Cost Comparisons between Leasing and Using Office Space at Regatta 1 Business Centre

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1 Contents Different Office Products... 3 Traditional Office Lease... 3 Rent... 3 Outgoings... 3 Body Corp Fees... 4 Other associated Costs in leasing office space... 4 Once off set up costs when first moving in... 4 Recurring monthly costs... 4 R1 Office Suites... 5 Rent... 5 Other associated Costs in renting a R1 Office Suite... 5 Once off set up costs when first moving in... 5 R1 Executive Offices... 6 Cost Benefit of using a Business Centre versus a commercial lease... 7 Cost Comparisons between Leasing and Using Office Space at Regatta 1 Business Centre Often when people come and inquire about renting an office at our centre they are often focused on what it cost per square metre or the monthly rental cost. When comparing a standard lease against renting an office or office Suite at R1 you need to take into consideration that R1 monthly cost includes all costs of the office unlike taking out a standard lease which just includes rent, not all the other associated costs.

2 The following table is comparing a 50 sq. standard 3 year lease that has a reception, meeting room, kitchenette and office area to R1 Office Suites (avg 30sqm) and R1 Executive office space. All expenses amortised over three years. Based on two people and ex GST. Fit out is based on $22000 assuming that some walls had to be put up, signage and legal fees plus other expenses such as furniture and equipment. Normal Lease R1 Office R1 Executive Office Suites Rent included $1400 Included $1550 Included Outgoings Not Included $400 Included $0.00 Included Air-conditioning monthly servicing Air-conditioning replacement of certain parts Insurance on building Maintenance on building Garden maintenance Cleaning of common areas (Multi Tenant building) Mandatory safety checks of fire alarms etc. Rates Fit Out Not Included $700 Included $0.00 Included Lease preparation Not Included 55 Not Not Applicable Applicable Electricity Not Included $200 Not Included $120 Included Office desks Not Included $55 Not Included $55 Included Internet Not Included $60 Not Included $35 Included Phone lines Not Included $34 Not Included $30 Included Off street parking Most do Included Included Large photo copier Not included $250 Included $0.00 Included Tea and Coffee Not Included $40 Option $40.00 Included Staffed Reception Not Included Included Included Office Cleaning Not Included $130 Option $80 Included Phone System Not Included $200 Included $0.00 Included Lease Term Fixed 3 year 6,12 or 24 M Monthly to 12 months. Total Cost of just an office $3524 $1910 $1500 Answering Service, Not Included $130 Option $130 Included $3654 $2040 $1500

3 Different Office Products In this section we will discuss the three different ways of renting office space. These are Traditional Office Lease (3-5 year term) R1 Serviced Offices R1 Office Suites. Traditional Office Lease Traditional 3 Year Office Lease is what most people are familiar with. Common things people look at is cost of rent per month but often neglect to look at all the additional costs such as outgoings and other costs per month. Rent Most of the time rent is talked in terms of price per square metre and outgoings are usually just mentioned in the lease and not specifically quoted as they are not a fixed cost. For example if you are looking at 50sqm and price was $360 per square metre then 50 x 360 is $18000 which is the price per year. The monthly rent would be $18000 / 12 months = $1500 per month Outgoings Now outgoings is simply the term given for all expenses that the Landlord incurs on maintaining and running the property for you to occupy. In commercial leases it is standard for all expenses to be passed on to the tenant as they occur. There are some exceptions. This is very different to renting a house where the tenant just pays the rent and water usage. All other costs such as rates, insurance, maintenance is at the Landlords expense and these cannot be passed onto the residential tenant, however they are for the commercial tenant. Outgoings for a commercial tenant would include Council rates Air-conditioning monthly servicing Air-conditioning replacement of certain parts Insurance on building Maintenance on building Garden maintenance Cleaning of common areas (Multi Tenant building) Mandatory safety checks of fire alarms etc. Lift servicing fees. These would be the most common items that the tenant is responsible for.

