Bayleys Real Estate Ltd
Property Services
News and Editorial

Total Property -


Safe as buildings


A building’s “whole-of-life” input/output, its resilience, relevance and safety all need to be considered by investors and occupiers in an increasingly sophisticated market.

Ensuring commercial buildings remain fit-for-purpose, compliant and market-relevant should be a high priority for every building owner seeking to optimise return on investment across a property’s lifetime, and investor radars should be tuned into these markers, too.

The institutional and listed commercial market is leading the way with a focus on sustainability, structural integrity and risk assessment to avoid being saddled with an effectively stranded asset in a fast-moving world where occupiers and financiers are becoming more discerning.

Via its commercial property consultancy, advisory and facilities management service lines, Bayleys proactively assists its clients across a building’s lifecycle from acquisition to disposal and every point on the continuum with its mantra being to maximise the value of its clients’ real estate assets.

With commercial property investors and occupiers demonstrating a flight to quality in all sectors, showing a commitment to new technologies and methodologies, and having enhanced awareness around the likes of emissions reduction, seismic performance, and energy efficiency – Bayleys has been actively upskilling its teams to ensure its service delivery aligns with current thinking.

Bayleys’ Building Consultancy division provides a comprehensive range of surveying-related services to clients and offers a full package of technical due diligence and other professional services associated with all the practical aspects of acquiring, developing, leasing and maintaining property.

Its detailed technical due diligence reporting can delve into all aspects of the building fabric and incorporate the findings of structural engineers, building services experts, fire engineers, geotechnical engineers, and planning consultants.

The building consultancy team’s scope of expertise is complemented by solutions-based Bayleys Property Services (BPS) which provides proactive asset and facilities management, valuation, consultancy and occupier liaison services.

After assessment of a building’s physical structure and utilities infrastructure, a review of regulatory and statutory obligations and associated consents, consultancy reports around seismic, fire, health and safety, and environmental-related analysis, the Bayleys team can advise the best way forward including likely future capital and operational expenditure and appropriate insurance cover.

Bayleys building consultancy head, David Guy says with the unrelenting flight to quality among both occupiers and investors in the current market, buildings are under the microscope.

“Occupiers are being extremely prudent about the space they commit to, compelled to improve the attractiveness and safety of their workplace for staff, to leverage operational efficiencies for bottom-line performance, and to satisfy sustainability principles.

“Given the wider softening of the commercial investment market, investors and their funders are also becoming more selective about the quality and fortitude of assets, borne out by more due diligence and greater aversion to properties with identified problems.”

Guy says the past two decades have seen huge changes in market sensitivities around weather tightness/leaky buildings, asbestos and seismic, alongside the more recent emergence of passive fire and sustainability matters.

“Using a professional building surveyor to improve the understanding of a property can provide a range of benefits, with identification and remediation improving the ability to retain tenants, enhancing the marketability of a property – both for leasing or sale – and helping to limit costs associated with problems getting worse over time.”

Strengths and weaknesses

BPS senior facilities manager Mark Fogarin says seismic performance of commercial assets has been a significant focus for both landlords and prospective tenants, particularly since the 2011 Christchurch and 2016 Kaikoura events.

“Knowing how seismic performance is calculated by central and local authorities and how outcomes are managed, have become a core competency for property and facilities managers and are critical to successful management practices being implemented,” he explains.

“The general rating of buildings in New Zealand is measured in percentage of new building standard (NBS) with a building’s overall percentage NBS reflecting the lowest rating of any part of a building, meaning only specific parts of the building may pose an actual risk in the case of a seismic event.”

Detailed seismic assessments DSAs carry far more weight than initial seismic assessments (ISAs), with many prospective occupiers walking away from opportunities if detailed seismic information is not available.

Passive fire compliance has also become an increasingly important consideration with respect to asset and safety for occupants of commercial buildings, following the tragic events of the Grenfell tower fire in the UK and the recent fatal fire at Loafers Lodge, Wellington.

