Australia's stature is rising, transforming from quirky backwater to a global powerhouse, in what feels like the blink of an eye.
As economic, political and social tremors are felt across global regions, Australia is increasingly seen as the safe destination for business expansion, with many international businesses now naming Australia as their Asia-Pacific hub.
For those considering such an expansion, what are some of the facts that might assist their evaluation?
In this infographic, we have offered statistical information that reveals more than mere numbers and percentages, as each one tells a unique story of growth and prosperity.
With over 10 years of experience advising international businesses, if you’re considering a move we'd love to help, so please do get in touch.
Franklin Shanks Assist in a Lease Relocation for A Medical Retailer
The Company:
Global Retail Sleep and Breathing Solutions company.
Our Engagement:
Franklin Shanks was appointed to source a replacement site for the end of the lease term. Along with working closely with the client to provide a suitable fit-out.
FS Project Management were appointed to manage the fit-out of the store. The key benefits in having an independent project manager are;
Liaison with Centre management to ensure policies and procedures were fully understood for the build-out of the space
Approval process both in-house Centre and certifiers for issue of Complying Development Certificate
Design review to ensure all information required for full fit-out requirement
Program management and clear expectations set for tendering shopfitters
Tender process to ensure competitive cost achieved for ResMed
Tender review for minimisation of variations
Weekly site meetings and reporting to key stakeholders within ResMed
Onsite quality control for minimisation of return to site for shopfitters
Occupation Certificate management to ensure the first day of business (FDOB) achieved
Full defects reporting and management
The Challenge:
The old site was in part of the suburb with very little foot traffic and low brand visibility. The sales of their products had been in steep decline for the best part of 2 years as the major shopping centre expansion and renovations attracted trade away from local strip shops. The client’s brief was to source a site close to the major shopping precinct with high visibility, and parking for staff and clients to boost awareness of the brand and sales. Based on internal Data the client wanted to remain in the area as a bigger client base could be captured.
The Outcome:
Whilst the site was being sourced by FS, I recommended testing the market inside the main shopping centre and lifting brand awareness.
A Kiosk contract was negotiated until a suitable site became available. A site within the centre became available with a fit-out that could be worked around. The site was delivered warm shell to the client, significantly saving on full fit-out costs. Also meeting client sustainability criteria.
A Gross lease negotiated from an initial offer of $120,000 down to $100,000 gross per annum
With a fit-out contribution of $80,000 to be applied to the rent across the term of the lease.
FS Project Manager Nick Maric worked closely with the client and centre around fit-out design and tendering the works delivering the fit-out alterations on time to meet the proposed opening date and lease commencement date.
From the client:
“We have seen a significant jump in sales (and conversions to PAP therapy)!
157.3% increase in revenue sales in the 7 months since opening new store and 246% increase in conversion products.”
Now more than ever: We don’t shop to buy
Retailers have long taken advantage of the lure ‘want’ has over ‘need’ and created shopping meccas that inspire, delight, and open wallets. But we now sit at a nexus where our shopping needs can be easily filled online, and retailers need to work harder on desire and dopamine hits to keep us coming back into stores.
Iconic and engaging physical retail is bouncing back.
Even amongst global turmoil and the dreaded R word (that we are apparently not having in Australia), physical retail has rebounded. Amongst the biggest and busiest shopping malls in the world are The Forum Shops at Caesars Las Vegas, which is spread over 162,000 sqm and attracts 40M shoppers annually. Westfield Stratford City in London is slightly larger at 177,000 sqm and attracts 50M visitors; dwarfing them both is The Dubai Mall with 577,000 sqm which attracts 85M visitors.
As for department stores the one and only Harrods, with 90,000 sqm of internal space gets 15M visitors per year, while Galeries Lafayette Paris is 70,000 sqm and welcomes 12M visitors. Shading these two, in attendance at least, is the gorgeous Galleria Vittorio Emanuele II in Milan, which has only 19,000 sqm of space, but attracts a whopping 60M visitors.
