suburbs was expanded to include neighbouring Ultimo and Pyrmont, where heritage and character commercial spaces are more readily and reasonably available, with a greater selection of floorplates with individual offices/rooms rather than open plan, high ceiling spaces.

The Holding Space Collective now call the iconic Farmers and Graziers building on Wattle St home, with timber floors, arched windows and building security for staff, and readily accessible weekday parking for clients. Secured on a 3 year term at highly competitive rates, and with the very first small tenant e-guarantee in the Sydney market, eliminating the need to tie up valuable cash flow in a bank guarantee.

“Our experience of working with Franklin Shanks exceeded our expectations. They provided excellent end to end service, expert advice and market knowledge, and all at a very reasonable cost to our business. Their enthusiasm, transparent communication, and passion for delivering a quality service supported us through what might have been a difficult process. We would highly recommend them.”

April Ash & Louise Turner, The Holding Space Collective

If you would like to speak to Jaymie Rowland about your upcoming lease negotiations, reach out directly on +61 405 342 598 or [email protected]

Franklin Shanks assist Acumentis with Office Lease Acquisition | Alexandria, NSW

Client satisfaction is everything to us. Our team are passionate about what they do, so that when a client leaves a testimonial like this one from Acumentis, it emphasises how much value we add during a lease transaction. Nathan Wang, Senior Associate, took the time to understand Acumentis Group’s business and property goals and secured a very suitable premises in a desirable location. Here is a message from John Wish, CFO and Group Executive Director at Acumentis Group.

“Acumentis engaged Franklin Shanks to assist in locating a new office in southern part of Sydney to replace our long standing Rockdale office.

We had a relatively tight budget and were looking for space that would provide good amenity to our staff, have onsite parking and be close to public transport links, preferably rail.

Nathan Wang of Franklin Shanks provided several options that would meet our requirements in what at the time was a challenging market with limited opportunities.

Once we had selected our preferred option within Sydney Corporate Park in Alexandria, Nathan Wang and Franklin Shanks negotiated very strongly on behalf of Acumentis and we ended up taking a 5 year lease at an attractive gross rental and with the landlord providing a beautiful new fitout as part of the incentive.

Franklin Shanks took the time to understand our requirements and delivered a selection of properties that appropriate.

We saved a lot of time and are very happy with the end result.

We would whole heartedly recommend Franklin Shanks for companies looking for assistance with finding their next office.”

John Wish, CFO and Group Executive Director | Acumentis

If you would like to speak to Nathan Wang about your upcoming lease negotiations, contact him directly on M: +61 406 638 580 [email protected]

Conflicts of Interest | Wearing too many hats in the same transaction

There has been recent coverage about potential conflicts of interest in commercial real estate brokerage scenarios and wearing too many hats in the same transaction. Conflicts of interest are present within the commercial real estate sector, and most go unnoticed and are usually well managed by professional firms. However, with the latest lawsuit involving CBRE all over the headlines, it is about time we address this serious matter – publicly. 

Recently, a New York-based real estate investor announced they were suing CBRE for more than $11.5M in damages over a Washington D.C private school lease. They are claiming CBRE failed to adequately disclose that it was representing both sides and that it misled the landlord on the tenant's financial health.

Whilst accepting that conflicts of interest can be professionally managed and have been so handled for many years, the push for fee maximisation is increasingly blurring the lines. As a tenant only advisory firm, Franklin Shanks, we have been vocal about the importance of transparently managing conflict for many years. We elect not to represent or seek brokerage fees from Landlords, to ensure our clear alignment with our clients – has the time now come for a more rigid approach, possibly a clear set of industry based rules covering this important issue?

In a world of increasing globalisation and consolidation of real estate service providers, Franklin Shanks has aggressively maintained its independence. We don’t act for landlords, and we don’t manage buildings - we simply represent occupiers all day, every day.

To read the full article please see here: https://tinyurl.com/nap5fcw

Franklin Shanks assist Afterpay with Melbourne Workplace Lease Acquisition

Overview

Afterpay is an international payments platform, built to enable financial wellness for the next generation of shoppers. Consumers receive products immediately, pay in four interest-free instalments and are rewarded for paying on time. With no credit checks, no interest, and no catch, we empower customers to pay in a financially sustainable way. Afterpay is a movement in which everyone wins - shoppers, retailers and society.

Afterpay is offered by over 55,000 of the world’s best retailers and has more than 10 million active customers globally. The service is currently available in Australia, New Zealand, the United States, the UK, Canada and Europe (Spain/France/Italy/Portugal)

Our Engagement

Franklin Shanks was engaged to assess the Melbourne office market and source suitable accommodation for Afterpay’s new Melbourne HQ. Afterpay were across two sites and were looking to consolidate their operation. Afterpay had also introduced a Hybrid Workplace model allowing multiple team members to work from home as well as the office.

