Tenant reps can find the right office space

By ANNE GIBSON

John Roberts, of McCann-Erickson, says the Union St premises that tenant reps found for the company are "just stunning". Picture / Richard Robinson

"Find me offices like a New York-style loft, with brick walls and a vista," said McCann-Erickson NZ chief John Roberts.

He had just returned from seven years in Asia to find the McCann creative advertising agency in an office in Epsom's Manukau Rd that he thought was a nice home for an accounting business, but hardly fitted the image he wanted to portray.

In his previous role running Saatchi & Saatchi in Singapore, Roberts had shifted the firm into stylish, character-filled, concrete-floored, open-plan digs.

McCann writes $100 million worth of business in New Zealand annually and has 70 staff, yet Roberts thought its home of 18 years let it down and projected a grey, boring image.

Thankfully, others had already noticed this and plans were in place for the agency to shift to Parnell, but Roberts challenged this.

"Why would we want to be the last advertising firm to move to a sunset area like that?" he asked.

In the hunt for a new home, he was steered towards the Jones Lang LaSalle tenant rep team in Auckland, headed by John Cameron.

"I went to them because they're experts," Roberts said.

"Real estate agents work for themselves, but these people really worked for us. I always say each to their own - let the experts do the job."

Dean Humphries, of Jones Lang LaSalle, said the ad agency wanted the best of both worlds.

"Their desire was to relocate from suburban offices to a character building close to the city - but with their existing suburban occupancy cost parameters and specific occupancy requirements in mind."

After nine months, everyone agreed the former Classic Fashions building at 23 Union St near Victoria Park fitted McCann's image exactly.

It had character, with wood floors and brick walls, it was in a good location - and in the film zone, on the fringes of Ponsonby, thus near to many McCann clients.

With Jones Lang's assistance, a six-year lease was negotiated with a three-year right of renewal.

Roberts had holes knocked in the brick for windows and fitted out the interior with polished concrete tables.

"This place has an industrial, gritty feel to it - it looks just stunning," he said.

McCann is not the only firm to use a tenant representative.

Cameron, at Jones Lang LaSalle, has noticed a radical shift in the past few years in how tenants select new offices.

He said tenants were increasingly engaging their own consultants to negotiate a lease or manage a shift, rather than calling a real estate agent who was often engaged to work for the building owner and had the landlord's interests at heart.

In Australia, few tenants employed their own advocates just three years ago, but now more than 70 per cent looking for space of more than 1000sq m in CBD and fringe areas sought representation, said Cameron.

"There's a growing need for salary-based, tertiary-qualified professional consultants providing independent and impartial advice to the maturing occupier sector, which is a big change from the traditional commission-based real estate agents."

Jones Lang calls its tenant rep division Corporate Solutions. Clients include Microsoft, United Technologies, Deutsche Bank, Exxon Mobil, HSBC, Sun Microsystems and ANZ Banking Group.

Cameron said tenants wanted the best deal when leasing space and landlords should know that they were becoming more demanding.

He advises tenants to ask for:

* Flexibility through shorter-term leases to allow for changes in the tenancy.

* Expansion and contraction rights in the area being let to accommodate the changing business environment.

* Soft-ratcheted rents - tenants often want rent review formulae to assist with forecasting.

* Unrestricted and efficient floor plates to allow for interior flexibility.

* Good building services to cope with tenants' increasing density demands, particularly fast lifts and efficient heating/air conditioning.

* Guarantees that a building will remain exclusively an office building and will not change to a less desirable or incompatible use, such as a foreign language school building.

* Assessment of the quality of the services and the construction of a building to give an insight into operating costs and overall occupancy expenses.

Many buildings fail to meet these requirements.

Jones Lang is not the only firm offering a tenant rep division.

Specialist property consultancy DTZ also has an occupier services division for national and international clients, bringing together its traditional real estate, consultancy, research and management functions to provide what chief executive Ross Pickett calls "occupier solutions to meet the needs of business and the public sector".