Avanta’s New Division Will Deliver Flexible Leases To Landlords, Agents And Occupiers

Feb. 2, 2010 - PRLog -- Landlords and agents are missing out on many medium sized occupancy deals, due to the inflexible nature of their long-term institutional leases, claims serviced office operator, Avanta, which has in response taken the bold step of entering the property management arena with the formation of Avanta Property Management.  The new division will also be focussing on assisting current occupiers which have unused space that they may wish to sub-let.

This new division will be headed by Richard Douglas, former managing director of Managed Office Solutions, which he formed in 1999 and subsequently sold to Regus in 2006. “There’s a vacuum in the market that’s been created by a mismatch between supply and what potential occupiers actually need,” comments Douglas. “So, Avanta Property Management will address the gap between a conventional lease and serviced office space.

“Whilst Avanta could certainly accommodate large occupancy deals in some of its existing business centres, the economics don’t always stack up financially and tactically.  If there’s a big move out from a centre, we’d be left with infrastructure problems such as large open plan spaces which are costly to divide into smaller parcels for reintegration into the business centre operation. So, the new division’s focus will be placing new tenants into quality buildings that match their infrastructure and cost requirements.

“There’s a healthy market for businesses seeking accommodation for one to five years and for between 20-100 people, but these businesses are demanding flexible leases as they won’t risk making any long term commitments during the current economic downturn. These deals can often be directed to secondary buildings by agents whereas by working with us, Agents can unlock a multi-let strategy on any building – particularly including instances where there is existing fit-out, furniture and infrastructure.

“There’s a lot of Grade A property out there that’s under-utilised by occupiers trapped in long term institutional leases and we believe that much of this property can be re-let and thereby introduce smaller parcels of high grade property into the market. This would help reduce the financial burden on the bottom line of those businesses tied into long leases as well as providing flexibility to drawn space down in phases for reoccupation.

“For instance, an occupier that has signed a long term lease some time ago may have been subject to rent review in the last 2-3 years may be paying somewhere around 40% more rent than current market prices dictate.  Because reviews are never ‘downwards’ why would any business logically want to lock itself into a long term lease in the present financial climate?

“Avanta Property Management’s team will assume the role of managing agent with a view to de-risking a property acquisition. Our proposition will be a perfect fit for existing corporate occupiers that have already made an investment in the infrastructure of a building, which we can help offset by sub-letting cost-effectively by re-utilising our client’s investment. We have substantial experience of working with both occupiers and landlords and our team will handle all negotiations with landlords on an occupier’s behalf.

“Our new service will also prove attractive to companies that consider themselves too independent to move into a business centre, as these often include services they believe they don’t need. In many cases, the office manager has to take on the responsibility of a relocation with no previous experience and is forced to learn ‘on the job’ – with significant potential pitfalls.   The front and back-end hassles of set-up and re-investment / dilapidation costs are often not taken into account; particularly double-occupancy costs during these phases – which is avoidable.

“We are set up to deliver fully operational space within six weeks on a build-to-suit basis and with our user-friendly short form of lease we can also fast track the legal processes.  This is a major benefit to new occupiers which can’t always afford to wait months for an uncertain traditional lease negotiation that could collapse at any moment.

“The new division will benefit the agent community, which are likely to be already handling properties we could use in the scheme. With a large sales team in our new business call centre handling 300 enquiries per week, we have a valuable inflow of market information we can bring to disposal instructions. Many of these properties are not suited to the business centre sector, but would be ideal for the Avanta Property Management model; ideal for shorter term / medium term building opportunities.

The launch of Avanta Property Management brings together Richard Douglas and former agency director of Managed Office Solutions, Patrick Maher.  Despite having only been in operation for two weeks, a number of large occupancy deals are already under negotiation, demonstrating the opportune timing of its launch.