The Brief

Afterpay initially required c.3,000-4,000sqm of A Grade office space within the Melbourne CBD. Large inter-connected floors were a key driver within an A-Grade building offering quality staff amenity in an accessible location. Outside fresh air via external terraces was also a high priority. Afterpay were looking to create large open spaces with multiple work and meeting zones, cantered around large areas for special events, functions and all-hands meetings.

The Challenge

The Melbourne office market had low to moderate A-Grade and Premium vacancy, with a spread of opportunities available for the business. The key was large useable and efficient floor plates also providing outdoor spaces and the ability to interconnect floorplates. A side core modern A-Grade building close to their current Collins Street location was the main challenge.

The Solution

After a long due diligence of the market and having technically reviewed and test fitted a number of floor plates, Afterpay focussed on GPT’s Queen & Collins Tower (ex 100 Queen Street) which was under construction, undergoing a back to base refurbishment, linking all existing low-rise buildings on Collins and Queen Street to the tower, providing Afterpay an opportunity to secure 4 large low-rise podium floors allowing them to consolidate and integrate their business in a stunning new workplace environment.

The Outcome

The overall deal both financial and non-financial was an outstanding result for Afterpay. A five-year lease commitment allowed a high level of landlord capital towards their fitout and a lease structure that provided for expansion within the tower and adjoining Collins Street building as the business grew. There was also a high level of additional landlord capital towards further base building upgrades (voids and façade works) and contributions to tenant fitout.

The result provided Afterpay with flex space, expansion rights, option terms, attractive face rent and escalation structure, and caps on limited opex and future capex liabilities. Additional business lounge/third spaces were made available plus basement parking and signage right options.

“Afterpay would like to thank Franklin Shanks for their partnership and support under the Agreement. Franklin Shanks has been an important partner contributing to the growth and success of Afterpay and the team wishes Franklin Shanks every success in the future”

Tim Halpin | Director, Property & Facilities

  For assistance with your lease negotiations, please contact Scott Berriman on 0416 122 233.

Let’s get Physical! Taking your ecommerce baby to the people.

Whether you’re seed stage, Series A start-up or a seasoned ecommerce player, taking the plunge into physical retailing, or expanding your store footprint is a huge step. Launching into the world of store strategy and location sourcing can be as challenging as it is exhilarating, but has been identified as an essential post pandemic strategy for many DTC brands: Human to human contact is invaluable for brand loyalty, customer experience and continued growth. 

Location sourcing and retail leasing can be overwhelming, with plenty of factors to consider. The ‘Franklin Shanks Four’ most important things to know before signing a store lease are:

1.     How your space serves your brand

Physical space is one of the most powerful opportunities to build brand credibility and long-term loyalty – with your customers, your teams, and your investors. Be it brand activations, test store pop-ups, short-term leases or long-term investments, understanding your physical objectives and how to best leverage a physical footprint goes well beyond ‘that’s a cool space with good footfall’. 

2.     Location Location Location

Are you a convenience or a destination brand? Are your customers in centres or on cute local strips? There’s no one size fits all approach to ‘the best retail space’, and understanding who your customer is – or who you want them to be – will greatly inform your location strategy for both short and long term physical investments. It may be the general rule, but footfall isn’t always worth paying for, and being located next to major mainstream brands doesn’t always resonate. Make informed decisions with tailored demographic and psychographic data overlayed with detailed local market knowledge. 

3.     Realistic Optimism

New stores are exciting, none more so than your first flagship location. But balancing flexibility and surety is key to ensuring your property investment works for you. Property is typically one of the three largest costs in a retail store (after Product and People) and the largest fixed cost. Typical retail lease terms are 5-10 years to rationalise fitout costs and to build trust and loyalty through consistency. But should you outgrow the space or the strategy, or need to contract, it’s important to ensure this is factored into the business plan and your lease agreement. Considering casual leasing, shorter terms and subleases can be advantageous if balanced against your initial investment and allows you to maintain agility as your brand and strategy evolve.  

4.     Have you got the right stuff (terms), baby? 

You may have negotiated a few commercial leases to get to this point, however the market is evolving rapidly as we exit covid. Understanding the current landscape and how to craft a market leading agreement is critical in ensuring your lease works for your business, not just your landlord. Commercial leases and retail leases can also be worlds apart, in both commercials and legislation, with very specific requirements around a wide range of clauses such as disclosure statements, market reviews and relocations. A solicitor who specialises in property is highly recommended to review your lease for legal exposure, but they may not be familiar with current market comparables, incentives and your operational requirements. Engaging commercial experts such as tenant representatives, who understand your needs can help save you time, money and headaches, and free you up to focus on meeting your customers face to face with an incredible instore experience. 

