BA BROOKER, TL WEBB & MS BADENHORST 1 The lease evaluation process for office buildings occupied by state departments in South Africa: An evaluation Abstract The Department of Public Works leases close on two million square me­ tres of office space for state departments in South Africa. The depart­ ment follows an extensive lease evaluation process. including a multi­ faceted evaluation on aspects such as suitable depth of space versus natural light, appropriate electrical distribution for the planned office lay­out and an evaluation of the amount of partitioning that will be required as a function of shape on plan. A questionnaire survey was conducted among Public Works Department leasing officials to establish the extent and depth of their knowledge of these factors. It was concluded that the existing lease evaluation has many strong points. The survey results, however, indicated serious limitations to the existing understanding of leasing officials of crucial aspects in the evaluation process. Proposals are presented to improve on the process in general. Keywords:Lease evaluation process, Public Works, South Africa. DIE HUUR-EV ALUERINGSPROSES VAN KANTOORGEBOUE VIR STAATSDEPARTEMENTE IN SUID-AFRIKA: 'N EVALUERING Opsomming Die Departement Openbare Werke huur sowat twee miljoen vierkante meter kantoor-ruimte vir staatdepartemente in Suid-Afrika. Die Departement volg 'n omvattende huur-evalueringsproses, insluitende 'n meervoudige evaluering van aspekte soos geskikte diepte van die ruimte teenoor natuurlike lig, toepaslike elektriese bekabeling vir die beoogde kantooruitleg, sowel as 'n evaluering van die afskortings wat benodig word as 'n funksie van planvorm. 'n Vraelysopname is onder huurbeamptes van die Departement Openbare Werke onderneem om die omvang en diepte van hul kennis aangaande bogenoemde faktore vas te stel. Dit het geblyk dot die huidige huur-evaluering as sodanig verskeie sterk punte het. Dit het nietemin geblyk dot daar ernstige beperkings bestaan wat betref huurbeamptes se begrip van kritieke aspekte wat met die huur-evalueringsproses verband hou. Voorstelle word aan die hand gedoen om die proses in die algemeen te verbeter. Sleutelwoorde:Huur-evalueringsproses, Openbare Werke, Suid-Afrika. BA Brooker. B Sc(QS)(Natal) M(T&RP)(UP), Lecturer: Department of Construc­ tion Economics and Management, University of Cape Town; TL Webb, D Sc(UP), DSc(hc) (Rhodes), Professor Emeritus, UNISA; MS Badenhorst. B Sc (T&RP) (UP) D Phil(RAU), Head: Department of Town and Regional Planning, University of Pretoria. Brooker, Webb & Badenhorst / The lease evaluation process Introduction T he Department of Public Works has two methods of provid­ ing office accommodation for government departments, namely, the development of new office buildings and the leasing of existing office buildings. The socio-economic pri­ orities of the present government have decreased the funds available for the construction of new office accommodation. Approximately 1,86 million m2 of office accommodation is pres­ ently leased in South Africa by the Department of Public Works. During 1995/96, 203 new leasing contracts were concluded, 158 were cancelled and 2 624 were administered. The net rental ex­ penditure for 1995/96 was R550 million, an increase of R40 million (8%) on the 1994/95 amount of R510 million (Department of Pub­ lic Works, 1995). This paper focuses on the lease evaluation process of the De­ partment of Public Works in South Africa. The South African gov­ ernment enters into over two hundred new lease contracts per year, which results in a substantial amount of money and time being spent in lease contract decision-makin,g. Poor space utili­ sation has resulted in an increase in total area leased which has a direct effect on other cost factors which are proportionate to the total area leased such as lighting, heating, security and cleaning of the leased accommodation. These related expenses also contribute to an increase in total lease expenditure for gov­ ernment departments. Energy efficiency and the sick building syndrome, are however, not considered here. Factors impacting on space utilisation The theory of factors that influence the utilisation of office space can be divided into two main groups. The first group includes the type of tenant, its organisational structure and the operational requirements of the tenant. The second group includes the mor­ phological factors of the building under consideration, such as the shape and height of the building, the floor to ceiling height and the depth of space. The above factors influence both the total amount of rentable area required as well as the running cost per m2 for the tenant. The two major objectives in establishing the operational aims of the state department requiring office space is to tabulate the amount of space necessary to house the organisation and, sec­ ondly, to translate a two dimensional organogram into three di­ mensional office space (Saphier, 1968). 