One of the biggest capital expenditures for business is the cost of office premises. In this new series, Tracey Cook examines some of the issues that arise when a business is considering relocation or refurbishment of their premises.
MOVES by shopping centres and hotels to update decor and facilities every decade or so are starting to resonate with many businesses, which are increasingly aware of the need to keep up with the times.
Maintaining a competitive edge is what it’s all about in the business world, and the same applies when it comes to choosing a new location or fit-out.
A number of factors can induce a business to relocate or update its look.
Growth or the need to consolidate different business components into one location is usually the most common factor.
Other factors in the decision making process can include market image and cost parameters, according to Stewart Johnson, director of project manager firm The Johnson Group WA.
Mr Johnson said while the majority of moves were based on cost factors, there were no set guidelines to choosing when to relocate or refurbish, with this depending wholly on what a business planned for its future.
However, he said business needed to give more time to the pre-planning and business planning required before relocating or refurbishing.
“You are looking at a couple of years of planning before a move.”
Mr Johnson said that, with the market swayed in favour of tenants, building owners were holding onto their tenants with offers of substantial refurbishment of existing tenancies and buildings.
“Refurbishment is a logistical and communication exercise, but it can be done and done well,” he said.
According to director of The Marsh Partnership, Janine Marsh, more businesses chose to relocate when attractive deals or new building stock became available in the marketplace.
Ms Marsh, who analyses office buildings to help firms identify the most appropriate space for their business, said the cost of a new fit-out and the staff disruption incurred made relocating expensive.
However, relocating a business can bring many benefits, including securing a better leasing deal or a more appropriate and accessible location, using tenancy space more efficiently and, if moving into a newer building, reducing outgoings.
Relocation is often an opportunity for businesses to update technology and fine tune their office design.
“We look at two or three sites, not just in terms of gross space, but in flexibility of design space,” Ms Marsh said.
The efficiency of space was dependent on building shape, with some buildings easier to adapt and allowing more flexible options than others, she said, adding that the physical relocation of a company could bring about a psychological change, enhancing changes in corporate structure or management.
Wridgeways The Removalists owner Peter Conroy has assisted many businesses relocate.
With his removalist franchise mainly focused on the CBD area, Mr Conroy has experienced first-hand the westward drift of the CBD.
"Currently the oil and gas companies are moving up the terrace to be closer to Woodside," he said.
Mr Conroy said most of the relocations he did came down to economics, the placement of the area and the need to modernise facilities and premises.
"A lot of people are moving out of old buildings, which need refurbishment."
Removalist costs for an average company were about $1000, he said, whereas companies of around 200 employees could be looking at $16,000 for one day’s work.
Mr Conroy said most large companies farmed-out the work to project managers or interior design firms.
"When you move a large group of people into a large footprint, things have to go in a schedule."
Companies such as Freehills, Clayton Utz and JB Were have used recent moves to either update their image or consolidate their staff.
A Clayton Utz spokeperson said practice growth, coupled with the attractions of QV1 were the driving factors behind the firm’s decision to look for new, premium grade office accommodation.
They said the larger floor plate at QV1 was a major attraction to the firm, allowing all staff to be located on two-and-a-half floors.
For founder of promotional products company ASB Marketing, Andrew Bloom, the decision to relocate his business of 11 years from South Perth to Belmont had a lot to do with car parking.
While his business had outgrown its current premises, Mr Bloom said that with seven staff and a need for a larger showroom, car parking was a big factor in his site choice.
He said despite wanting to remain in South Perth, local government parking ratios made it difficult due to the regulation that there be one car bay per 100sq m of showroom space.
In comparison, one car bay is permitted per 20sq m of office space in Belmont.
After a six-month search Mr Bloom has found a new site in Belmont that will enable the business to grow from a 40sq m to a 130sq m showroom plus provide better services such as car parking for staff
“We found a brand new building and we are to fit it out ourselves,” he said.
“The council has been most helpful in achieving a resolution to the car parking issue.”