If you’re looking to take the leap into physical retail, we’d love to help. 

Contact Jaymie Rowland on +61 405 342 598  or [email protected] 

Is your Start-up Ready for a Physical Office Space?

Working from home as you build your business is great to start with as your creative juices flow, however it can quicky become limiting for your business especially if you have come as far as hiring people. If you’re ready to give up your kitchen table or living room sofa and start renting an office, we can help you navigate the end-to-end leasing process so you can focus on what you know best – growing your business.

Whether you’re a seed stage or Series A start-up or have raised additional funding rounds, start-up office space in Sydney can be overwhelming and a tricky landscape with a lot of negotiations to consider. Here are the 4 most important things start-ups should know before signing their first office space:  

1.     What your office space says about your business

Brand identity and credibility are the emotional connection that your team and clients will have with your brand. Meaning your physical office space is a first impression for your brand and vision that customers, employees, investors or visitors will form. Fortunately, you have a choice in the type of space that will most benefit your business: 

-       Coworking space: This is a popular choice amongst start-ups as it allows you to take a short-term commitment from a couple months to longer. Coworking spaces such as WeWork, JustCo, Hub Australia and Tanks Stream Labs, all provide a ready to go environment that is fully furnished and well designed. As you only need to sign a license agreement, you won’t need to worry about a lawyer reviewing your lease agreement. You will also be surrounded by like-minded entrepreneurs and start-ups.

-       Sublease space: Subleases are a great way to maximize value for start-ups looking to secure office space. Especially since the pandemic hit as workplaces adopted an agile approach to working and no longer required their full floors and large spaces. Like any space, subleases run the full spectrum from brand new and beautifully fitted out to the more simple and minimal style. A sublease agreement is required so you will likely need to engage someone to take a closer look at this for you.

-       New direct lease: A new direct lease is ideal for a start-up looking for longer term space of 3+ years and where you may be looking to modify an existing or fitout a new space to specifically meet your business requirements. There are more options to negotiate a good deal with the landlord to say cover a portion of the fitout costs.

Coworking space

2.     The employee experience in and around your office space

We have learnt from assisting many of our start-up clients, that what surrounds the office space is imperative to attracting and retaining best talent in a competitive market and ultimately supports your business growth and opportunity. 

Location plays a big role as people look for more convenience around their already busy work-lives in a post Covid world. Public transport, recreational spaces and restaurants all contribute to an attractive modern workplace and ultimately employee morale. Parking should be its own key factor if your business relies on client or customer interaction.

Surrounding yourself with like-minded people is key for Founders. Considering building and landlords with start-ups in their portfolios is key. These landlords will be more accustomed to the relative risk of a startup tenant, understand and be willing to adapt for uncertainty with respect to growth, and be more comfortable with startup financials. When you’re a startup, landlords want to “win” your business and grow you within their portfolio, but they also have varying levels of comfort with your relative “risk”. It’s important to understand which buildings and landlords are experienced with startups, as this will have a direct impact on the economics of your deal. Alternatively, consider joining a coworking space like WeWork, JustCo, Hub Australia or Tank Stream Labs. 

Facilities also play a key role in employee experience. An A-grade/premium building will have state-of-the-art facilities while a B or C-grade building will have adequate to minimal facilities. Consider how your business operates and what facilities it would benefit from such as shared meeting spaces, day care services, outdoor areas and end-of-trip facilities. Access to these facilities and services will contribute significantly to the overall productivity of your team and ease of business operations.   

3.     Being optimistic and realistic about your future growth plans

Flexibility is key in the start up ecosystem and engaging with landlords who can provide for both growth and, on occasions sadly, contraction should be key in any decision making process – real estate as a fixed cost is a significant part of your business operational expense and being saddled with space you do not need reduces your ability to use cash for development and growth. This is where considering flexible co-working space or shorter terms subleases can be advantageous.

4.     Should we talk about negotiating the right lease terms

Considering an office space for your start-up also means negotiating your lease and future makegood obligations which can in themselves be significant. Whilst an independent tenant advisor is best to assist with this, some start-ups choose to look after this themselves and may be deterred from what could have been an ideal location due to unfavourable asking terms. Taking good, independent professional advice will ensure you negotiate fair and flexible lease terms matched to your business needs, this is where we can help save you money and make the right choices to meet your start up’s fabulous future as hopefully you grow to be that next Australian Unicorn!