2 1998 Acta Structilia Val 5 No 1 & 2 Documents that will assist in the establishment of operational re­ quirements include the existing floor plans of the organisation under inspection and the personnel list of the organisation. An in­ spection in loco of the existing premises, together with a mem­ ber of a central state department, would yield greater insight into the interrelationships within a central state department. Bailey ( 1990) states that large corporate organisations involved in a variety of business endeavours would have many depart­ ments at the same level in the organisational hierarchy. A rela­ tively low rate of change will occur in large organisations, due to the fact that any major restructuring of these organisations would impact on all departments as a result of dependencies within the organisation. The type of office space that would suit a large organisation is invariably open plan office space. The nature and size of the user department, the hierarchy and status of the people employed within the user department, and the security requirements of the user department, will influence the organisational requirements of the office space to be se­ lected. The shape on plan of the office building is one of the most im­ portant criteria that will have the greatest influence on the rent­ able/usable (R/U) ratio of office space leased (Towsend, 1983). The circle is the shape that has the smallest perimeter in relation to area. But circular buildings seldom produce an efficient use of internal space (Seeley, 1983). Generally the simpler the shape, the better the R/U ratio will be. Irregular shaped office buildings usually result in more circulation space as well as more "dead space". Shallow space that is usually associated with linear-shaped buildings makes full use of daylight and outside awareness, and can permit natural ventilation where this is desirable (Dashing Office Furniture, 1995). This type of space is, however, negatively affected by the large areas of external facade that will permit unwanted heat gains in summer and excessive heat loss in win­ ter. Medium depth space has been very popular with those devel­ opers speculating in office rentals in the nineties. Part of the space is naturally lit, while the internal area furthest away from the windows is artificially lit. The deeper the office space, the longer the time period that will require artificial lighting. Bailey ( 1990) and Joedicke ( 1962) states that by having usable office space on both sides of the circulation area, the R/U ratio 3 Brooker, Webb & Badenhorst / The lease evaluation process would be more efficient than a building with only office area on one side of the circulation area. An increase in the total height of a building will decrease the rentable/usable ratio. High rise office buildings have a direct in­ fluence on increasing the annual operating cost for central state departments. To support this statement, Seeley ( 1983) states that the presence of vertical transportation in the form of lifts and staircases necessarily increases the amount of related horizontal circulation space. Fire protection becomes an important factor in high-rise build­ ings, and it is important for leasing officials to be aware of the regulation as detailed in the National Building Regulations. Larger buildings require wider passages, which increases the amount of unusable rentable office area. Notwithstanding the fact that rentable area is measured in a horizontal plane, increasing the floor to ceiling height has an ef­ fect on the rentable usable ratio. If the office building is air­ conditioned, an increase in the area of external facade per floor would increase heat gains, resulting in a need for additional conditioned air (Ferry & Brandon, 1991). The increase in floor to ceiling height increases the volume of air in the office space to be air-conditioned. Operating costs When evaluating the cost implications of leasing one office building over that of another office building, most tenants focus on the rental rate per m2 (Posner, 1990). Very few tenants place enough emphasis on the operating costs relating to a particular office building. Operating costs of office buildings are those costs that keep the building operational during the period of the lease (Spedding & Holmes, 1994). Cleaning, repairs and main­ tenance, electricity, water, security and property management fees are some of the operating costs that must be determined to establish the total leasing cost (BOMA, 1994). The net rental rate, together with the operating costs, make up the gross rental rate for a building. The average operating cost per month for A-grade office space as indicated in Figure I is R 12,50 per m2 (Rode, 1996). Operating costs can account for 25 % of total leas­ ing costs and, as a result, form an important part of the lease evaluation process (Barrett, 1995). At the start of a lease contract, there are initial costs that only occur once during the leasing contract period. These initial costs include stamp duty, legal fees and installation costs. These costs can be paid by either the tenant or the landlord, depending on 4 1998 Acta Structilia Vol 5 No 1 & 2 FIGURE 1 Operating costs for an office building • electricity • rates D repairs D security !illl cleaning R 2.as !illl management II insurance II water 11111 other the conditions of the lease contract and, as a result, have a bearing on the total leasing cost (Walker, Undated; Timm, 1987), It can be