1. The budget needs to be at least $5,000 per head for average quality and $7,000 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.
3. As well as desk space, is there a need for break-out areas and places for collaborative meetings (they don’t have to be separated meeting rooms).
4. What does it feel like from where people maybe seated, light, colour and aspect. Could the space be described as comfortable and inviting in some way.
6. Does the location provide adequate amenities to your staff – where are their food providers they like and other nearby facilities like gyms, bike parks and lunch time walk areas.
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 and likely growing to 8 staff within two 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 taking place. This area has long been the source of cheaper office stock. 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 to for seismic ratings, new light-weight ceiling tiles, LED lighting, modern carpets and refurbishments. Office fitout costs have risen anecdotally by at least 50% over the last five to 8 years due to similar rises in materials and skilled labour from the national building boom.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 when banks, insurance companies and government departments offered ‘jobs for life’, and Gen Ys and Millennials are mercenary relative to previous generations about their employers and what they want out of life. The workplace is where we spend most of our week, it is certainly in any employers’ interests to provide a comfortable and interesting work-space to encourage their staff to turn up on time, or even early, and to function at their peak. 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 two consultants offered employment refused because they perceived the office space to be of 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 his building into residential. It is true markets that go up inevitably go down and that many commentators expect a GFC style correction shortly (we haven’t repaid the debt from the last one!), 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 to change for the better