If you’re looking to take the leap out of your living room and into a space that provides opportunity and supports your business growth, we’d love to help. Contact Mike Franklin on +61 416 985 650 or [email protected]

A NORA Showreel featuring Franklin Shanks | Retail Property Strategy

Let us help you take care of your retail property requirements. Jaymie Rowland is our retail property specialist and works with well-known retailers to reduce their property risks. Jaymie and her team take care of the time consuming and often time-critical details associated with running a robust, profitable retail portfolio, so retailers can focus their time and energy on growing their businesses. 

Late last year, Jaymie had the pleasure of sitting down with Paul Waddy at NORA - National Online Retailers Association to highlight the importance of a strong property strategy for retailers. Listen or read their interview below for valuable insights into Jaymie’s retail knowledge. 

For more on the NORA Network visit their website here. 

Get in touch with Jaymie on [email protected]

[Paul Waddy | NORA]
Welcome to the Nora Showreels. My name is Paul Waddy. I am a member of NORA advisory committee and an ecommerce advisor, feel free to connect with me on LinkedIn if you want to learn more about what I do. Today we are lucky enough to be joined by Jaymie from Franklin Shanks. Welcome and thanks for joining us at NORA.

[Jaymie Rowland | Franklin Shanks]
Thanks so much Paul it is nice to meet you

[Paul Waddy | NORA]
Why don’t we start with a little bit of background about the company and the role you play inside the company?

[Jaymie Rowland | Franklin Shanks]
Yes- so Franklin Shanks is a commercial real estate advisory firm, we have been around for about 14 years now. I am relatively new to the team, and joined last year to head up our retail division. We look after commercial property from office to industrial to anything that you could think of that your business might need, but my passion is retail. I have been a retailer for longer than I am ever going to tell anyone here, so we help with everything from overall property portfolio management through to individual leasing acquisitions and pitfalls and things like that.

[Paul Waddy | NORA]
So your niche is retail, what makes Franklin Shanks different? What makes you the best?

[Jaymie Rowland | Franklin Shanks]
I like this question. We are different because we are small. We are a boutique agency and we were founded by Mike Franklin and James Shanks who both worked in large institutional corporate commercial real estate agencies -who shall remain nameless. They found they were consistently butting up against conflict between tenants and landlords, when you are one of the big firms and you have clients who are landlords and clients who are tenants someone is going to lose out, and invariably it is the tenant that loses out in that situation. So, we were founded to be entirely tenant focused. We do not represent landlords, and that allows us to not have any conflict of interest when we are negotiating a deal. 

[Paul Waddy | NORA]
Interesting… so you are right on the tenants side, I like that already; this is an interesting one, I think in our stage as retailers or online retailers that we all have had to look  at commercial property and often we go it alone and don’t always know what we are in for and things like incentives and all the terms of the lease, what are the things that retailers should come to you for rather than going it alone?

[Jaymie Rowland | Franklin Shanks]
Ughh, everything; and come to us before you sign anything. Seriously we often start conversations with people when something has gone wrong, when they have already signed a lease and they are stuck in it for whatever reason[[interviewer] “trying to back out of the lease?”] correct! Yes, over the last 18 months or so there has been a fair bit of that, so we certainly say that it is what we do all day every day, you know we spend every day talking to agents and operating in that marketspace so we know it inside out and read leases every day. Whereas even an average sized retailer who might have anywhere from 20 to 100 stores is still not doing that as a daily activity, and it is hard and you miss things and you are under time pressure—a lot of that fine print and critical dates can get lost.

[Paul Waddy | NORA]
I think that is a really good point and there are a lot of retailers –independent retailers, that occupy a lot of real-estate and they really don’t know what they don’t know, would I be right in saying that you could help a retailer not just in finding a property and getting them a great deal, but also as you pointed out; helping them through difficult stages as well where you may need to re-negotiate or even try to quietly exit a lease.

[Jaymie Rowland | Franklin Shanks]
Yup!, there has certainly been a lot of those conversations lately. We find we add value because we can be a little bit of a buffer and sometimes it is the case, particularly with independent landlords and tenants where, perhaps; the relationship has just broken down over time and no one is getting anywhere anymore. So, we sit as almost a neutral party and can say: “we know this is what the market rate is, we know what incentives look like at the moment; this is what we know to be a fair deal, it puts a little bit of a breather in place and allows the relationship to move forwards because ultimately you have signed a lease—whether it is for 3 or 5 or 7 or 10 years and you need to be able to work with your landlord. Having us able to step in and whether you need us to play good cop or bad cop we can do both.