established that the impact of initial costs and running costs associated with a new lease contract are significant. Each cost type is influenced by many factors e.g. the shape of the of­ fice building being leased, the management capacity of the building administrators, and the quality of the design, specifica­ tion and construction methods employed to develop the office building. Certain operating expenses such as electricity can be controlled by the tenant, while other expenses such as security and mainte­ nance, are not controllable by the tenant and, as a result, place the tenant in a position that will limit his potential to keep operat­ ing expenses to a minimum (Mc Keever, 1968). The impact of op­ erating costs and installation costs on total leasing costs clearly shows that these costs should not be ignored in the lease evaluation process. Overview of the lease evaluation process since 1967 In 1967, the then secretary of the prime minister issued guidelines for the administration of accommodation for central govern­ ment departments. These guidelines formed the basis for the evaluation of leased office accommodation by the Department of Public Works (Department of the Prime Minister, 1967). A new manual on leasing was issued in 1982 by the head office of the Department of Public Works (Department of Community Devel­ opment, 1982). In September 1989, the Office of the Auditor 5 Brooker, Webb & Badenhorst / The lease evaluation process General released a report on leasing administration in the De­ partment of Public Works. This report drew attention to the pres­ ent method of lease evaluation undertaken by the Department of Public Works and high-lighted the shortcomings of the evalua­ tion process (Office of the auditor general, 1989). This report was followed by an investigation of four user departments to deter­ mine the average leasing cost per person for each department. This investigation lead to the implementation of new space norms for office accommodation (Department of Public Works, 1993). It can be concluded that the lease evaluation process continually evolves, and that the process discussed, reflects the present process. The first step in the evaluation process is the identification, by a central government department that a need for additional of­ fice accommodation has arisen. Based on the schedule re­ ceived from a central state department, the accommodation control section of the Department of Public Works establishes the total amount of usable and rentable area required. The method used for determining the total area required is done in accor­ dance with the guidelines set out in a document entitled "Space and Cost Norms for Office Buildings Funded Wholly or Partially by the State" (Department of Community Development, 1987). These space norms were adjusted in 1993 after an investi­ gation initiated by the Cabinet Standing Committee for Expendi­ ture (Department of Public Works, 1993). Each rank of staff is allocated a particular size of office. Norms for storage space, filing space and meeting space are also used to establish the total assignable area. The non-assignable area is calculated as a percentage of the assignable area, ±20%. The non-assignable area includes circulation area, toilets and foyers. The combination of the assignable and non-assignable areas constitutes the total rentable area required. If it is found that funds are available, then the financial approval document is sent to the leasing section for further processing. If the total rentable area approved exceeds 1 OOOm2 in extent, then the Department of Public Works will be expected to adver­ tise the request for space in two local newspapers (State Tender Board, 1993). If the space required is to be located in a CBD of a major city or town, and many buildings are known to be vacant or partly vacant, the Department of Public Works may advertise for space less than 1 OOOm 2 in extent. Once all offers to lease are received within the allotted time frame, the offers are opened in front of two representatives of the regional office of the Department of Public Works. All offers to lease are recorded on a summary evaluation sheet. It is note­ worthy that large amounts of information requested in the offer 6 1998 Acta Structilia Vol 5 No 1 & 2 to lease form are excluded from the summary evaluation sheet. Leasing section officials evaluate all offers to select the most suit­ able office accommodation. Those offers of accommodation that do not comply with the requirements of the advertisement, are excluded from the list. An inspection of the remaining office accommodation is under­ taken by members of the leasing section, the central state rep­ resentative requiring office space, and the property broker, who is representing the landlord of the accommodation offered. They must establish whether or not the office accommodation is suitable for occupation by a central government department. This inspection that entails approximately twenty minutes per building visited, requires those present to make a multi-faceted and integrated evaluation on aspects such as suitable depth of space versus natural light, appropriate electrical distribution for the planned office layout, and an evaluation