Faced with a rapidly growing Auckland team and a new strategic focus on Auckland, the Commerce Commission had to make a choice about exiting early from a lease and relocating within the CBD. Geoff Williamson, GM Organisation Performance, explains how engaging TwentyTwo helped him deliver a highly cost-effective solution in a hot market. This is his story…
As GM Organisation Performance, my job is to ensure that we can deliver the best possible support services to enable the Commerce Commission to be successful in achieving its goals. It’s about how we can help people in the organisation excel in what they do and realise their potential. There are many aspects to this work including IT, HR, Finance, Communications and, of course, Property.
When we think about accommodation, we want to provide good spaces that people feel comfortable working in, that they’re going to be productive in and that they’re going to enjoy coming to work in.
Over the last two years, we’ve had three significant property challenges to deal with, each very different in nature. I’ve tried to look at those challenges as opportunities to deliver better value for the Commission and taxpayers and to create more productive working environments for the Commission team.
We’ve exited our small Christchurch office and, in Wellington, we’ve worked with other state sector tenants in our building to negotiate new lease terms, along with a seismic upgrade for the building and tenant fitout. That project will be completed later this year. We’ve also just relocated our Auckland office…
Reflecting Auckland’s growth
The Commission made a strategic decision to focus more of its resources in Auckland. A lot of the work the Commission does is oriented around New Zealand’s centre of commerce. Many of the fair trading and consumer matters that we deal with are located there. We were looking to increase the number of commissioners and staff based in Auckland to be closer to this key market.
But this greater physical presence in Auckland couldn’t be served by our existing 350m2 office in the Auckland Council building. We had already done everything we could to make that space more efficient and get more people in there. But with more people arriving, we needed more meeting spaces for them to have conversations, conduct interviews or make calls away from their workstations. It became unworkable and, on balance, we made the call that we couldn’t delay a relocation until our lease expiry in February 2018.
While we have general property capability internally, we needed Auckland-based expertise. I’m based in Wellington and we don’t have any property-related people in Auckland. Without local market knowledge, we didn’t feel confident that we could explore and exploit the best opportunities so we engaged TwentyTwo to help us.
We’ve been working with TwentyTwo on our Wellington project so we know them well. Engaging TwentyTwo’s Auckland team meant we had people on the ground who we could trust to be our ‘eyes and ears’.
From initial briefing to RFP
Through an initial strategic briefing process, TwentyTwo helped us determine a space budget based on growth in our Auckland head count, the kind of premises that might suit us and the locations that would work for our stakeholders and partners. In respect of location, we had to factor in a number of requirements:
- We wanted to be reasonably close to some of the key partners we deal with – agencies such as the Financial Market Authority and law firms, for example
- We also needed to have good transport connections for staff and visitors. This naturally pointed to a central location
- Set against that however, was the requirement to find a cost-effective solution in a ‘hot’ market. Did one exist in the CBD?
TwentyTwo developed a search strategy and then we went out to the market with an RFP seeking space.
A smart solution
We reviewed and evaluated a number of options returned in the RFP. The option we chose might not have seemed immediately obvious, but it was quite creative in as much as it represented very good value and gave us good future options.
We picked up a tail lease for space in the Forsyth Barr building on Shortland Street that expires in September 2019. Two things that really make it work for us – first, it’s difficult right now to accurately predict the future growth path of our Auckland-based team. With this option, we weren’t getting locked into a very long-term lease only to find that the space was not flexible enough to allow for the growth. And, secondly, we didn’t want to end up taking additional space that we didn’t really need. This property gave us the right amount of space at the right price.
Although we don’t have a right of renewal, TwentyTwo initiated discussions with the building owner about what might happen at the end of the lease term and they know that we’ll be coming to speak to them a bit closer to the time when we know more about our future requirements.
We might find that the office is not big enough for us or it’s too big. So we’re comfortable with the idea that, by the lease expiry date, we may need to look for something else. It’s likely that some of the heat will be out of the market by then so we might have an opportunity to deliver better long-term value.
A better working environment
TwentyTwo helped us negotiate with the existing holder of the lease on fitout costs. We reached a deal that allowed us to create a good space that can accommodate up to 40 people.
The new office feels like a good place to work. We made some deliberate decisions around the type of office environment we want to create and the facilities we provide. We installed sit-to-stand desks for all our staff because employee health and wellness is important to us. Many of the team are making use of this flexibility.
With more space and a better environment, we’ve already seen an improvement in productivity. It’s always hard to pinpoint or isolate the exact drivers, but the office provides collaborative spaces and meeting spaces that take noisy work away from the workstation areas meaning there are fewer distractions.
I think the changes we’ve made do have a positive impact on people’s mood – how they feel about coming to work and obviously on retention. We think people are happy with their surroundings and generally feel better about coming to work. That’s good for hiring too.
TwentyTwo have really helped facilitate things for us in Auckland. Being there on the spot, with knowledge of the market, knowledge of what the best strategy is to procure premises that are going to work for us… that’s been really valuable.
In addition to working on the procurement strategy, running the RFP process and evaluating the options, TwentyTwo also helped oversee some of the design elements and conducted site visits while the fitout construction was going on. By making sure everything was on track, they made sure that our interests were being looked after and I trusted them absolutely.
If I imagine what would have happened without engaging TwentyTwo, it would have meant me doing a lot more basic research, a lot more of the leg work and spending a lot more time in Auckland. That would have made it a lot less cost effective.
When we engage outside advisers, we have to think very carefully about getting value for the taxpayer, about the spending decisions we make overall and on particular items in a project. Everything must stand up well to public scrutiny.
I’m confident we’ve got extremely good value in our solution. It’s cost effective because we’re paying a competitive rent for accommodation which is really fit-for-purpose and which people enjoy working in. We may not have found this solution without TwentyTwo. Our expectations have certainly been exceeded.
GM Organisation Performance
TwentyTwo is currently helping the Commerce Commission and other state sector tenants with the Wellington project. It represents another complex challenge but it’s on track and we look forward to telling the story on completion.