Segro shrinks

Segro continues to divest its portfolio of assets with an announcement of a further series of sales totalling a total of £159 million.

An industrial site in Crawley, a site in Munich, and four industrial estates in Runcorn, Lymedale, Pucklechurch and East Midlands airport make up the latest assets to be disposed of as part of a £1.6 billion divestment programme designed to turn round the fortunes of the company.  In the last 12 months assets values at £680million have been sold, but the current harsh climate has still seen £180 million fall from the value of the remaining portfolio.

James Alexander can help your organisation review your property and land portfolio and develop strategies for better usage and utilisation, as well as determining strategies for asset divestment, or acquisition.  Get in touch and see how we could help.  innovation@jaltd.co.uk

Home work

For many office workers today is the first day back in work since the Christmas break.  However, the prospect of an extended break is just too difficult for some to contemplate.  The standard IT and technology products and services most companies provide to staff to assist them do their jobs and stay in contact during the working week also come with additional costs.

It has become common practice for some staff to regularly check eMail and intranet services long after the working day has finished.  For some, the opportunity to catch up on a few late eMails whilst on the train home has not satisfied the desire.  The temptation to do just one final check before turning out the lights for the evening has led to an increasing number of people turning their bedrooms into secondary working spaces.  In a recently conducted survey, one in three participants admitted checking eMails, finishing reports and checking online work activity from the comfort of their bed, some spending as much as two hours a day doing so.

Apart from health risks with potential problems with posture and muscular damage from a poorly supported working position, there are also relationship perils for couples who do not establish boundaries for what is acceptable behaviour in this regard.

Of course, a downside for one group represents an opportunity for others and one bed manufacturer in the USA is marketing a bed which comes with its own power sockets and wi-fi connection!

So, if you have not faced a mountain of eMails on your return to work this morning, you have spent too much time in bed!

Reach for the Sky

The race to dominate the skyline continues apace as the tallest structure in the world, the Burj Khalifa (Khalifa Tower) in Dubai is set to be eclipsed during the first half of 2013 by the 220 storey Sky City.  Built in Changsha, in the Hunan Province of China, it will top out at 838 metres, beating the Burj Khalifa by a mere 10 metres.  Peanuts!

However, the more interesting aspect of Sky City’s development is it’s method of construction.  Constructed by Broad Sustainable Building, 95% of Sky City’s fabric features prefabricated construction techniques which will allow the construction to progress at 5 storeys a day.  Developments in off site manufacturing techniques and materials development have meant that Sky City is able to boast impressive statistics for environmental, sustainability and health and safety measures.  The financial and programme savings achievable by construction the majority of a building of this size and height at ground level cannot be underestimated.  BSB are expecting to finish this building within 90 days, an astonishing achievement, which, if previous projects are any measure of potential, will be achieved.  The video link at the bottom shows the completion of a 30 storey hotel in 15 days.

The current mantra for development and construction is that the price and unavailability of land is pushing developers upwards, rather than outwards.  To meet this increasing trend, technical construction techniques require to develop ever faster to meet the demands and technical requirements.  The Chinese appear to be spearheading these developments at present, in July, Zhang Yue, Chief Executive Officer, Broad Sustainable Building, told a Reuters magazine that he plans build at a two-kilometre high, 636-floor tower.

This will be bad news for the Kingdom Holding Company, whose Chairman Prince Alwaleed bin Talal said in June 2012 that the 1,000-metre high tall Kingdom Tower in Jeddah will be completed by mid-2017.  That is not all, Avesta Group an Azerbaijan company, has advanced plans to build what at the time would be the tallest tower in the world, standing at 1,050 metres, surrounded by number of artificial islands and a Formula One racetrack. This project is likely to be completed between 2020 and 2025, but will it be eclipsed before it’s even built?.

View the BSB hotel development here:

http://bit.ly/Umanuu

James Alexander Consultants eMail us on innovation@jaltd.co.uk or see our contact page for our numbers.  We look forward to speaking with you.