of the amount of partitioning that will be required as a function of shape on plan. It was the obvious importance of this particular stage of the evaluation process which prompted the issuing of a question­ naire to Public Works Department leasing officials to establish the extent and depth of their knowledge of the factors pertinent to the decision-making process (Brooker, 1998). A recommendation is then made to the leasing committee for the approval of the selected accommodation. The selection of the most suitable lease is usually based on the net rental, per­ centage escalation, area offered to lease, installation cost, run­ ning costs, and maintenance costs. Once the evaluation pro­ cess is completed, the signing of the lease contract takes place. Survey In an endeavour to establish the extent of state official under­ standing of the influence of shape and layout factors on the suit­ ability of office accommodation for leasing, a questionnaire sur­ vey was compiled. The results of survey are documented to es­ tablish, in effect, the current understanding of lease officials in the Department of Public Works in the evaluation of office ac­ commodation. A total of 25 questionnaires were mailed to all seven regional of­ fices and to the head office of the Department of Public Works. Three leasing officials per regional office were requested to each complete a questionnaire, whereas four officials at the head office were requested to complete the questionnaire. A total of 16 questionnaires were returned (64%). At least one re­ turn per region was received. The response rates of the survey are depicted in Tobie I. 7 Brooker, Webb & Badenhorst / The lease evaluation process Table 1: Response rates for questionnaire m�, �'¥- � '* Description Total responses Not returned Bloemfontein 1 2 Regional office Durban 3 0 Regional office Johannesburg 1 2 Regional office Pretoria 1 2 Regional office Cape Town 2 1 Regional office Kimberley 1 2 Regional office Port Elizabeth 3 0 Regional office Pretoria 4 0 Head office Total No(%) 16 9 (64%) (36%) The results of the survey are henceforth discussed. Shape of the cellular office Total dispatched 3 3 3 3 3 3 3 4 2.5 (100%) The respondents were requested to indicate which office layout presented in Figure 2 is considered the most suitable for meeting the working space requirements of a state official. This question sought to establish the respondents' understanding of the rela­ tionship between the shape of the office and the functional re­ quirements of the state official requiring office accommodation. Moreover, it sought to determine the relationship between the shape of the office and the amount of circulation space that is generated as a result of a particular shape. None of the respondents selected office 'A' as the most suitable office shape for meeting the working space requirements of a state official. Sixty-nine percent of the respondents selected of­ fice 'B' as the most suitable office layout of the three options de­ picted in Figure 2. The most commonly cited reason by respon­ dents for selecting this office layout is that the office is more suited to the furniture requirements of a state official. One re­ spondent stated that his reason for selecting that particular of­ fice is that it would provide more natural light. This reason is, in fact, incorrect as office 'C' has more external window area and 8 1998 Acta Structilia Vol 5 No 1 & 2 is a more shallow office than office 'B'. Thirty one percent of the respondents selected office 'C'. The reason given was the same as that given for the selection of office 'B' viz., a more suitable shape of office to meet the furniture requirements of a state offi­ cial. The responses to this question are summarised in Table 2. FIGURE 2 Shape of the cellular office 6m 1.5 m 2m Office A= 12 m 2 4m 1.5 m 3m Office B = 12 m 2 3m 1.5 m 4m Office C = 12 m 2 9 Brooker, Webb & Badenhorst / The lease evaluation process Table 2: Selection of cellular office type Description Office A Office B Office C Total Most suitable 0 11 5 16 office The question relating to the shape of offices was correctly an­ swered by most (68%) of the respondents, but none of the re­ spondents quantified their answer by stating that the circulation area for office 'C' is 6m2 while the circulation area of office 'B' is only 4,Sm 2 . In other words, office 'B' contains 25% less circulation space than office 'C', remembering that the circulation area is included in the rentable area of a building. According to the Department of Community Development ( 1987), circulation area for a typical office building is 20% of the assignable area. Cable distribution network Respondents were requested to indicate the type of cable distri­ bution network they would select for an open plan office build­ ing. As the information technology requirements of office work­ ers increase, so does the demand on technology increase to satisfy the cable distribution requirements of a building (Camrass and Barrow, 1988). An unsuitable cable distribution network would potentially limit the office layout potential which, in turn, would increase the amount of rentable area required to meet the needs of a state department. An ability to recognise the