[Paul Waddy | NORA]

Retailers might look at using a commercial agency or a tenant representative as a cost, but I would look at it as the cost is well and truly more than absorbed by the incentives maybe that you are able to get that are not able to be accessed – [[Jaymie] “come and work for us!”] – Do you feel that is a fair call? 

[Jaymie Rowland | Franklin Shanks]

100%. We obviously don’t like to promise anything but it would be safe to say that we are not doing our jobs if we are not at least covering our fees by what we will save you. Everyone comes to us asking about what we can save them on their base rent, yes we can do that; but where we will really add value for you is in ensuring that the lease works for you and that we build flexibility in long term and that we remove as much ‘vaguery’ around the terms that are in the lease, so when something goes wrong you know where you stand and what you are entitled to, as opposed to ending up in lengthy negotiations with your landlord where it becomes a more hostile situation that it needs to be

[Paul Waddy | NORA]

Yeah I think that is a good point and one of I guess ‘gotchas’ that I have seen in a few leases and most of them have been stinkers, you know is not thinking about what happens when the lease expires and particularly when you are doing well and want to stay, exiting is one thing but what about the next 3 or 5 years and then all of the sudden you are hit with a 25 or 20% increase or God knows what else, what are some other ‘gotchas’ that people might not know about?

[Jaymie Rowland | Franklin Shanks]

I think certainly thinking about what happens when things go wrong is invariably- we all have a positive bias right?- and we don’t like to think about the rainy day. So it is things around whose responsibility are repairs and maintenance, who pays for what when something goes wrong, building in safety nets around how long you have if there is a breach of your lease—something people don’t tend to think about very often, and then those exit costs. At some stage you need to leave, hopefully because you have outgrown the space and everything is  doing really well, but negotiating better terms around that can save you again, quite a lot financially but also in terms of stress when you get to that point.

[Paul Waddy | NORA]

Who are some of the clients you are working with and then the second part of that question is-we have probably got some good retailers listening- who are some that you would love to work with?

[Jaymie Rowland | Franklin Shanks]

Look, so I am going to shy away from ‘who are some of the retailers you are working with at the moment’, I haven’t told any of them that I was doing this today. Confidentiality is something that we pride ourselves on and we find that is often really valuable. Where we have found our niche is with retailers who have quite a strong ‘strip’ focus. That is, if you are a retailer that is predominantly you know—Westfield or Vicinity, then you are dealing with only a couple of agents to manage your whole portfolio, whereas for retailers who are into bulky goods or neighbourhoods or strips they might have as many landlords as they have stores. And that is really time consuming and also tends to have a lot more emotions in play when you have independent landlords rather than institutionals, so that is where we have picked up most of our clients. People that have anywhere from 10 to 100 stores around the country and are just struggling to look after that function in house with one or two property people, and the reason we are here with NORA—we are a new solution partner for NORA—is because we see the evolution that obviously e-commerce has had a pretty good couple of years, which is awesome (and I am an e-commerce manager from way back so it is great to see the industry doing really well), but that the next evolution we see for a lot of those online pureplay retailers is branching out into physical and it is hard to do and it is hard to do well. We would love to put our hand up and say let us help you with that strategy from the start so that you get it right and you are signing leases that will hold you in good stead for the life of the lease. 

[Paul Waddy | NORA]

Yeah, I think that is a great way to round it out and speaking from experiences I wish that I had used tenant focused agencies right back at the start—you nailed it before—you will be more than covering the fee that is involved and not to mention the heartache as well.
So, Jaymie; really nice to learn about Franklin Shanks so thank you so much for joining the NORA showreel.

[Jaymie Rowland | Franklin Shanks]
It has been my pleasure, thank you so much.

How our Global Network ensures we provide first-class Tenant Representation

Franklin Shanks is part of an extensive global network of best-in-class tenant representation experts, Exis Global. Mike Franklin, Co-Founder of Franklin Shanks, is an executive Board Member and Global Co-Chair of this worldwide group. Founded by the world’s most respected and recognised independent tenant representation firms, Exis is dedicated exclusively to representing occupiers and corporate end-users without conflict of interest and with a goal of providing cost-saving outcomes.

Leveraging this close network enables Franklin Shanks to provide comprehensive services, thought leadership and local expertise across 40 cities throughout Asia Pacific, Europe and the Americas. In every way, our service is professional and consistent and allows us to manage the complexities of regionally diverse real estate portfolios effectively.

While other networks employ individual advisers in various countries to create a global presence, we work with established firms that are leaders in their geographic areas. They have a solid track record and extensive knowledge within their local markets. Collaboratively, we provide our clients strategic consulting and pragmatic solutions whether they are local or looking to expand around the globe.

For further information on any global market, please contact Mike Franklin on [email protected]   

Employers are ready & Employees don't know what they want!

