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​​Managing occupancy levels and agency changes during the co-location

​Occupancy levels will fluctuate throughout the life cycle of the co-location, during both the project phase and the tenancy itself.

As agencies work through their co-location business cases, they’ll need to state what their expected occupancy levels will be at the start of the tenancy. This includes any special space requirements they might have, like evidence rooms, securely controlled work areas or customer transaction areas. These occupancy levels will create an area allocation that informs the search for a building and subsequent negotiations. We have an area allocation tool that you can use to clarify the potential space being committed to.

At the point that a lead agency enters into a formal agreement with a building owner, an MoU must have been signed by all parties. The MoU will include expected area allocations for each agency, ideally based on the net lettable area of the preferred building. This will form the basis of each agency’s share of capital funds to be transferred to the lead agency. Area allocations will not be able to significantly change unless a suitable arrangement is agreed between all parties.

For various reasons, a co-location may decide to bring in additional suitable agencies during the project phase or the tenancy. The decision for a new agency to join the co-location sits with both the participating agencies and GPG. Any new agency will be considered suitable if they’re another state sector organisation, and:

  • they do not undertake a function that conflicts with the operations of the occupants or lease terms
  • no other significant barriers are identified during the compatibility assessment
  • they’re financially able to contribute their share of the ongoing costs.

If all agencies agree with the proposed changes resulting in an incoming agency, the area allocations can be adjusted for all parties accordingly. The incoming agency has two options for capital contribution. In line with CAPEX principles, they can either:

  • contribute to the capital requirement upfront. This will be adjusted for any accumulated depreciation, and calculated according to the proportion of the new agency’s area allocation, plus the applicable capital charge, or
  • have their share of the capital contribution waived with the consent of the existing lead and participating agencies. This will mean no capital is returned to the incoming agency at the end of the lease.

Agencies may need to exit the co-location early or reduce space. In this case, the agency leaving can avoid continued cost during the project and tenancy by negotiating an alternative arrangement. This can either be:

  • with an existing occupant, or
  • by sourcing a new occupant who’s agreeable to existing participating agencies and GPG.

If the departing agency has contributed capital to the co-location, the incoming agency will reimburse the capital at the appropriate depreciated value. GPG can help participating agencies agree an alternative arrangement.

The MoU and co-location agreement’s release clauses detail the procedures and obligations for joining or leaving a co-location. Once you’ve entered into an MoU, your agency will need to continue to meet the financial obligations for CAPEX and OPEX until an alternative arrangement is made.

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