The average spend per head isn’t eye-watering; which is worrying for luxury brand bottom lines in 2024, but promising for the return of retail as a whole. It indicates consumers want to spend, they still want that physical endorphin rush, and they still see value in getting off the couch to interact with their favourite brands. In Harrods, the average transaction is US$300, whereas Westfield Stratford City is around $100, and Galleria Vittorio Emanuele II is again higher at $450, but nothing crazy - it is Milan after all.
What do these retail meccas have in common?
First and foremost people go for the experience, the history, the Instagram shot, and the bags that bear the name of the brand experience.
People are there because, in many instances, they are fulfilling a lifelong dream. Think Harrods for a genuine shopping tote, the revamped Tiffany & Co’s The Landmark on 5th Ave or the classic Louis Vuitton on the Champs-Elysees. There is something intoxicating about all that history, romance and storytelling, that goes beyond the bag you take home.
The future of retail will have increasingly clear lines of delineation.
For those who want a commoditised item for everyday life, such as a new laptop charger or a replacement showerhead, it’s more likely that the online giants will get the spend. It’s just too easy and too cost-friendly, and nothing good will come from retailers attempting to out-spend Temu and Amazon on digital ads. But when it comes to high-end fashion, luxury goods, and premium or bespoke products that inspire joy, confirm our sense of self, or are intended to last, the experience centres will continue to win over.
In the vast space between these two paradigms, in billions of metres of suburban retail, the mid-ground offerings will continue to struggle. This is not a new prediction, but the timeline does appear to be speeding up. The majority of retail is not cheap or quick enough to compete with Temu, nor is it enticing enough to warrant the ‘day out shopping’ that was once a major form of entertainment. As our needs are fulfilled online and our expectations of great experiences increase, our wants get harder to impress at a local mall level. These stores can't compete with the history of Harrods, so they need another hook. It must be about the intangibles and the power of genuine human experience that online will struggle to replicate for some time.
The future is friendly
How do retailers solve for all that space in the mid-ground? Many larger retailers with vast store networks are already successfully experimenting with ways to play to a store's strengths: instant gratification, touch and feel, and service-based offerings. Even Officeworks has bought Geeks2U inhouse, with 'Meet a Geek' in store because they recognise the value of solving problems face to face that most of us could probably google. Physical retail spaces will always have the upper hand when it comes to good old-fashioned human-to-human interaction and learning. A friendly, familiar face in a local store drives deeper, longer-lasting loyalty than a tiktok campaign, and anyone who has done their time on customer service phone support will attest: we're all nicer, and happier, face to face. The future of physical retail will hinge on, and benefit from continuing to ramp up the humanity. We don't shop to buy; we shop for entertainment, immersion and fundamental human connection.
What does a tenant advisor actually do?
We all no doubt know the feeling; a boardroom set-up, lots of people who don’t know each other sat around it, and then the meeting convener makes the ultimate faux pas: “Could we please go around the room and get everyone to introduce themselves and briefly explain what they do.”
First up is easy, but if you’re down the line you start to think “What is it that I actually do? I mean, I do lots of things. Oh dear, I’m up next!”
With this anxiety-filling thought in mind, we’d like to explain what a tenant advisor actually does, or should do, so that we don’t get confused with what others should be doing.
1. Space Requirements Analysis: A good advisor interrogates the client wishlist and forms an educated prioritisation matrix. This is the art-of-the-possible.
2. Site Selection: A good advisor buffers the noise and the emotion of so many options. With process and patience they work the matrix and narrow them down, until only the few remain. This is threading the needle.
3. Market Scanning: The client might know what they can predict today, but a good advisor must have knowledge to plan for flexibility tomorrow. By continually assessing emerging trends and sectors their advice is both intuitive and data-validated. This is the all-seeing-eye.
4. Lease Negotiation: A good advisor understands the deal prerequisites for both parties, the levers to pull, and the hot buttons to push, to deliver a win-win outcome. A lease is a long-term relationship which should start on an equal footing. Experienced instinct is paramount. The calm amongst the storm.