Last week we stumbled across an interesting read on employers’ eagerness to return to significant in-person interaction to save company culture while employees, simply put – are not. Published mid last year, this is still a very real issue amongst the workforce and let’s face it, for some time to come. 

Here is an overview: 

Employers are coming to terms with the whole concept of hybrid working. They want a new normal that is somewhat flexible but not dramatically different pre-covid. 

While Employees don’t know what they want are re-evaluating their relationship with work. For example, they expressed working from home drives fatigue and weakens their sense of belonging, but on the other hand, they discovered a connection to their home and family in ways that changed them.

A report McKinsey undertaken mid-last year found more than three-quarters of C-suite executives expected the ‘key’ employees to be back in the office three or more days a week. On the other hand, nearly three-quarters of around 5,000 employees queried globally would prefer to work from home two or more days per week. 

Furthermore, Leaders must come to terms with the future uncertainty of hybrid working, or key talent will continue walking out the door. Recent surveys found that 40 percent of workers globally are considering leaving their current employers by the end of the year.

Perhaps leaders need to embrace this opportunity for change and work with their employees to discover better ways to keep companies productive while caring for their workforces. There is no finish line, and the suitable longer-term working model is a work in progress.

To continue reading this article in more detail, you can find it here McKinsey Report.  If you need help finding a space that fits your strategy, we’re here to help. Contact Co-Founder Mike Franklin on [email protected]   

The Hype Around Hybrid Work – Across The Globe

There is no doubt the word ‘hybrid’ has been thrown around workplaces more than ever in the past two years. The hype is real and it’s across the globe as companies begin to brace for change and employees battle with what best works for them. We found 5 trending articles that delve into the pros and cons of a hybrid work model and its impact on productivity, company culture and talent. We hope they may provide useful insights to help navigate the challenges you may be facing and decide what’s right for your company.

1. ‘It’s time for leaders to get real about hybrid work’ – McKinsey Report

2. ‘Remote work is failing young employees’ – New York Times

3. “Most Companies Keeping NYC Offices While Adopting a Hybrid Schedule: Survey” – Commercial Observer

4. “How 15+ Tech Companies are Transitioning Back to the Office (Or Not)” – Fast Company

5. “Zillow is Adopting a Hybrid Work Model, But CEO Is Trying to Prevent a “Two Class System” Amongst Employees” – Business Insider

If you need help finding an office space that fits your strategy, we’re here to help. Contact Co-Founder Mike Franklin on [email protected]

The Sydney Corporate Real Estate Market – past, present, and the return

With Sydney shaping up to be one of the longest locked down cities in the world, (yes Melbourne still wins), we look at the impact on the Sydney Corporate Real Estate market, and more importantly, what we can expect office life to look like as restrictions ease. 

2020 - Lockdown 1.0

When the lockdown struck in March of 2020, uncertainty spread amongst businesses and real estate took a hit. Following the lockdown from June to Christmas, the market rebounded strongly and the economy bounced back with multiple bailout packages for businesses and individuals.  

At the beginning of 2021, there was very high demand for commercial real estate, fuelled by high incentives and higher than normal vacancy levels. Interestingly, the whole​-floor market softened leading into June​, with increased demand for part​-floor/small suites. The market remained steady right through to May/June before lockdown 2.0. Face rents in the majority held firm, with incentives very much asset and Landlord specific.

2021 - Lockdown 2.0

Lockdown 2.0 has certainly slowed things down, although transactions are continuing and completing​, with interest from tenants aplenty. We are now seeing great underlying pent-up demand with corporate Australia looking ahead into 2022 in a vaccinated ‘no lockdown, no shut border’ environment. We certainly expect to see an increase in demand from Q4 this year with a progressive return to work as we hit the "magical" 80% vaccination rate.

Returning to work

The second lockdown has reinforced the value of face-to-face interaction​, and the importance of a place of work for collaboration and culture development. Employees absence from the workplace has reminded them of the benefits and the primary purpose an office serves. ​With restrictions likely to ease in stages, it will similarly be a staged easing back into the market.

The Workplace Hybrid model is here to stay in a variety of ways over the next few years. Flexible work arrangements, ​likely1-2 days per week, will continue to suit those with a longer commute, back-office staff and/or senior staff. Some business functions will also suit ongoing remote work better than others, with sales teams most likely to return quickly. A few weeks ago we also highlighted that many employees are requesting flexible 'work from anywhere' policies as a cornerstone for their hiring negotiations. Beyond talent retention, a hybrid model may undoubtedly prove more beneficial to mental health and wellbeing as employees find a cadence that works best for their individual situations​, and potentially having positive sustainability impacts as travel is reduced. 