ca­ ble distribution requirements of a particular state department is therefore needed in the selection of the more suitable office ac­ commodation for a state department. Cellular and open plan offices require different cable distribution networks to suite the office equipment requirements of state offi­ cials. System 'A' is more suitable for cellular offices and is most likely to be the cheapest form of distribution. Moreover, such a network distribution is unlikely to disrupt the circulation of people. However, alterations involving the cutting of new holes and chases, will result in considerable disruption. System 'A' is ideal for cleaner's sockets in passages, providing permanent supply positions. Systems 'B', 'C' and 'D' are more suited to open plan offices as they allow for final distribution to work stations from any position of the cable distribution network. 10 1998 Acta Structilia Vol 5 No 1 & 2 FIGURE 3 Selected types of cable distribution networks Type A Type B II '-.. I "'- ' ' ' � II Type C Type D Respondents were asked which cable distribution network in Fig­ ure 3 best suits an open plan office. Table 3: Selection of cable distribution network Descrip- System A System B System C System D Total tion Selection of 2 2 5 7 16 system Most (75%) of the respondents selected systems 'C' and 'D', stat­ ing that the power point can be moved, thereby not limiting the placing of workers. This reasoning is correct as the constraints on an ideal office layout are reduced. Although this reasoning is valid, one should note that the access flooring system is only needed if the demand for power and related cabelling is above the average demand, for example, in a main-frame computer room (Bailey, 1990). The selection of an access flooring system would be excessive for the typical requirements of the average administrative official. One respondent stated that the cost of 11 Brooker, Webb & Badenhorst / The lease evaluation process systems 'B', 'C' and 'D' would be very high. Although this may be true, these costs do not necessarily impact directly on the rental amount to be paid by the state. Structural frame of the building Identifying and evaluating the impact of the structural frame of the building is important in determining the usable portion of the office building. Both buildings depicted in Figure 4 have the same shape and external dimensions. The major difference be­ tween the two buildings lies in the fact that building 'B' has much larger columns than building 'A' due to the fact that it is a twenty storey building. The larger columns will decrease the amount of usable area in relation to rentable area. Ideally, a leasing official should be able to identify the impact of the struc­ tural frame on the rentable/usable (R/U) ratio. The rentable area is 200m2 and the usable area is l 86m 2 for building 'A', while for building 'B', the rentable area is 200m2 and the usable area is l 75m2. The responses to this question are depicted in Table 4. FIGURE4 Plan view of the structural frame of each building Building A Ground floor of a 2 storey office building in the CBD Building B Ground floor of a 20 storey office building in the CBD Table 4: Structural frame of each building �@:..���� Description Building A Building B Total Building selected 11 5 16 Sixty-nine percent of the respondents selected the most appro­ priate option, but only half of these stated that building 'A' has the most usable space. Some of the other reasons given for the choice of option 'A' included the notion that the smaller col­ umns will not restrict the view of workers and visitors, and that more parking will be available in this building. How these respon- 12 1998 Acta Structilia Vol 5 No 1 & 2 dents established the effect on parking availability is unknown to the author, but this response clearly shows that most leasing offi­ cials are unable to identify those aspects of design that improve the R/U ratio. The reasons given for the selection of building 'B' include the opinion that this building could more easily be identified due to its height. Although this statement is correct, the respondents were requested to confine their responses to measurable items such as area and cost. Other respondents stated that it would result in better utilisation of office space, which, in fact, is incor­ rect. None of the respondents stated unambiguously that the type of structural frame and the height of the building would have a di­ rect influence on the amount of usable area in relation to rent­ able area, although most (69%) had selected the correct build­ ing for other reasons. System of partitioning The system of partitioning selected by the leasing official for the administrative section of a state department will have an influ­ ence on both the usable area of the office building and on the possible types of office layouts available to the occupants (Boje, 1971 ). The selection of a particular partitioning system will reflect the understanding of the leasing official with regards to the needs of the occupants, i.e. flexibility to change spaces continu­ ally or the need to increase the amount of usable area due to the thickness of the partitioning system. Three systems of parti­ tioning were