Government Property Unit under the microscope

Some interesting commentary this week on the subject of the Government land and built estate ownership and occupation.  The cross party Publlic Accounts Committee, chaired by the Rt.Hon Margaret Hodge, has published a report recommending that improvements in building occupancy should be achieved, that unoccupied buildings should be made available to mall businesses to rent and that the Government should continue to realise value from built assets i.e. sell surplus real estate.

The drive is to save the UK tax payer in excess of £800 million per year in operating costs and to realise capital receipts.  Last year the Government Property Unit achieved sales on over 250 freehold assets, realising £640million of cash for the coffers.  In addition to this, co-sharing and more efficient usage of space and facilities has saved over £48 million, GPU claim.

The Government is the UK’s biggest property owner and also the biggest tenant.  Staggeringly, the property portfolio is worth in the region of £370 billion (even in this market?!) and costs £25 billion a year to run.  A Cabinet Office spokesperson has said that the recommendations will be considered carefully and the potential for savings taken into account with those savings already achieved.

James Alexander can help your organisation review your property and land portfolio and develop strategies for better usage and utilisation, as well as determining strategies for asset divestment, or acquisition.  Get in touch and see how we could help.  innovation@jaltd.co.uk

Cameron & Osborne step into the planning breach.

Just days after our last update on the planning situation Prime Minister Cameron steps forward to introduce clarity where once there was dithering..…..

With Mr Osborne, who is the Conservative Party’s chief election strategist, further reforms to planning rules are proposed to promote growth in the economy.  The new legislation is expected to provide for less time for appeals by limiting local residents’ abilities to appeal and, most controversially, to allow council to authorise building on the green belt, by redesignating other areas, thereby providing more land in the previously sacrosanct green belt for new build projects.  With sparkling insight, Mr Osborne has indicated that he would like a planning system similar to that in China, where industrial pollution, degradation of the countryside and an appalling health and safety record are the watchword.

These reforms form part of the Government’s financial package of £40 billion to aid and promote growth.

House builders in the UK currently hold in excess of 200,000 plots for development with planning permission.  Why are these not being built on?  Could it be anything to do with the lack of availability of mortgages and funding?  I wonder.  Rather than meddle with planning reforms that have barely had a chance to bed in and start to take effect, perhaps Mr Osborne could sit down at Gregg’s with some of his banking friends and ask if they would be kind enough to let the UK taxpayer have some of the money the Government provided for bonuses to allow house building to get moving.

Just a thought.  

Planning Review - All Change?

In March this year we posted on the new National Planning Policy Framework and the likely impact it would have on the process for new development in the UK.

The Department for Communities and Local Government issued their Impact Assessment yesterday, which at 79 pages is longer by a margin than the Framework document itself.  Amongst much else, the Impact Assessment contains some fascinating insight into the projected costs of the consolidation of the planning processes proposed in the NPPF and by whom these are to be borne!  Read the full document here:

http://www.communities.gov.uk/documents/planningandbuilding/pdf/2172846.pdf

Three months on and the jury is still out.  Lining up in one corner of the green field is the “pro development” lobby and, currently, they would appear to be reassured by the legislation, in that there is a presumption in favour of sustainable development.  In essence, if a proposed development is well located, with good public transport links and connection to the town center, is of a high quality design and the construction materials can be proven to be sustainable then all should bode well.

In the opposite corner are those who, let’s not say they are “anti development” but are most concerned for the future of our green and pleasant land and they too are feeling encouraged.  Leading the charge are Friends of the Earth and the National Trust who, with many others have heard the Government state that the green belt is sacrosanct and that the natural heritage of the nation needs to be defended for future generations.

So, peace and love abounds with both sides feeling satisfied that their concerns have been listened to and addressed, at least in part.  However, as the expression goes, “something’s got to give”.

I think we can look forward to the detail of applications that come under opposition fire being thrashed out in the courts of the land, over many hours and at much cost.  The much heralded, new and slimmed down, planning framework may be about to get a lot fatter as each challenge is mounted. 

Anyone for a Judicial Review?

Cambridge BioPharm all over again

Earlier in the year we reported on the acquisition of Granta Park in Cambridge by BioMed Realty Trust.  The specialist REIT (www.biomedrealty.com) own or have interests in assets in excess of 12.5 million ft² ($4bn +) almost entirely in the USA, specifically in bio hubs in Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania, and New York/New Jersey.  BioMed has an exacting specification for portfolio acquisitions and it is interesting to note that Granta Park represents one of what is believed to be a very small number of offshore assets.