Incentives & Rents

Currently, incentives are still ranging from low 30’s to 40% driven by stock with higher than market vacancy levels. Different precincts have different metrics, with the western core lagging behind stock opportunities in the core and mid-town. We see incentive levels maintained in the short to medium term with 'hidden incentives' such as delayed start dates continuing.

We expect face rents to remain fairly flat, with a tenant-led market right now. As we move into 2022 and 2023 we will see minimal face rental growth across the Sydney Commercial Market. 

Sublease space from the initial lockdown in 2020 was c.180,000sqm, now down to approximately 130,000sqm. Most of this sublease space has been withdrawn, for example, Macquarie and Deloitte, while the rest has been absorbed with above-market deals, quality, high-level fit-outs, attractive rents and medium lease tails.

In summary, it is evident the lockdowns have had a significant impact on the corporate real estate market and economy. The physical workplace will remain with a hybrid model adopted, a tenant led market will continue to see attractive incentives causing a continual drop in effective rental levels.

The future of the workplace. Let's take a step back; what is the primary purpose of an office?

Inevitably, a pandemic that grasps our health and safety in its hands will transform how we work and go about our day-to-day activities. As corporate real estate advisors representing clients in Australia and globally, we have seen this impact our clients in many ways. Whilst the dynamics of workplaces continue to rapidly change and evolve, we can share what we have observed in the market over the past year of remote working and where we believe it is heading.

Employee's ability to ''adapt'' has become increasingly apparent. Businesses have reviewed their processes, and the ''old way'' of doing things has fundamentally started to feel like the new norm with some interesting but not necessarily surprising nuances. Technology will remain a key challenge for employers to ensure efficient accessibility to one another and remote data in the office and working remotely. For the majority, we've seen that both productivity and profitability is possible remotely. As we pointed out in our July post, we highlighted some global tech companies transitioning to permanent remote work, though this has iterated again to reduced numbers with some key global groups espousing a full return to the office. In contrast, other companies are still encouraging a hybrid transition back into the workplace. Management continue to navigate and derive best work practices for their teams who in their turn are reporting increasing frustrations working away from their colleagues. 

The critical question employers should ask themselves is; What is the office really for – the purposes a physical space serves and what drives individuals. Understanding these factors can help derive best workplace practices. So, we polled reasons why we would like to return to the office.

1.         Inspiring Environments 

While offices are, in some way, a home away from home, equipped with the essentials like a kitchen and a place to sit and work, they can also be inspiring spaces, purpose built to encourage great work. They have funky furniture, greenery, lighting, creative writing walls. Being in a distraction-free environment provides focus and time management, and limit distractions. At home we often encounter distractions and limited tech facilities, including sharing broadband and family demands that may cause productivity frustrations, whereas good office design provides a balance between collaborative and solitary spaces.

2.         Sense of Belonging & Socialisation

Going to the office provides socialisation and collaboration. Meeting rooms and areas to sit down and have a casual chat over a coffee, and indeed those “collisions” that occur in corridors, lifts and common areas are vital for everyone’s mental health. Many find a sense of belonging in their work environment, feeling valued and being a part of something that gives them purpose.

3.         Learning Styles

People's learning styles will strongly determine where they most thrive and feel most productive. Some people function better at a dedicated place of work, with the ability to “partition” their lives from family and friends. They like to connect, learn, create, and challenge together in a social environment with a team.

Additionally, there may be too many distractions at home and limited tech facilities including sharing broadband with every increasing family demands may cause productivity frustrations - good office design will provide balance between collaborative and solitary spaces.

Understanding what the primary purposes an office is, and an individual's preferences will help shape your return-to-work strategies. While offices aren’t disappearing just yet (our personal and professional view is that they will not disappear just evolve), the purpose they serve in people’s lives is changing and the office layout must change with them. Check out our other article that highlights the ‘top 6 workplace changes post covid-19’.

Top 6 Workplace Changes Post Covid-19

We'd like to share our observations on the common workplace changes taking place to ensure the health and safety of all employees post Covid-19!

1. Private spaces
   While agile spaces will remain, there will be a greater focus on using portable walls to divide spaces and provide privacy.

2. Technology

   With an increased % of people working remotely, there will be a strong reliance on efficient technologies to stay connected and support daily work activities.

3. Enhanced Hygiene

   Workplaces will have a greater need to maintain personal hygiene. Frequent cleaning of workplaces, ensuring airflow is sufficient, and providing appropriate PPE.

4. Mental Health

   Workplaces that promote mental health and support people with mental disorders are more likely to reduce absenteeism, increase productivity and benefit from associated economic gains.