5. Lease Review and Analysis: A good advisor effectively translates the minutiae of the current contract, and explains the detailed implications. This is laying the deal foundations.
6. Renegotiation and Restructuring: A good advisor knows what value means today, for all parties. They work the matrix again, creating an environment of competitive tension amongst the shortlisted targets. This is narrowing the expectation gap.
7. Project Management: A good advisor has a good team around them, and they have experts who turn the bricks and mortar building into the complete and finished result. This is curating perfect spaces.
8. Cost Savings: A good advisor is empathetic to the impacts of cost. When their advice saves the client on the unnecessary, so that the necessary can be invested in, that’s true service. This is eeking out incremental wins.
9. Dispute Resolution: A good advisor maintains the goodwill amongst tenant and landlord, even during moments of strain. This is balancing the needs of all.
10. Ongoing Support: A good advisor, is available to the client long after the deal is done. With sage advice or a proactive new idea, value is lived as a continuum. This is paying it forwards.
In, summary a good tenant advisor fully understands his or her client’s ongoing needs and does not just turn up when a lease expiry notification materialises in their calendar.
The 8 Growing Technology-trends Fuelled by Hybrid Work
Paul Smith Engage Franklin Shanks to Negotiate Exit of Stores
The Company:
Paul Smith UK – Retail Luxury Retail clothing, accessories and jewellery
Our Engagement:
Paul Smith engaged FS to negotiate the exit of their stores in Sydney and Melbourne. We assisted Paul Smith in organising the defit of their store in Sydney and negotiated exit for the Melbourne store. For the Melbourne Store the preference was to end tenancy without taking on the make good obligations in a heritage listed building.
Challenges:
Melbourne: 266.90 sqm
Using the standard make good guide provided by the institutional landlord Franklin Shanks arranged for the scope of works and costings around a make good.
The guide included works outside heritage listing guidelines and not reflecting the condition of the property upon entry.
To meet these and heritage-listed property standards the quote came in at $448,268 +gst. (equivalent to approximately 9 months rent)
FS negotiation was based on Estimated Cost of make good was equivalent to 9 months’ rent more than a penalty fee should Paul Smith had terminated the agreement early. Additionally, the timeline for trades and Heritage building approval timelines actual hand back date would be much later than lease end date..
Sydney: 135sqm
Make good had to be complete by end of term date. FS obtained quotes from companies already inducted into Westfield to save time and costs for works commencement.
The Outcome:
Melbourne: Negotiated a settlement offer for make good as a lump sum payment to the landlord of $200,000 + GST and make good obligation of removal personal items and clean and tidy only. The clients full Bank Guarantee of $270,000 was also returned
Sydney: Full make good to cold shell completed ahead of agreed hand back date. With full Bank Guarantee returned.
From the Client:
“Thank you Kate for all your assistance with closing these two shops. It’s always difficult for a company when you are closing shops in a country where you have no administration team based. The complete process has gone very smoothly and efficiently.
It has been a pleasure working with you.”
- Anita- Commercial Property Manage, Paul Smith UK
What can Office do to Drive Talent Aspirations?
An Office Should Function Like an Idyllic Village.
Talent Attraction and Talent Retention is how ‘hiring-well and inspiring-often’ is described these days, and it is a key metric for all discerning businesses. Thankfully, the brief and insidious quiet-quitting movement seems to have abated for now, and a job market of optimism is returning for some sectors, including Technology, Finance, Healthcare and eCommerce, all of which are back in expansion mode.
The question now becomes, “What are the strategies for ensuring that Talent will seek out our organisation and, once onboard, will stay motivated and performing?”
No doubt there are various formulas and algorithms that can enlighten, but I pose the notion that word-of- mouth for attraction and continuous on-the-job-learning for retention remain two of the best strategies. High praise and recommendation from a trusted peer is a compelling endorsement, particularly if that praise is for an employer who provides genuine skills-improvement for career potential.