proposed, namely: 0 solid brickwork or blockwork 0 studwork and plasterboard 0 proprietary relocatable system FIGURE 5 partition system A partition system B partition system C Types of partitioning systems Solid or blockwork A Studwork & plasterboard B Proprietary relocatable C 13 Brooker, Webb & Badenhorst / The lease evaluation process The amount of money that is usually provided by the lessor for the initial installation of the offices must be deducted from the total cost required to partition the offices. Partition system A is not suitable for any changes that may take place in the organi­ sation, due to the relatively permanent nature of the construc­ tion. Changes to office layout would be disruptive to the occu­ pants and costly. Partition system B would allow for the limited change that might occur in a mature organisation. while still maintaining a suitable level of acoustic performance and struc­ tural stability. A stud or plasterboard system can be re-used, po­ tentially decreasing the cost of future changes in the office lay­ out. Partition system C is used in open plan offices. and is more suitable for organisations with continually changing needs, as the system can be relocated with limited inconvenience during the lease contract. System B is, at present, best suited to meet the needs of a state department, as cellular offices dominate the space requirements of user departments. The responses to the question on the selection of partitioning systems are de­ picted in Table 5. Table 5: Selection of partitioning systems �����moo..����� Description Partition Partition Partition Total system A system 8 system C Selection of sys- 0 2 14 16 tern Eighty-seven percent of the respondents selected the proprie­ tary relocatable system (system CJ, stating that it would facilitate easy and inexpensive re-arrangement if modifications to office layout are desired. This answer is correct. but the initial cost of this type of partition system is expensive and the probability of change in a mature organisation is relatively low. The remaining thirteen percent of respondents selected the studwork and plas­ terboard system (system BJ. The reasons given for selecting sys­ tem B are that this system is relatively cheap and easy to relo­ cate. One can conclude from these findings that most leasing officials attach value to the benefit of being able to relocate partition­ ing, even though the amount of changes made in state depart­ ments is not very high, if historical changes in state departments are taken into account. 14 1998 Acta Structilia Vol 5 No 1 & 2 Storage criteria The ability of a leasing official to identify criteria that will en­ hance the storage capability of a building is important. Appro­ priate selection of storage space will decrease the rentable area needed to accommodate departmental files. Due to the nature and size of state departments. storage space for files consumes large amounts of usable space in each build­ ing leased by the state respondents' decision criterion and rea­ sons for selecting office space for the storage of files are listed below. Criteria Reason for selec- Number lion Floor strength to support heavy loads 7 Large open spaces to maximise rack space 6 Fire protection system since material is flam- 4 mable Basement area or lower due to excessive floor 6 floors loads Appropriate lighting to prevent miss-filing 3 Ventilation or air condi- to prevent rotting 6 tioned Provision for security to prevent theft 8 and safes From the above list of criteria, one can conclude that most leas­ ing officials appreciate the requirements for storage space. The only criteria that was not listed by the respondents was the influ­ ence of floor to ceiling height on storage capacity. In essence. storage space required is not determined by area. but rather by volume. The addition of 400mm of height to a typical floor would decrease the required area for storage by some 12 percent (Panero and Zelnik, 1979). Understanding the definition of rentable area Clearly, it is important for state officials to possess an understand­ ing of the definition of rentable area in order that they appreci­ ate the implications for the determination of rental. Respondents were provided with a hypothetical plan layout (Figure 6) and re­ quested to illustrate the areas to be included in the rentable area of an office building as defined by the SAPOA method of measuring floor area (SAPOA. 1992). 15 Brooker, Webb & Badenhorst / The lease evaluation process FIGURE 6 Floor plan for measurement of rentable area external wall column projection D D D column column column Responses to this question are given in Table 6. Table 6: Areas to be included in the rentable area Name of Area Correctly indicated on plan Incorrectly indicated on plan Toilets 8 8 Columns 4 12 Projections 0 16 Only fifty percent of the respondents correctly included the toi­ lets in the rentable area, with only twenty-five percent correctly including the columns. All respondents incorrectly omitted the projections for the determination of rentable area. It can be concluded that most {66%) leasing officials do not have an ac­ ceptable understanding of which areas are included in the rent­ able area of a building. This shortcoming must potentially limit their ability to evaluate the difference between buildings offered to the state for leasing purposes. Respondents were then asked to comment on areas to be ex­ cluded from the deter-mination of rentable area. The responses to these questions are given in Table 7. 