4 Body Corp Fees In buildings which have multiple owners each owning a separate section of the floor space a Body Corporate is put into place to manage the building on behalf of the owners. So most of the costs mentioned above is paid for by the Body Corp which in turn invoices each owner according to the percentage of floor space they own. These body Corp fees are then passed on to the tenant. Other associated Costs in leasing office space Like most things in life there is more than meets the eye and leasing floor space is no exception. The costs listed in this section need to be taken into consideration when working out the real cost of office space. Once off set up costs when first moving in Legal fees for both Landlords and tenants solicitors in preparing lease. ($2000) Fitting out office to suit your needs such as o Putting up walls and partitions o Getting plans drawn up for fit out. o Council approval of fit out o Purchasing office furniture such as chairs and desks o New signage o Installing phone system o Connecting phone lines o Connecting internet lines. o Purchasing and installing routers /switches for computer network. Bond. Landlords often ask for up to four months rent in advance as a bond. Two months has been the standard. Recurring monthly costs Next and final cost of office space are the expenses that occur just to have the office even before you spend money to make money. These costs generally stay the same each month and are independent on how much work is going through the business. Electricity Insurance on your fit out and contents Alarm system and monitoring fees Weekly cleaning of office

5 R1 Office Suites R1 Office Suites is a new concept which is halfway between a standard lease and Serviced Offices. It is perfect for those who have two to four people and need a professional environment and only want to commit to 12 months instead of three years. These office Suites are around 30 sqm and their real strength is that all of this 30 sqm is for your work area. You don t need to use any of this area for a reception, kitchen or even meeting room as you utilise R1 s reception and kitchen areas. So a 30 sqm office Suite would be equivalent to a sqm stand alone tenancy. Rent Rent not only includes the standard rent but also includes all the costs listed under outgoings in office leasing. This has the advantage of you being able to budget as the amount you pay each month does not change for the term of your agreement. Other associated Costs in renting a R1 Office Suite Once off set up costs when first moving in Legal fees NIL. We use a licence agreement saving you legal fees. Fitting out office to suit your needs such as o Putting up walls and partitions Almost NIL o Purchasing office furniture such as chairs and desks. (or use ours) o Installing phone system (or use ours) o Connecting phone lines (or use ours) o Connecting internet lines. (or use ours) Bond. One month only.

6 R1 Executive Offices Our offices are single office that will take up to two people working in them. While these offices are around 11 sqm on average, you actually have use of close to 100 sqm of office area. These office are designed to include everything the average office user requires. Comes standard with furniture, electricity, internet, dedicate phone number, answering service, manned reception to greet your clients and couriers and photocopier. Set up costs are only $120 plus one month s bond. The monthly cost is all you are going to be charged, no extra outgoings, electricity or even phone line rental. Any extra charges would only be for phone calls you make and printing and other extra services you may need.

7 Cost Benefit of using a Business Centre versus a commercial lease Operating your company out of a Business Centre is the most cost effective way to conduct business. In fact, you will be hundreds of dollars better off every month, which will leave you with more financial resources to invest into your core business functions. A typical business with one or two people at Regatta 1 Business Centre will spend between $900 and $1800 a month. This would include phone calls and other miscellaneous charges. In this package, you not only have the use of your private office but also basic receptionist duties and full use of a board room, meeting room, kitchen and reception lobby. If you were to set up your own office by entering into a commercial lease and fitting it out you will be paying much more than $1900 a month. On the Sunshine Coast, the smallest area readily available to lease is about 50 square metres. This would be large enough to have two offices, a small reception lobby and a third room for meeting and/or kitchen area. The table below outlines the actual cost of conducting such a project over a three year lease. Small commercial lease 50 sqm at $340 p/sqm $ 1, Outgoings at $85 p/sqm $ Phone line rental $ Internet connection $ Insurance $ Electricity $ Fit-out repayments* $ Misc maintenance $ Total monthly cost for office space (ex GST) $ 2, On these figures you would be spending $ per month on your own office space. That is over than $4400 more than at Regatta 1 Business Centre. If you don t require a receptionist, you would still be spending $1100 more than the cost of one of our top offices at Regatta One. And you will be lonely as you won t have us around to help you. Operational expenses with Receptionist Wages including super and leave $ 2, Office equipment rental and maintenance $ Security alarm monitoring $ Cleaning $ Office supplies eg paper, tea coffee milk $ *Fit-out amortised 3 years Carpet/partitions/electricity $ 15, Furniture $ 3, Telephone installation/connection $ Security alarm supply/installation $ 1, Legal fees for preparing lease $ 2, Total expense $ 22, Repayments per month at 8% interest $ Total operational cost $ 3, Total Cost for Business per month (ex GST) $ 6,331.00