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Facilities Principles

What guides every facilities decision before the broker arrives?

The Loop​

Facilities creates value by ensuring the physical environment amplifies the operating model at the lowest joint-reversibility cost — and by closing the information asymmetry that defines every transaction the function runs.

That sentence is the gauge. Every workflow, instrument, and decision in this section either tightens that envelope or it does not earn its place.

First Principles​

Six truths that shape every other choice. Hold these and the rest follows.

  • You are not picking a space. You are picking the physical execution layer of your operating model. Start from how value is created — then test space options against the model. Reverse the order and you pay for capacity you will either underuse or outgrow.
  • Rent and payroll are coupled, not parallel. Same operating model, same fixed-cost budget. Location picks talent pool → talent pool sets wage band → wage band sets headcount → headcount sets m² → m² sets rent → rent eats margin → margin caps wage. Decide them together or the loop punishes you.
  • Reversibility wins on uncertain demand curves. The option with the lowest joint cost to exit in 12 / 24 / 36 months — across both the lease AND the headcount plan — beats the option with the lowest headline rent.
  • Every facilities transaction is in an asymmetric field. Repeat-player counterparty. One-shot amateur tenant. Information, tooling, retained specialists, time pressure — all stacked against the operator. Assemble the team before the first viewing, not during the negotiation.
  • AI is the buyer-side leverage that closes the information asymmetry today. Lease clause analysis, NPV modelling, comparable-rent synthesis, due-diligence sweeps, negotiation prep — two hours of prompt work returns more ROI in this asymmetric field than in any operating domain, because the baseline is so low.
  • Crypto rails are emerging instruments — track, do not bet. On-chain title registry, smart-contract escrow, stablecoin cross-border settlement, on-chain lease registry. Investor / sell-side tokenization is mature. Operator / buyer-side leverage is still nascent.

Essential Data​

Without these the function breaks. Each entry names the decision it drives.

  • Occupancy cost as % of revenue, by location — drives the financial envelope on every renewal / new-space decision. Missing this, the function is reactive.
  • Revenue per FTE and per m², by location — drives density and right-sizing decisions. The denominators that tie facilities to the operating model.
  • Lease term, break clauses, renewal options, escalation, make-good obligation, per location — drives reversibility-cost calculations and renewal calendar.
  • Total cost of occupancy per location (NPV over horizon) — drives lease-vs-buy and option-comparison decisions. Not the rent line. The whole cost.
  • Headcount projection over the lease horizon — drives capacity decisions and triggers expansion / contraction planning. Without it, you sign a 10-year lease against today's headcount.
  • Tenant rep network and counterparty database — names the lawyer, valuer, QS, finance broker, planner, insurance broker, accountant the function relies on. Drives whether the asymmetry is closed before the next decision.
  • Comparable rents in the actual catchment (not asking rents) — drives negotiation positioning. The asking rent and the actually-paid rent are different numbers.
  • Building incident log + landlord responsiveness record — drives renewal decisions and tenant-side leverage. Receipts trump promises.

Glossary​

Terms used across this playbook. Each carries a specific meaning. Treat them as canonical.

  • Head of Facilities — Apex decision maker for every facilities workflow. Owns the gauge. In small organisations this role sits on the COO or founder; the title does not matter, the accountability does.
  • Tenant rep broker — Broker representing the tenant's interests, not the landlord's. Not the same person as the listing broker. Often paid by the landlord — check the incentive structure.
  • Total cost of occupancy (TCO) — Full cost of being in a space over the planning horizon: base rent + OPEX + service charges + taxes / rates + insurance + fit-out + equipment + moving + ongoing maintenance, net of incentives. Not the same as rent.
  • Occupancy cost as % of revenue — TCO annualised divided by location-attributable revenue. The envelope. SaaS < 5%, services 5–10%, manufacturing 3–7%, logistics 4–8%, retail 8–15%.
  • Joint reversibility cost — Combined cost of exiting both the lease AND the headcount plan at a given location in 12 / 24 / 36 months. Includes break fee, make-good, move, lost productivity, redundancy, knowledge loss.
  • Sequencing trap — Picking space before the headcount and operating-model plan is locked. Reverses causality and locks in the wrong m² for the wrong density.
  • Wage-rent substitution test — For each option: can $X of annual rent buy more revenue as one extra senior hire? Forces the conscious trade between the two largest fixed-cost lines.
  • Asymmetric field — A field where being excellent at the operating business gives almost no advantage in the transaction. See first principle. Facilities is one of the canonical cases.
  • Make-good — Tenant's obligation to restore the space to a specified condition at lease end. Often understated at lease negotiation; surfaces at exit.
  • Right-sized — Space matched to headcount density appropriate for the operating model. Often 20–40% smaller than broker estimates suggest.
  • Buyer-side player network — The team of external specialists (tenant rep, lawyer, QS, valuer, finance broker, planner, insurance broker, accountant, peers, council, workplace strategist, existing tenants) assembled BEFORE the first viewing. The team that levels the asymmetry.