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Buildings under the microscope amid increasing flight-to-quality

According to Bayleys leaders, ensuring commercial buildings remain fit-for-purpose, compliant and market-relevant should be a high priority for every building owner seeking to optimise their return on investment across a property’s lifetime.

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

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

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 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.

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, is a core competency for property and facilities managers and critical to successful management practices being implemented,” he explains.


“Passive fire compliance has also become an increasingly important consideration within commercial assets in order to meet Building Warrant of Fitness requirements for general fire egress, and must also be a focus whenever new fitout works are carried out by landlords and occupiers.”

Fogarin says working closely with 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.

“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 the need to distinguish between operational and embodied carbon emissions. “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, 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 will allow commercial building tenants and owners to improve the climate and energy efficiency of their buildings and Gillon says BPS can provide advice on this, and on NABERSNZ initiatives.

BPS senior facilities manager, Kurt Mills says since January 2021, government agencies have required a NABERSNZ rating of 4 stars or more to enter a new lease in an existing building and this has set the tone for the wider occupier market.

“Energy ratings and ‘green lease’ requirements have moved from ‘nice to have’ to ‘must have’ for many tenants when signing a lease,” he says. “BPS partners with industry-leading solution providers to arm clients with the systems required to monitor and improve a building’s energy performance, with the obvious benefits being lower operational costs, better leasing opportunities, and improved asset capital value.”

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 while there is no such thing as zero risk, 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.

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