In good times and in bad times there are ways to squeeze out the maximum of benefits when it comes to developing an office park or industrial park – or even just a standalone building.
Two vital points are that there should be a healthy supply of parking – and that all buildings can be divided into separate offices, in multiples of around 150 square metres per office, or per tenant.
“This is a formula that works and ensures that the developer is very likely to have lower levels of vacancies, and therefore a better cash flow,” said Org Geldenhuys, MD of property and development company, Abacus DIVISIONS.
“This is because the rent for a 150 square metre office is far less – and this cost-saving financial aspect will appeal to a broader spread of potential tenants. Having office ‘pockets’ means there is also greater flexibility for the landlord.
“One of the biggest problems in office parks – or at standalone buildings – is limited parking. This might sound like a trivial point, but it is not. Developers often make the mistake of trying to use up too much of the stand for offices, thereby severely limiting parking.
“This lack of parking can be frustrating for both employees and visiting clients. Neither clients nor employees want to park outside of a more secure office park, due to high crime levels. Therefore, ensuring that there is adequate parking is a big plus factor.”
Commenting further on separate “office pockets”, Geldenhuys said this design is another major draw card.
“Dividing the building up into various zones, or offices, and offering these separate offices shared amenities, such as shared boardrooms, is highly effective. It also spreads the overall risk, as the landlord does not have to rely on one or two big tenants. Losing one tenant will not severely hurt the wallet – and he will have time, with less pressure, to find a replacement tenant.”
Geldenhuys did point out that shared facilities should ideally not include kitchens and bathrooms. “I think these facilities should not be shared – each tenant should have his own kitchen and bathrooms,” said Geldenhuys.
“This is a very workable formula- one that maximises profits and cash flow and minimises the risks of sitting with high vacancy levels, or being reliant on one or two big tenants. Having one or two good tenants, of course, can be extremely rewarding, financially –until their leases expire and they don’t re-sign. Suddenly you have one big building to fill.
“Conversely, when you offer a number of smaller offices, the loss of a tenant has less of an impact on finances, and gives the landlord breathing space to market the vacancy at a more leisurely rate, and without pumping money into a loss-making office park, or building.”