6. EPW management of office space
The Department of Energy and Public Works (EPW) is responsible for developing and implementing innovative strategies for the provision, management and utilisation of suitable, cost-effective office accommodation that supports agencies' service-delivery needs.
The portfolio of office accommodation managed by EPW includes space in:
- government-owned office buildings
- 'major leased' buildings (leased wholly or in substantial part by government)
- 'other leased' buildings (including buildings procured through a pre-commitment lease process).
EPW undertakes office space management on both strategic and operational levels.
A strategic approach is taken for longer-term (2-5years) office accommodation planning and project implementation in the Brisbane CBD and regional centres.
An operational approach is generally taken for current-year office requirements in Brisbane and regional centres.
The management objectives for EPW are to:
- maximise the utilisation of government office buildings
- minimise the overall vacancy rate within the portfolio
- improve the overall quality of government office accommodation
- reduce the overall cost of government office accommodation consistent with quality improvement
- support individual agencies' office space needs
- maximise whole-of-government savings and benefits.
The process of managing government office space is integrated with the process of managing government office-building assets, as described in Guideline 1: Planning.
Office space management in the Brisbane CBD and all regional centres is undertaken as a series of separate exercises because agencies' office accommodation requirements are generally specific to each centre. Agencies' requests to relocate between centres are managed as required.
In the Brisbane CBD and regional centres, EPW:
- establishes the office accommodation requirements of each agency in each centre and aggregates these areas to establish the total space demand in the current year, 2-3 years out and 5 years out
- establishes the increase or decrease in demand and the timeframe
- assesses the opportunities for functional alignment between agencies and other levels of government and service-delivery partners within a region
- assesses the space available, or to become available, in government office buildings (EPW and agency owned)
- assesses the status of current leased space (functional suitability, condition, landlord performance, remaining lease term, rent review opportunities, etc.)
- assesses the status and performance of the local property market including leasing opportunities
- confirms the functional suitability of space available to meet agencies' needs
- consults with agencies to confirm requirements
- develops a strategy that integrates the various space requirements into an interlinked series of projects that meet agencies' needs for additional space, reduced space, relocations, collocations and vacation of unsuitable space
- negotiates and acquires new leased space or lease extensions in existing buildings in the marketplace as required
- negotiates and acquires new leased space under pre-commitment lease arrangements if no suitable premises are available in the marketplace
- undertakes the ongoing processes of building management (for government-owned buildings) and lease management (for all leased buildings)
- undertakes the ongoing tenancy-management and financial-management processes
- conducts ongoing premises inspection programs and tenant liaison programs
- upgrades government-owned office buildings to enhance functionality as needed
- confirms to agencies' the rental commitment required under the strategy
- confirms and formalises the funding arrangements for the strategy project funding, including contributions from the Office Accommodation Program (OAP)
- implements the series of projects that form the overall strategy
- evaluates the process and the strategy's outcome.
EPW undertakes the above office-space management process as a continuous, rolling program. The consultation process with agencies is extensive and ongoing.
In smaller regional centres, the management of office space by EPW is based on a consultation process and on agencies' specific requests. The sensitivity and viability of the local property markets in these centres is also considered as part of the process.
EPW has the mandate to negotiate, acquire and manage office space leased from the private sector for agencies to occupy. When Government needs new or more space, EPW work through a strategic process with the requesting agency to ensure that any new premises will suit their needs, as well as the needs of Government.
EPW looks for options in the private leased market, only if there is no suitable space in the existing government portfolio. Any potential leased premises are then assessed on the following criteria:
- location
- functionality
- amenity
- statutory and regulatory compliance
- environmental, energy and sustainability
- rental and other occupancy costs
- availability timeframes
- agencies' other special requirements.
Once the agency instructs EPW on their preferred premises, EPW will negotiate the terms and conditions of the lease agreement with the Building owners and/or their agents. The agreement is not legally binding until approved by the Minister for Energy and Public Works (or their delegate). To seek this approval, EPW require the following documents (where applicable) to be completed and appropriately endorsed:
- If fitout work will be needed, and the construction cost is expected to be more than $100,000, a Departmental Office Accommodation Proposal form is to be completed by the agency and approved by EPW.
A practice note on this procedure can be found in Guideline 2 of the OAMF.
- The Occupancy Detail Schedule (ODS) and the agency’s instructions to EPW to go ahead on their behalf, needs to be signed off by the agency. The ODS is prepared by EPW for each new lease, and documents the full terms, conditions and legal provisions of the agreement that the agency is committing to, including costs and cost escalation methodologies.
Once the signed Occupancy Detail Schedule is executed by the agency, EPW will seek approval from the proper delegate to enter into a legally binding contract with the building owner or agent. Office accommodation leases are entered into by the State of Queensland represented by EPW and, as such, EPW is the lessee in a legal sense.
When a need for leased space has been identified, but the local property market cannot provide suitable space from existing stock, the possibility of acquiring the necessary space through pre-commitment lease process can be considered. This space can be provided in a newly constructed building, in a refurbished building or in a building that has been extended to provide the space.
