What will you do in your summer holidays?
Summer time is a great time to take stock of your business and a great time to think about and diarise some property housekeeping issues that quite often get overlooked in the bustle of normal day to day business.
However if you consider this now, you can plan to carry out some crucial housekeeping duties in January when business is traditionally quieter.
Some of the not so sexy but absolutely essential items to consider to maximise your return and minimise your cost and risk are as follows:
Property Replacement Insurance: given the sizeable increases in construction costs in recent times, have you considered whether your properties are correctly insured? Do you know what you are insuring: base building and / or fit out?
Capital Expenditure Planning: what items have you planned over the next calendar year? How will they be managed?
Maintenance: are your maintenance contracts up to date and appropriate? Are there any routine maintenance items that can be efficiently attended to in this quiet time?
Tax and asset updates: Is your base schedule correct? Have you carried out any upgrade works during the financial year to date for which you can claim either a tax write off or a future tax deduction?
Condition Audits: Do you need to create or update any condition surveys of your tenanted properties?
Tenancy Make Good: Do you have a schedule of lease expiries that will occur during the year? Are there any “repairing and make good” obligations that need to be planned with the tenant?
N&B can assist with all of the above to help you really enjoy your summer holiday.
Sherwood fire sparks timely warning about Property Insurance
The recent warehouse fire in the Brisbane suburb of Sherwood should send a significant warning to property owners and managers about property replacement cost assessments. The damage to the Sherwood warehouse was massive. From a property owner’s perspective, it was critical that they were not under-insured.
Unfortunately, all too often we see companies that lose their assets (due to fire, flooding etc) without first ensuring they are adequately insured. This is an expensive mistake.
Everyday, property owners are at risk of under-insurance due to a variety of factors. The case study below demonstrates the difference between an insurance replacement cost assessment prepared by a qualified Quantity Surveyor and a property valuation estimate.
The example is based on a 10,000m2 property which has a 4,000m2 industrial building, including a 500m2 office component.
|
Item |
Quantity Surveyor |
Valuation |
|
Current building replacement cost |
$2,480,000 |
$2,480,000 |
|
Additional building cost for office areas |
$290,000 |
$290,000 |
|
Cost of external hardstand, landscaping and services |
$600,000 |
Not considered |
|
Demolition cost of existing structure |
$240,000 |
Not considered |
|
Demolition cost of existing hardstand |
$120,000 |
Not considered |
|
Additional cost of asbestos removal |
$200,000 |
Not considered |
|
Additional costs to achieve current building code compliance |
$100,000 |
Not considered |
|
Replacement cost of Landlord owned tenancy fitouts |
$250,000 |
Not considered |
|
Total replacement cost |
$4,280,000 |
$2,770,000 |
|
Cost of re-design and professional fees |
$270,000 |
Not considered |
|
Cost of council fees and charges |
$80,000 |
Not considered |
|
Total development costs |
$4,630,000 |
$2,770,000 |
|
Cost escalation between disaster date and final completion of new building (18 months) |
$463,000 |
Not considered |
|
Total replacement cost |
$5,093,000 (1,273/m2) |
$2,770,000 (692/m2) |
