Relocating a business is a project that competes for attention with running the business, and it is usually managed by people doing it for the first time. The costs that blow budgets and the delays that hurt are consistent enough to plan for.
Start with the lease, not the layout
The commercial terms determine what the fitout is worth spending. Settle these before design:
- Term and rights of renewal. Fitout should be depreciated over the time you are certain of occupying. A five-year fitout on a three-year term with no renewal is a poor investment.
- Landlord contribution. Fitout contributions and rent-free periods are common and negotiable, particularly in softer markets. Ask.
- What the landlord is providing — base building services, air conditioning capacity, power supply, sprinklers, accessible bathrooms. Assumptions here cause the largest cost surprises.
- Make-good obligations at the end, and whether the fitout you are installing must be removed. Negotiate to leave it if you can.
- Landlord consent for the works, and what approvals are required.
The consenting question
Fitout work frequently requires building consent, and this is the most common cause of programme delay because it is discovered late.
Consent is generally required for structural changes, alterations to fire systems, changes to means of escape, new or altered plumbing and drainage, and changes to specified systems. It may also be needed where the use of the building changes, which triggers requirements around accessibility, fire safety and structural capacity that the previous use did not.
Changing a retail space to a food premises, or an office to a gym, are the classic triggers — the building must comply with requirements for the new use, and the cost of that can exceed the fitout itself.
Establish the consent position before signing the lease, not after. A building that cannot accommodate your use without major upgrade is not a cheap building.
Costs people forget
- Base building upgrades the landlord will not fund — power capacity, ventilation, accessible facilities.
- IT and communications — cabling, connections, the lead time for a business fibre install, which can be weeks.
- Signage, which may need council consent and landlord approval.
- Double rent during the overlap between fitting out the new site and exiting the old one.
- Make-good on the outgoing premises, which is a genuine and often large cost that arrives at the same time as the new fitout.
- Moving and downtime — lost trading, staff time, temporary storage.
- Furniture and equipment that does not fit or does not suit the new space.
- Address changes across the Companies Office, IRD, licences, insurance, suppliers, marketing material and online listings.
A contingency of 15 to 20 percent on fitout is realistic rather than pessimistic, particularly in an existing building where conditions are unknown until linings come off.
Sequence
- Confirm requirements — space, services, access, growth allowance.
- Shortlist premises and check consent implications for your use before committing.
- Negotiate lease terms including contribution, make-good and consent.
- Design, with input from the people who will work in it.
- Building consent where required.
- Tender or price the works.
- Construct, with inspections at nominated stages.
- Code compliance certificate, and any occupancy requirements.
- IT and communications commissioning, ahead of the move rather than during it.
- Move, with a plan for trading continuity.
- Make good and exit the old premises.
Health and safety during the works
A fitout is construction work, and where your staff are present alongside contractors, overlapping duties apply. You cannot contract out of your duties by engaging a builder.
If the work is notifiable — certain fall heights, asbestos removal above thresholds, and other categories — WorkSafe must be notified before it starts. Asbestos is a live risk in any pre-2000 building, and a survey before demolition work is both a legal requirement in many cases and a practical necessity.
Keeping trading
Decide early whether you will trade through the move or close briefly. A short planned closure is frequently cheaper than an extended period of degraded operation.
Tell customers before they find out by arriving at an empty building. Update every online listing on the day, not the week after — a business that cannot be found is worse than one that has moved.
The management cost
The most underestimated cost is attention. Someone senior will spend months on this, and that time comes out of running the business.
For anything beyond a small office, a project manager or tenant representative is usually worth the fee, both for the expertise and for protecting the owner’s time.
MBIE publishes building consent guidance at building.govt.nz, WorkSafe publishes asbestos and notifiable work requirements, and your territorial authority publishes local consent and signage requirements.
General information only, not legal or building advice.
