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Why retain the firm’s office?
Both financially and professionally, there are upsides to holding on to office space in the current climate. Justifying attendance of the premises to staff is another thing.
Jerome Doraisamy
The age of coronavirus has resulted in a period of extraordinary turbulence for commercial leases. Holly Bailey (pictured), director at Kernel Property, has twice spoken on The Lawyers Weekly Show about the state of affairs for commercial leases in Australia and how such leasing arrangements are evolving during the global pandemic.
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In conversation once again with Lawyers Weekly, Ms Bailey reflected on the considerations firms must undertake in determining whether – at a time when flexible and remote working is not only becoming more mainstream, but a preferred mode of working for many practitioners – retention of commercial office space is the best path forward in 2022.
“Most Australian CBD office markets are strongly in favour of tenants with supply outpacing demand,” she mused.
“If a firm is looking to dispose of space by way of sublease, then they effectively become a landlord and are competing against direct office space in tenant favourable markets. Subleasing should therefore be seen as a cost mitigation exercise and is unlikely to provide a strong financial return.”
If a firm’s lease is nearing expiry, Ms Bailey continued, and the firm is comfortable locking in to a new lease term, “then it is a good time to be a tenant in the market considering your options”.
“The deals are generally very strong across the core CBD markets,” she advised.
“If you’re more cautious about the future and your lease is expiring, consider short term solutions.
“This could be a short-term extension, where you currently are or relocating to a new office on flexible terms.”
The pandemic, Ms Bailey said, has not ruled out a place for the office. However, it has changed the way such spaces are utilised with the advent of hybrid arrangements.
“For employees, the reason for being in the office needs to justify the commute and provide a better experience than what they would have at home. Common attractors to the office include: escaping from a busy household or home schooling, separation between work and home, collaboration, socialisation, mentorship, training and learning by osmosis,” she detailed.
“The quid pro quo is that staff need to accept they may not have a permanent, dedicated desk or office. If firms can overlay a desk sharing ratio in their space planning, then they should be able to reduce their overall footprint and therefore rental cost.”
In deducing what steps to take, Ms Bailey said that firms “need to determine their approach to return to work which is something that companies across all industries are grappling with, particularly how to bring back staff safely and what policies are put in place for working from home”.
“Staff surveys and interviews are helpful in providing data on the needs/wants in an office moving forward,” she suggested.