More news from Cambridge’s BioPharm community this week, breaking from the good people at Estates Gazette (www.egi.co.uk), regarding the continuing progress of Cambridge's BioMed Campus, the healthcare village that now has outline planning consent for 70 acres.  Project Director, Jeanette Walker, is seeking an opportunity to put the first spade in the ground by securing a prelet for 35-40,000 ft² of commercial space.  This would allow for construction of up to 100,000 ft² which, Interestingly, is not being seen as solely for BioMed / Pharma type businesses.  Great store is placed on the opportunity that this development could offer for skills transfer and working across different sectors.  There are currently commitments for occupation from Papworth Hospital, University of Cambridge, the School  of Clinical Medicine, the Medical Research Council, Addenbrookes Hospital and Rosie Hospital.

Top 5 relocation tips

Moving the business to new location or locations is a process best undertaken with a great deal of planning and forethought.  Commercial relocation is so much more than moving your house, its obvious isn’t it, but you would be surprised how many organisations approach this activity full of confidence due to someone having moved their own home last year, only to fail in spectacular fashion, costing the business dearly.

Here are my top 5 tips for your relocation project:

• Team:  Pull together your in house and professional team early on.  The fundamental requirement for the project team is to have delegated authority to make project decisions.  You will undoubtedly have a project Board with the overall Company authority, but the ability for the Project team to act within bounds is paramount. 

• Programme & Timing:  Your relocation project will almost certainly culminate in one or more moves over a series of weekends or a holiday period.  Planning for your project can start at either end of the scale.  Either working back from a mission critical end date, perhaps the expiration of the existing lease period, or working from the start, based on the longest lead time elements and the date you determine to launch the project.  Either way you cannot start the overall planning too soon.  Informal planning will have been taking place for some while but this needs to be pulled together at the earliest opportunity so that all aspects can be captured and detailed.

• Communication:  Early on in the project you will need to determine your communication strategy with staff and stakeholders.  As a source of rumour and misinformation, there are few better catalysts than a relocation project to stoke the fires!  Planning and implementing an integrated communication plan will greatly assist the project, both in terms of staff satisfaction and also in terms of buy in and co-operation.

• IT and Communications:  Make sure your IT and communications teams are fully engaged from the start.  We have seen projects that have started off in fine form, bringing the communications teams in at a later date, only to find there are practical technical matters that have been overlooked and the project suffers delays and cost overruns.

• Have a clear out!:  Develop time in the programme to encourage staff to have a good clear out of filing cabinets, old machinery, cupboards, loose boxes, equipment, records, files, obsolete bits and bobs and the many other things that will cost money to move, cost money to house and then cost money to move next time!  There will be opportunities to recycle, sell, donate, dispose and, in the process, contribute to the organisations corporate social responsibility agenda.

James Alexander Consultants can help you with your relocation project.

eMail us on innovation@jaltd.co.uk or see our contact page for our numbers.  We look forward to speaking with you.

Gulf expansion into overdrive

Not a usual topic for a posting today, but the numbers involved are quite impressive and reflect another side to the current world economic concerns.  With news today of a very slight improvement in the UK construction industry, after two quarters of decline interesting news and figures emerge from the Gulf with MoveHut (www.movehut.co.uk) reporting on the prospects for the construction industry in the UAE.

Led by the hotel and commercial sectors, the value of projects completing this year is expected to increase over 70% to £51.3 billion.  The Gulf Cooperation Council, the political and economic union of states surrounding the Persian Gulf and Arabian peninsular, awarded construction contacts worth over £37 billion in 2011 across the commercial, retail, hospitality, and residential sectors which, with the 2012 contracts, will see building activity progress into 2013.

A significant aspect of these figures is down to the increased demand for hotel space in the GCC.  Room revenues are predicted to reach $22 billion (£14 billion) this year and are predicted to reach $27 billion (£17 billion) by 2015, according to Global Retail Development Index.  This increase in demand is due to the positive growth estimates for the GCC, based on the region’s strong economic growth and political stability. Forecasts for GCC’s economic growth have projected to 4.3%, up from 3.4%.

