Tenant relocation cost : A study to identify tenant relocation costs for small office tenants in New Zealand : A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Property Studies at Lincoln University

Abstract

The research sought to identify the expense items that small office tenants in New Zealand face when they relocate their office premises and the relative cost of these expenses. The research highlighted the lack of information currently available on the topic. To provide an insight into the topic of tenant relocation six consultants in the real estate industry were interviewed. The consultants ranged from a commercial real estate agent through to a quantity surveyor who specialises in helping tenants assess their space requirements and analyse the alternative accommodation options. A survey of a small sample of tenants who had recently relocated was also carried out to identify the costs that they had encountered. The research has identified two types of costs. The first being general relocation cost items. These are cost items that would be applicable for all tenants and included expenses in the area of staff labour, legal, physical moving, telecommunication and computer (including cabling), stationery, and signage costs. The mean average cost identified for these items from the research was $12,500 plus Goods and Services Tax. The second being tenant specific relocation cost items. These are cost items that relate specifically to the tenants circumstances. The cost items that need to be allowed for this type of expense is reinstatement/make good cost of the old premises, any alterations required to the new premises, and the opportunity cost of the staffs time during the move. Although the small sample group would not provide statistical credibility to the actual cost of tenants to move, the findings do identify the relocation cost items that tenants will need to factor in moving premises. The definition used for a small tenancy was approximately 250 square metres. The research identified that relocation costs vary only slightly from the $12,500 as the area had little effect on most of the cost items. For example signage costs are not affected by a variation of floor area for a smaller sized tenancy.