63% of job leavers cited “no opportunities for career advancement” as a main reason for leaving, according to a Pew Research survey, and while I’m adding a layer, based on my own experiences, lack-of- opportunity tends to be less about promotion and more about furthering oneself through knowledge and skills attained, because ultimately this is what translates to future market opportunity.
Not wishing to denigrate any organisation’s attempts to provide their people with knowledge, but classroom Learning & Development, for me, has never cut the mustard. I believe the best way to learn is through osmosis, trial and error, time-on-task, seeing how the experienced people do it better, until over time the learner does it better than the teacher.
What I have just described is a structural form of osmosis, and there are of course other forms, such as collaborative osmosis, in which peers, grouped together, will over time improve collective knowledge by learning from each others’ innate strengths. We may be good at one thing, while relatively inadequate at another, but within the group there will invariably be a complementary set of efficiencies and deficiencies. Once it is known who is the go-to for each task a form of mutual symbiosis, can occur. This is how a tribe survives and it is only made evident by living and participating in the daily group activities
Kings Cross, London. A development inspiring total urban transformation
The challenges of a dispersed office workforce are entirely new, and you shouldn’t let any know-it-all convince you otherwise, because it first emerged only 2 years ago, and we are learning its impacts for the first time. However, in saying this, intuition and reason have served us well as a species over millennia, and these challenges are entirely surmountable with a dose of both of them.
As Tim Cook correctly opines “innovation isn’t always planned”, in fact I’ll add that its far better when it isn’t. Innovation, spontaneity, creativity are not easily accessible in a formal setting. The duality of this statement is that, as an individual, almost everyone has more expansive creative thought when walking a forest-trail, or submerged in a bustling city market, yet as a group people tend to be far better at articulating their creativities when they are in person, rather than peering into a screen filled with screens.
This village concept is presenting itself more regularly via a number of growing initiatives. Adobe, for example, has seen a skyrocketing of enquiry for formal mentoring, with over 80% of Gen-Z workers requesting a mentor, since the launch of their 2023 mentoring initiative. The presence of an “elder” can be comforting to all of us, as we navigate the trials and tribulations of the working life.
Elsewhere, in commercial property, we are seeing the blossoming of a different kind of village concept, the “town square”. Perhaps the best examples are the station development precincts that are starting to pop up everywhere. This is certainly topical for Sydney, with North Sydney’s new station development, set for an August ’24 completion. Martin Place, Pitt St and others are in the wings, as Australia’s usually warm and sunny climate makes it an ideal location for open-plan projects of scale.
What makes these station developments meaningful is the acknowledgement that people are no longer adequately engaged by a desk and a nearby café, instead they want an inside-outside workday, in which the surrounding precinct is as much of a feature as the office itself.
Some proof of this is in the vacancy stats, with Manhattan having an office vacancy of around 16%, while its East Manhattan development precinct at Hudson Yards has a 7.8% office vacancy. The same is true of the City of London which has an 11%+ office vacancy, while office built around the Kings Cross Station development has a 6.5% vacancy. People and businesses want activation.
Returning back to my original Talent Attraction and Retention theme and applying the simplicities of logic and reason, if we are to counter the erosion of knowledge sharing that hybrid working may indeed promote then the obvious answer is that we must give the workers something to look forward to, be inspired by, and want to be around. What better than:
A bright, comfortable, temperature favourable office, where the sense of something new exists every day, and being surrounded by lively and accessible outdoor spaces, so that your wandering time with colleagues and clients brings out the best in each other.”
By my assessment we are at least on the right track.
Mike Franklin
The New Era of Work 2024
The New Era of Work 2024.
After so much conjecture and opinion, about the changing state of work and workplaces, we decided to amalgamate our own client engagement experiences to provide a modernistic view on the workplace transitions that businesses are now faced with.
We explore:
Leadership, Generational Preferences, Technology’s Take-Over, andthe Broadening Role that both employers and landlords now have for delivering Healthy, High-Performing and, ultimately, Compelling workplaces.
Click below to read
The Future of Office for Commercial Law Firms
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 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.
What Lenders reveal about the true Risk Profiles of different asset types
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.