Tenant Lease Commencement

When a tenant commences occupation in a commercial building it is essential to set some solid rules and channels of communication early in the occupation cycle.   In this way you will have a harmonious relationship into the future that can benefit the investment property.

As landlord works near readiness for occupation, it is wise to inform the tenant of the next stages that effect them and methods of occupation that are to follow.   Standard letters and procedures are ideal for this purpose.

As part of this process there are 3 main outcomes that you should be seeking to satisfy in this process.   

They are:

  1. To control the way the tenant moves into the building and that the process is well managed.   This will involve the use of loading docks and perhaps lift and escalators after hours.   As a general rule the movement of a new tenant into any building is best managed after hours and on weekends.
  2. To identify tenant details that need to be entered onto the building directory and similar lists and displays used by occupants and customers that visit the building.   As part of this process it is important to tell other tenants in the building of the new tenant and their entry to the building.   In this way you preserve quality of communication to all parties concerned.
  3. To keep the new tenant well informed on property matters that will impact them into the future.   You should be seeking to inform the new tenant of the building rules, operational elements such as air-conditioning and security, and fit out guidelines and approval processes.

 

Elements of the introduction letter to the tenant can incorporate the following informational topics on the property and the building:

  1. Establishment of the move-in date to the property so that the security and lift access can be provided.   You are also seeking to avoid conflict with other tenants as the move occurs.   This becomes more complex and difficult if a number of tenants are moving into the property at the same time.
  2. The tenant needs to be approached regards the detail required on the directory board to the building.   It can also be that the graphics and design of the tenant’s logo will need to be incorporated into the directory board layout.   It is debatable whether the tenant should pay for the entry of their business name onto the directory board.   This will come down to the landlord’s decision on the matter as a gesture of goodwill in the leasing process.
  3. Any tenant signage on the entrance doors to the tenancy or the building will need to be approved so that it does not conflict with other design elements of the property.   In some circumstances it may be necessary to seek architectural comment on behalf of the landlord before the tenant can proceed with their signage.   Take particular care with colours and location of the signage.   If the signage is on the outside of the building, it is likely that the local planning authority will need to approve the signage before it is installed.   Engineering comment may also be needed for signage placement on the exterior of the building.   Signage of the tenant can or should attract a separate rental for the landlord particularly if the sign is in a place of prominence on the outside of the building and the building is located on a main road with high numbers of passing cars.
  4. Car parking licences should be established for the tenant’s vehicles and the parks then clearly laid out on a car park plan.  It is normal for car parks to have separate licence documentation that provides for both the unique elements of the property function and the use of the car park by tenants.
  5. Communication systems access points such as those for telephone and data should be explained to the tenant.   Any matters of access or special charges should also be outlined to the tenant.   Take care with the tenant using the risers to the building to run cables as riser space is limited.   Some landlords will charge a rental of space within the riser for this very reason.
  6. Electricity switchboards and access points should be outlined to the tenant.   Any methods of recovery of tenant electricity should also be explained.   It may be that the landlord buys the energy for the building in bulk and then charges the tenants for their consumption on a monthly arrears basis.   As an alternative it can be that the tenant is buying energy direct from the local energy supplier.   Importantly the property manager needs to know what is correct for the property and the local energy supply legislation.   Today energy supply and consumption is a critical part of building cost management; both tenants and landlords want to know that the energy supply and consumption systems on the property are correctly managed and charged.
  7. Services and amenities that are available for the tenant should be clearly described and any costs thereto detailed.   A plan of the building or the floor should detail the services and amenities that are available and how the tenant may access them.
  8. Use of common area facilities should be shown on the appropriate floor plans.   This can include toilets, showers, tea rooms, entrance foyers, lift foyers etc.
  9. The use method and operational hours of the air conditioning for the building should be detailed and explained to the tenant.   In most circumstances the air conditioning supplied by the landlord will only operate during certain daylight hours between Mondays to Fridays.   Any tenant usage beyond those hours should incur a special hourly charge based on the size and type of air conditioning unit.   In such circumstances the tenant consumption is metered and charged.   If a tenant is a sole occupant in the building then the air conditioning running costs and maintenance may be the responsibility of the tenant; in such cases the lease of the premises should explain and support the process.
  10. Security access systems should be explained to the tenant so that they can order the necessary security passes for staff and the passes are coded to the hours of access that the tenant needs for each individual on staff.
  11. Security Patrols and Guards need to be briefed about the new tenant to the property and any emergency contact points or response methods documented for that tenant prior to their move to the property.
  12. Door keys should be ordered to the access needs of the tenant.   It is likely that the building master key system will be part of the keying system for the tenant doors.   It is normal for tenants to seek any new keys for the premises via the property manager as the authorized party on the master key system.
  13. Emergency evacuation procedures must be communicated to the tenant at the earliest opportunity and prior to occupation.   Any threats and evacuation needs of the tenant must be efficiently handled in the evacuation plan established in the building.  If the tenant brings any unusual and special threats to the property and the other occupants, then the property manager needs to take action on any needed changes to the evacuation procedures.   It is normal for the property manager to appoint an expert contractor to design and implement the correct building evacuation plan for the building.   That contractor will then also maintain the tenant training needed for the evacuation plan in keeping with local building and safety legislation.
  14. Building rules and regulations are typically written into a building manual that is supplied to all tenants.   From time to time the building manual will be updated.   This becomes a great tool of control for tenants and building function.  It also supplies the tenant with all the important and critical information relevant to the property in a concise and specific form.
  15. Fit out procedures and approval processes must be understood by the tenant, as they will need to make changes from time to time to premises design and usage.   Local planning and building codes can dictate that any tenancy changes must firstly be approved by the planning authorities.   In moderate to large buildings with multiple tenants it is normal to create a fit out guide and supply such to the tenants in the building.   This then becomes the rules for any changes to the tenant premises.
  16. Property Manager and Property Maintenance contact methods should be outlined to the tenant in a contact register supplied to them.   From the earliest stages of occupancy things will not always operate each and every day on the property.   The tenant needs to know where to call to advise the right people of any problems.   The property manager as part of this process needs should have a procedure to keep the tenant up to date on any advancement on repairs and delay times.  Not all maintenance matters can be attended to quickly and efficiently if large items of cost or unusual parts are required to complete the work needed.

 

So these details can be a way of introducing the tenant to the building and controlling ongoing occupancy.    Add to this list as your property requires.  A standard letter can be framed to incorporate the necessary information relative to the tenants lease and the site.

Author: John Highman

Commercial Real Estate Broker, Coach, Speaker, Author, Broadcaster.