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Are you Sale or Lease Ready?

  • by HFM Asset Management
  • Aug 18, 2017

Leasing or selling a building? A NABERS rating may be required before a building is sale or lease ready.

Are you Sale or Lease Ready?

Changes to the Commercial Building Disclosure (CBD) program came into effect on the 1st of July 2017. However, we believe many landlords or managing agents of commercial office buildings are leaving it too late in the sales or leasing process to think about compliance with the Building Energy Efficiency Disclosure Act 2010.

The CBD department is constantly reviewing advertising material related to commercial office transactions both online and in print and have issued several warning letters to landlords and property managers advising them to remove non-compliant advertising or face serious financial penalties. CBD states on their website that the current penalties are a maximum of $210,000 for the first day of non-compliance and up to $21,000 for each subsequent day of non-compliance if imposed by a court. Alternatively, the Department of the Environment and Energy may issue an infringement notice of up to $21,000 for the first day and up to $2,100 for each subsequent day of non-compliance.

The timeframe to complete a Building Energy Efficiency Certificate can take anywhere from 2-6 weeks. Timeframes are highly dependent on the collection of all required data and a final review and formal certification by NABERS and CBD departments are required. Therefore, it is paramount that landlords and managing agents understand the assessment process and timeframes to ensure they don’t face disruption in their sales or leasing campaign or even financial penalties.

Treatment of Mixed Use Buildings – Office / Non-Office (e.g. Retail, Warehouse)
You may already be aware that changes to the Commercial Building Disclosure (CBD) Program came into effect 1st of July 2017. But what you may not be aware of how this may affect mixed-use buildings.

The commercial building disclosure team has recently released a comprehensive guidance note on this topic which can be found here. HFM has provided a basic summary below.

No Internal Access
If an owner wishes to offer 1,000m2 (or more) of office for sale or lease, and the office space is not internally connected to the non-office space (e.g. via an internal door or opening) then it is considered as being disclosure affected and a BEEC is required before proceeding.

If an office space for sale or lease exceeds 1,000 sqm then a BEEC is required

When there is no internal access, the 75% mixed use rule does not apply. If the office space being offered for sale or lease exceeds 1,000 sqm then a BEEC is required.

Figure 1: No internal access and +1,000m2 office. Building is disclosure affected. (CBD 2017)

Internal Access Between Office and Non-Office
If an office space of 1,000m2 is offered for sale or lease and it shares a door or opening to the non-office space then it must make up more than 75% of the total building area to be disclosure affected. If the office component makes up less than 75% of the total building area then it is not disclosure affected and doesn’t require a BEEC to proceed.

If an office space for sale or lease exceeds 1,000 sqm then a BEEC is required

An example of disclosure affected mixed-use building:

    • Office space 2,250 sqm
    • Warehouse 700 sqm

Office space greater than 75% of total building area, therefore the office space requires a BEEC to be offered for sale or lease.

Figure 2: Internal access and +1,000m2 office > 75% of total building area.  Building is disclosure affected (CBD 2017)
If an office space for sale or lease exceeds 1,000 sqm then a BEEC is required

An example of a mixed-use building (where internal access exists) as an exception:

    • Office space 1,300 sqm
    • Warehouse (non-office space) 7,600 sqm

Office space is less than 75% of total building area, therefore is an exception and not disclosure affected.

Figure 3: Internal access and +1,000m2 office is < 75% of total building area. Building Is not disclosure affected (CBD 2017)
Source: Commercial Building Disclosure (CBD), 2017, Department of the Environment and Energy

Multiple buildings on one site
In the scenario where there are several buildings on one site, each building is individually treated, unless the buildings are interconnected.  Where office space is internally connected to non-office space and share a common primary entry point, the spaces are part of the same building.

For more information please click here or contact HFM Asset Management.


Categories:Buildings, Energy, NABERS, Water


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