If EPW identifies this process as the preferred option, and the potential tenant agency agrees, then a lease pre-commitment project can be initiated. These projects are managed by EPW on behalf of the proposed tenant agency or agencies on a fee for service basis.
The process involves at least 5 stages:
- Extensive consultation with the agency's end user of the space to develop a base building brief for pre-commitment lease of space from the private sector (Please refer to supporting documents). This stage is critical because the new premises will be purpose built to suit the agency's needs.
- A call to the marketplace for expressions of interest to deliver the accommodation as described in a project building brief which defines the minimum built-environment standards that must be met.
- Evaluation of responses and short-listing of the most suitable proposals.
- Identifying the preferred option, and entering into negotiations with that proponent on a without-prejudice basis to reach agreement under all headings for the provision of the new accommodation.
- Implementation of normal new lease acquisition procedures as described in '6.5 Acquisition of leased office space from the property market'.
Additional evaluation stages may be required to reach the preferred proponent/developer, particularly for large or special use facilities. The process involves a structured approach with probity risks effectively managed and documented. The process also involves extensive consultation between EPW and the proposed tenant agency or agencies, together with their technical and fitout consultants.
The proposed building and accommodation must be technically acceptable to EPW and acceptable to the end-user tenant agency or agencies, both functionally and financially. EPW uses its base building brief (PDF, 280KB) to ensure that these requirements are met agencies that are to occupy the building must provide formal financial commitments and approvals, and obtain fitout project approval as mentioned in section '6.5 Acquisition of leased office space from the property market' and described in section '6.8 Fitout Project Approval process'.
Office accommodation pre-commitment leases are entered into by EPW as lessee. Occupying agencies must comply with the agreed lease conditions.
Cabinet has approved that EPW shall manage all new and existing government office accommodation leases except where other arrangements are already in place. Leases are entered into by EPW as lessee except in very specific cases where the lessee will be the occupying agency.
Lease management includes:
- all consultation with the property market
- arranging technical inspections as required
- lease negotiations
- lease acquisition and establishment
- instructing solicitors in the preparation of lease agreements and other legal documents
- exercising options
- rent-review negotiations including instructing valuers as required
- negotiating lease extensions, lease terminations, variations, subleases and assignments
- dispute-resolution negotiations
- financial management
- tenancy management
- premises-inspection programs
- landlord and/or agent interaction
- 'make good' negotiations.
EPW, in its role in a legal sense, is responsible for the financial management of leases, including making accurate and timely lease payments to landlords and/ or agents in accordance with the lease provisions, and recovering lease charges from tenant agencies. EPW uses its iSPACE system) for lease management, invoicing and payments.
A general description of the operation of the iSPACE system is described in section '7.1 Space and tenancy management system'.
The fitout-project approval process is managed by EPW. The process was initiated by DPC and is mandatory for all agencies.
The purpose of this process is to monitor and review agencies' office accommodation fitout projects to ensure that these projects are consistent with the intent of the Office accommodation workspace and fitout standards and meet appropriate space and cost performance benchmarks. The process operates in a consultative way and provides for EPW to review project proposals against benchmarks and consult with agencies to achieve an efficient and cost-effective outcome.
This process comprises 2 stages and uses a template for submission of the project proposal. Submission for stage 1 approval should be considered as early as reasonably possible in the project program to avoid non-productive design and documentation work if changes are necessary. When agencies are acquiring leased space, stage 1 of the submission forms part of the lease-acquisition process and stage 1 approval needs to be obtained before the government becomes bound to proceed with the lease acquisition.
Stage 1 of the fitout project approval process incorporates assessment and approval procedures for projects in 3 project cost ranges as follows:
- agency-funded projects up to an estimated project cost of $100,000 may be self-assessed by the agency that is proposing the project
- agency-funded projects over $100,000 are assessed and approved by EPW Accommodation Office
- * all projects funded through the EPW Office Accommodation Program (OAP) are assessed and approved by EPW Accommodation Office.
Apart from preliminary design fees, no project expenditure should be committed until stage 1 approval is obtained.
Projects with an estimated cost over $100,000 also require a second stage (final) approval prior to commencement of construction. This approval is given only if the final (fixed) project cost is not more than 10% above the initial estimated cost. For building owner approvals within government-owned buildings, also refer to Guideline 4: Occupancy.
The approval procedure for government office accommodation projects is a supporting document of Guideline 3: Fitout.
In certain circumstances, EPW can assist community-based organisations occupy space in government-owned buildings.
The opportunities for this assistance are limited to space that is currently surplus to requirements or is unsuitable for use by agencies. Any such space can be made available only for the period that this space is not required for government use or until the building may be required for redevelopment or disposal.
Generally, preference is given to non-commercial (not-for-profit) organisations. Each request is treated on a case-by-case basis and occupancy is subject to specific conditions that must be agreed to by the occupying organisation. Rental and other occupancy costs are subject to negotiation.
Additional information is available from EPW.