16 1998 Acta Structilia Vol 5 No 1 & 2 Table 7: Areas not to be included in the rentable area Name of Area Correctly excluded on plan Incorrectly excluded on plan External wall 14 2 Duct 14 3 Staircase 13 3 Lifts 13 3 Most respondents (85%) have a much better understanding of which areas are not included in the rentable area of the office building. As respondents would seem to have difficulty in identifying the exact rentable area on plan, one can conclude that they would have difficulty in identifying the same at a site visit to a building offered for lease, if the building under scrutiny has numerous col­ umns and projections which would decrease the available us­ able area, which would result in the state department leasing more space. Shape of the building on plan Cellular offices of l 2m2 are more suited to shallow space build­ ings than deep space buildings. For example, the shallow floor space of building 'B' maximises the use of daylight and outside awareness and can permit natural ventilation where this is desir­ able (Stone, 1980). Building 'B' is more suited to housing the small cellular offices of a government department than building 'A'. Building 'A' is more suited to open plan office accommodation with its deep space layout (Figure 7). FIGURE 7 Shape of office buildings Building A Building B 17 Brooker, Webb & Badenhorst / The lease evaluation process Table 8: Shape of office buildings :ffi:�,r !St: , ·:«"' .... . ;.� Description Building A Building B Total Number of re- spondents that selected a par- ticular building 7 9 16 that best suited cellular office space Forty-four percent of the respondents incorrectly selected the deep space building, building 'A', stating the following reasons for the selection (Table 8): 0 Better utilisation of office space 0 Each office will have a window and a door 0 Easy access to service areas for all offices 0 Easy to arrange office-layout and functional. The remaining fifty-six percent of the respondents selected the more suitable building to accommodate the government de­ partment. The following reasons were given for the selection: 0 More offices can be accommodated in the building 0 More natural light 0 Offices of 4m x 3m can be accommodated, each with a window 0 Cross ventilation will work and no air-conditioning needed 0 Easy to partition. These survey results indicate limitations to the existing under­ standing of leasing officials of the Department of Public Works. Proposed changes The proposed changes are presented to ensure that the aims and objectives of the Green Paper for the Department of Public Works {Public Works Department, 1996), are achieved. Proposed changes to a central state department's requirements User department accommodation schedules should focus on function rather than status in determining the amount of office area required. Status should only be taken into account if it has an impact on additional office space been required to fulfil the 18 1998 Acta Structilia Vol 5 No 1 & 2 function of the official. A better understanding of functionality can be achieved by studying work flow, staff interaction, shift work and current utilisation rates for areas such as meeting rooms and conference facilities of a central state department. An interview with the management of a central state depart­ ment is encouraged to ensure that this central state department accommodation schedules reflect present and future utilisation rates for the office accommodation required. Accommodation schedules should be prepared by a central state department in accordance with the space norms document entitled "Space and Cost Norms for Office Buildings Funded Wholly or Partially by the state" (Department of Community Development, 1987), to ensure that the evaluation of space required is not duplicated by the Department of Public Works. Proposed changes to the Department of Public Works head office evaluation section The terminology relating to rentable and usable area used by the Department of Public Works should fall in line with the termi­ nology advocated by the South African Property Owners Asso­ ciation (SAPOA, 1992). The quality of office buildings required by a central state department should be classified as either A B or C grade office buildings. More open plan office norms should be incorporated into the of­ fice space accommodation requirements of user departments, and if a high percentage of cellular offices is required by the user department, only shallow space buildings should be se­ lected for occupation by a central state department. Proposed changes to the Department of Public Works' regional office evaluation The allocation of appropriate resources and time to the lease evaluation process of the regional office should be directly re­ lated to the capitalised value of the proposed lease contract. The capital value will be determined by the size of office area, the duration of lease contract and the standard of office ac­ commodation required. Appropriate resources would include the training of existing lease officials so that they can contribute more meaningfully to the correct selection of leased office ac­ commodation. The length of time for which the required space is advertised and the response period for landlords and brokers to respond to the request for office space should be related to the capitalised value for the required lease contract. 