5. Flexible Arrangements

   We all had a taste of it and now we expect it to stay. Workplaces are acknowledging the positive outcomes of flexible arrangements in boosting staff morale and improving physical and mental well-being. Not only is this being used in recruitment negotiations, but more and more workplaces are adopting this as permanent policy.

6. Touch-Less Tech

   Touchless technologies are becoming the new norm in offices across the globe as concerns over employee health and safety continue to inundate us. Think contactless employee check-ins, auto taps and dispensers and automated entrances.

If you’d like to hear more on our thoughts, get in touch. We are observing major workplace transformations amongst our clients particularly from a design perspective and relocating offices.

Australia

Franklin Shanks Sydney
Level 5
285 Clarence Street
Sydney NSW 2000
Ph: +61 2 8006 0734
E: [email protected]

Speculative suites are the ‘suite’ spot

In an ever-changing world, corporates in varying sizes, shapes, industry sectors and geographical locations are seeking flexibility in their leases with more and more demand in the small to medium sector for speculative suite fit outs (fit out speculatively refurbished by the landlord).

This is not a new concept and has been a market initiative over the past decade and longer, however, with the influence from hotels and residential display houses and apartments, design has stepped up dramatically by interior designers and landlords, looking to push boundaries in the latest ways to entice a tenant into their buildings.

The purpose of a spec fit out is to: a. reduce let up time and b. to offer a walk-in walk-out solution for the occupier. The design is aimed to be generic, catering for the broad business user whether technology, finance, education, healthcare or professional services. Spaces can be built out from 150sqm to a whole floor of up to 1,200sqm+.

With many of our clients looking to reduce not only OPEX but up-front CAPEX, these types of opportunities also take away the process of design and build, especially if time is limited.

Clients are wanting well designed creative and collaborative spaces for their teams including:

·      Open plan workspace - less dense and more open with a combination of sit/stand desks
·      Bench and stool seating
·      Multiple collaborative zones and booth seating
·      Team lounges and huddles
·      Dedicated and multi-purpose VC rooms for zoom/teams calls
·      Multiple enclosed meeting spaces with walk in A/V screens and/or projectors
·      Larger boardroom and multi-purpose rooms with bifold walls to create training areas
·      Large and multi-purpose breakout spaces and town hall/all hands zones
·      Kitchens with multiple fridges, water points
·      Exposed services in communal zones
·      Touch down areas with screens and data connectivity points
·      Diversity & Inclusion – parents/medical/healthcare/faith/reflection room
·      Health & Wellbeing – gaming, chillax, green room
·      Coms – dedicated IT infrastructure
·      Utility zones – printer, mail, bins/waste
·      Centralized storage – lockers, team storage, coats, stationery, merchandise

Overall, the design is key to ensure it appeals to a broad cliental. Designs are typically focused on warm timbers, creative use of glazing and lighting including pendant lighting, soft and neutral colour palettes, exposed services to create height, multiple floor covering types including polished concrete, stone, timber and a variety of functional and vibrant carpet, vinyl and laminate solutions.

A Tale of Two Sydneys

The Sydney we know and love is slowly making a strong return. The trains and busses are fuller, even the trams appear in regular use, fans are piling into the Sydney Cricket Ground for sporting events and we can finally dance at venues. However, not everything is completely back to normal. Businesses are still falling behind on their rents and looking to restructure or exit their lease. The city is and will be grappling with the effects of COVID-19 for some time. 
 
Portions of the city are making decisions around ‘space’, whether they are renewing an existing lease or looking for improved spaces for employees to return to. They know that the Sydney CBD vacancy rate is still double the norm at approximately 9%, and there remains 170,000sqm of sublease space, many with stylish and new fitouts. Amid concern about remote work as a long term strategy, many have acknowledged that returning to work, even in a hybrid capacity, is critical for human connection, productivity and employee morale, therefore, wanting to get the best possible deal before full recovery is upon us. 

However, in other parts of Sydney, we see a city where businesses across all industries are still reeling from the effects of the pandemic and doing their best to survive. Since as early as March 2020, we have been working with clients to terminate leases, negotiate rent relief or sublease their spaces. Though Sydney seems to be in a stable state of recovery, the pandemic has damaged many businesses for the foreseeable future and decision makers are left with unused or un-affordable space in its wake.

No matter what position your business finds itself in, we're here to help guide you in the weeks and months ahead by candidly sharing what we're seeing to ensure you arrive at a place where you can make the right strategic decisions for you and your business.

Please reach out to me at [email protected] or (02) 8006 0734 if you have any specific questions or would like to discuss how wecan help with your particular real estate needs.

Mike Franklin 

Franklin Shanks