“Passive fire systems within commercial assets are ever-important and must be compliant in order to meet Building Warrant of Fitness (BWoF) requirements for general fire egress,” says Fogarin.

“Passive fire must also be a focus whenever new fitout works are carried out by landlords and occupiers.”

One emerging issue in the commercial and industrial market is the fire performance of external wall claddings, in particular aluminium composite panels (ACP), so landlords should take action to identify and remediate this cladding to reduce insurance and leasing risks.

Fogarin says working closely with competent structural and fire engineers is key to understanding the strengths and weaknesses of an asset to identify the most feasible management pathway, with Bayleys having quality contacts across New Zealand to assist landlords with guidance and solutions.

“Not knowing where an asset sits on the seismic and passive fire risk spectrum may lead to low or no interest from quality tenants, significant remedial costs to address weaknesses identified after a tenant moves in, or in extreme cases, voided insurance cover.”


BPS national portfolio manager, Michael Gillon says the New Zealand Green Building Council (NZGBC) cites that the built environment including infrastructure contributes to more than 20 percent of New Zealand’s carbon emissions, so greening up the commercial sector is seen as pivotal.

“With the Government planning to introduce mandatory energy performance as an amendment to the Building Act – following Australia and the UK’s lead – commercial property owners need to be proactive,” says Gillon, noting we need to distinguish between operational and embodied carbon emissions.

“Operational carbon emissions include lighting, heating, HVAC and other power consumption throughout the building and is relatively straightforward for owners of existing buildings to address.

“Embodied carbon is all the carbon emitted in the production or development of the building, whether a new-build or a refurbishment, including how materials get to the construction site and the carbon emitted throughout the build process itself.”

“NABERSNZ is a great mechanism to measure the energy efficiency of buildings and to encourage continuous improvement, and while only applicable to office assets at present, we understand other market sectors will soon be included.”

To support its national emissions reduction goals, the government’s recently announced $40m targeted GIDI: Commercial Buildings fund as part of its Government Investment in Decarbonising Industry Fund (GIDI), which will allow commercial building tenants and owners to improve the climate and energy efficiency of their buildings.

“Bayleys’ global real estate partner Knight Frank found an eight to 18-percent sales price premium for green-rated buildings compared to equivalent building in Australia, and a three to 13-percent rental premium for prime Central London office buildings,” says Gillon, adding that BPS can provide advice on initiatives like NABERSNZ and assist with applications for the GIDI fund.

“The most significant risk for owners of commercial buildings who do not address or reduce the carbon emissions of their buildings is that they become ‘stranded assets’ which cannot be leased or sold.

“There are also potential finance implications, with major banks offering preferable rates via their sustainable finance platforms to those with a pathway to decarbonising assets.”

Managing health and safety

Also forming part of a building’s appeal to prospective occupiers is risk management in the health and safety arena, with competent building management having a large role to play.

BPS general manager Michael Thornton says the Health and Safety at Work Act 2015 and related regulations require that workers and others are given the highest level of protection from workplace health and safety risks, so far as is reasonably practicable.

“As professional property managers, we are a Person Conducting a Business or Undertaking (PCBU) and have both a duty of care and responsibility for the management and control of a property to ensure, if it’s a workplace, that all identified risks to health and safety are mitigated.

“We want building owners and occupiers to better manage risk, promote positive personal attitudes towards health and safety, and apply the most appropriate and reasonable solutions as the penalties for breaches of health and safety duties are significant.

“BPS have systems to identify and manage risks or hazardous situations that have the potential to cause harm to employees, occupiers of our managed properties, workers that perform tasks at our managed properties, the public, and the environment.

“There is no such thing as zero risk, but we are held to a ‘reasonably practicable’ standard that involves weighing a risk against the resources – time and cost – needed to manage it.”

Download full article (PDF)

Contact us

Office Hours
Contact Phone
+64 3 375 4700
Contact Email
3 Deans Ave, Riccarton, Christchurch