​​Negotiating leases

When negotiating lease terms in relation to price risk, agencies should:

• factor in the agency’s strategic objectives, its budget, timetables for procurement
• be aware of any agency directive to make a trade-off with those performance risk factors (eg the building’s seismic parameters, building code issues or the building’s services); and
• ensure they engage with other agencies operating in the same market. This will ensure that a consistent approach in the market is obtained.

When independent advice is required, as a prerequisite, agencies should consider those who have had experience working with Crown agencies and what the Crown’s property goals and objectives are. It is also recommended that agencies check to see if any of the services being sought are covered by a syndicated or all-of-government contract. Below is a list of the types of independent advice that are commonly required.

• Tenant advocates – are typically property professionals who are engaged to lead lease negotiations on behalf of agencies.
• External legal counsel – engaged to obtain independent specialist legal advice in the property area and to mitigate risks associated with the Crown entering into lease agreements.
• Structural and mechanical engineers – main services sought in this area include seismic related advice, heating and ventilation, structural and fire design advice.
• Valuers – engaged to provide independent advice on market rentals applicable to the relevant property.
• Project or construction manager – engaged to programme and implement fit-out and refurbishment works.
• Architects – engaged to deliver the design, relevant documentation and execution of fit-out and workplace design as specified by agencies.
• Quantity surveyors – manage all costs relating to building and civil engineering projects from initial calculations to the final figures.

See all collaborative contracts (All-of-Government, syndicated and common capability contracts)

Ensure all lease documentation is correctly completed, executed and held securely

Leases set out the rights and obligations of the landlord and the agency during the duration of the tenancy. This makes the lease a document of great significance which is contractually binding, typically non-negotiable once in place, and generally runs for a long period of time.

To ensure negotiations result in best value and outcome for agencies, they should obtain all relevant information about the building, the market, outcomes of recent lease negotiations and engage appropriate specialists to assist if the deal is of a large or complex nature.

Agencies should make sure that they have a rigorous process in place for the preparation and execution of all legal documentation and that internal policies and procedures are adhered to throughout the process. The process should ensure:

• An appropriate amount of time is allowed for the negotiations
• Internal and/or external legal advice is obtained throughout the planning, negotiations and preparation of the legal documentation
• A solicitor’s certificate certifying all is in order for execution is provided by the relevant legal advisor responsible for preparing the legal documentation
• Leases are executed by those who have delegated authority
• Accounting practices in accordance with the NZ PBE IPSAS 13 are adhered to
• All correspondence relating to lease negotiations are recorded (for example, all meetings and telephone conversations recorded in writing) and stored in the Government Property Portal (GPP).