19 Brooker, Webb & Badenhorst / The lease evaluation process The regional office should ensure that the rentable area of the office buildings offered for lease is correct. Once the rentable areas are established, office layout drawings should be pre­ pared to establish if the office space requirements of the user department can be met in each of the buildings offered for lease. To reduce the amount of time that is required to produce layout drawings, landlords and brokers can be requested to pro­ duce layout drawings that meet the requirements of the user de­ partment. To assist the landlords and brokers to produce the lay­ out drawings, the accommodation schedules of the user de­ partment can be given to them. Once the rentable area is established, based on the layout drawings and the offer to lease form, a financial model can be used to calculate the net present value of each lease offered by the landlords and brokers. As operating costs are an impor­ tant part of the lease contract, all offers to lease should include each operating cost, the party responsible for the payment of each cost, and the method used to determine these costs. To ensure that an appropriate value is attached to each operating cost, a data base of operating costs incurred by each user de­ partment for different grades of office buildings should be devel­ oped and managed by the Department of Public Works. Before the in loco inspection of each office building is under­ taken, a checklist should be compiled by the leasing officials to­ gether with the technical staff to ensure that all aspects of the office building are inspected to establish the suitability of the building for occupation by the user department. The checklist may include information on the location of the building and its surrounding environment, the age and condition of the office building, and the quality of the existing services within the office building. Energy efficiency and the sick building syndrome should also be part of the evaluation. More time should be taken by the regional office-leasing officials in establishing the existing condition of the office buildings of­ fered for lease. Once the condition of the office buildings is es­ tablished, the leasing officials can determine if the amount of money made available for partitioning, finishes and services is sufficient to meet the requirements of a central state depart­ ment's office layout and service installation. A standard proposal form should be used for easy comparison between different office buildings by the head office leasing committee. The use of a standard proposal form would also en­ sure that no important information was excluded from consid­ eration by the head office leasing committee. 20 1998 Acta Structilia Vol 5 No 1 & 2 Proposed changes to the Department of Public Works head office leasing committee evaluation The head office leasing committee should evaluate each offer received in response to the advertisement placed in the local newspaper. Only information received from the landlords and brokers in response to the offer to lease and additional informa­ tion gathered at the in loco inspection should be tabled at the meeting. Those buildings offered for lease that do not meet the require­ ments of a central state department should not be discussed at the leasing committee meeting. Only the remaining buildings should be discussed, covering the salient features such as the net present value of each lease contract, the location of each office building, and the quality of each office building. Once all the buildings have been discussed, the lease contract with the lowest net present value that is able to meet the requirements of the user department should be selected for occupation by the user department. Conclusion In conclusion, this investigation has shown that the existing pro­ cess for lease evaluation has many strong aspects, such as well­ calculated space norms and an appropriate model for deter­ mining the net present value of each lease offered. However, the leasing officials that are expected to execute the lease evaluation process are not suitably trained to ensure that the most suitable office accommodation is leased by the Depart­ ment of Public Works. References BAILEY, S. 1990. Offices: A Briefing and Design Guide. London: Butterworth, Architecture. BARRED, P. 1995. Facilities management: Towards best practice. Oxford: Blackwell Scientific. BOJE, A. 1971. Open-plan offices. London: Business Books Limited. BOMA. 1994. Experience exchange report: Income/expenses analysis for office buildings. BOMA. Washington, D.C. BROOKER, B. 1998. An investigation of the lease evaluation process for office buildings occupied by state departments in South Africa. 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