In comparison, the value of the Uk’s construction, across all sectors, including housebuilding (apparently there are some) is £90 billion, but the important difference is the our industry is at best flatlining, at worst continuing to decline.

Granite city takes the Gold!!

Knight Frank have produced their quarterly round up of the office marketplace (ROMP) and Aberdeen takes top spot with over 500,000ft² of deals undertaken in Q2, only just short of the total for last year!  The Aberdeen office market has been looking very strong of late and the take up has been increasing steadily since around 2009 an achievement in itself.

With some recent interest in the Aberdeen marketplace ourselves, it will make for interesting viewing to see if this trend will continue and, if so, how will it be serviced?

James Alexander Consultants are expert in assessing your portfolio and, with you, determining a strategy to develop the correct balance of assets, their relevance and performance for you.  We develop, plan and implement the strategy, leaving you to focus on core activity and opportunity.

eMail us on innovation@jaltd.co.uk or see our contact page for our numbers.  We look forward to speaking with you.

Planning to Review?

James Alexander Consultants are helping bring clarity to the challenges the asset portfolio’s of their clients bring.  Determining the relevance your owned or leased assets has to your business and its long term effect is fundamental to ensuring you have the correct profile in place.  Planning and managing the utilisation of those assets and their place in your business is our speciality.

James Alexander Consultants are expert in assessing your portfolio and, with you, determining a strategy to develop the correct balance of assets, their relevance and performance for you.  We develop, plan and implement the strategy, leaving you to focus on core activity and opportunity.

Now is the ideal time to undertake a comprehensive review of all your lease and occupancy arrangements.

·         Are you able to exercise any lease breaks?

·         Are any leases up for rent review?

·         Are you holding over?

·         Have your business needs changed?

·         Is your occupancy at the optimum?

·         Could you place any non essential requirements in better value accommodation?

·         Is there an opportunity to outsource activities?

Our focus is to maximise the opportunity your built and land assets brings to your business whilst minimising the liabilities.  Get in touch with us to see how we can help you address lease related problems, acquisitions or disposals and help bring your portfolio into line for your business needs.

eMail us on innovation@jaltd.co.uk or see our contact page for our numbers.  We look forward to speaking with you.

The value of Commercial Property

The commercial property marketplace in the UK continues to struggle in the current economic climate.  The first 6 months of 2012 show a downturn again and the outlook to be less that favourable.  We posted recently about regional shopping centre acquisitions and it is of note that the survey shows overall values in the sector down by 6.3% in the first 6 months of the year.

There has been a slight up turn in the office sector which, particularly in central London, has shown minor growth.  It is of note that the general trends in the office sector are in a downward direction, in terms of occupancy requirements.  New working methods, including the much heralded opportunity to work from home (how many organisations are getting that one wrong, I think we will have a posting on that subject alone in the near future?) and a changing workforce demographic are all factors that would suggest a downturn in demand could, over time, lead to a diminishing in values.  However, limitations in the availability of funding for new development, the shaky perception of the market in general, the continuing trend for conversion from commercial to residential in parts of Mayfair and the West End combined with the requirements for organisations to develop and implement ever more strict environment and sustainability plans mean that the limitations on supply are bolstering the current marketplace.

Where this will go in future is very much up for discussion.  The standard institutional lease is still alive and well and living a life under a new identity.  In this new guise, there are more opportunities for prospective tenants to negotiate with the landlord from a position of strength and as such a stronger model for occupancy is being introduced.  Watch for further development in the process.

For those with a strong nerve and deep pockets, taking advantage of the current market where values of freehold are potentially at their most advantageous to the acquirer, entering the commercial property sector in any form could be seen as the move to make.  Carefully selected and prepared, commercial sector investment now and held over the long term could be just the thing.

China’s UK nuclear energy ambitions

It is reported that the Department of Energy and Climate Change (DECC) has held high level talks with representatives from China.  A team of nuclear engineers and other representatives from the Shanghai Nuclear Engineering Research and Design Institute (SNERDI), an arm of the huge China National Nuclear Corporation (CNNC), met senior DECC officials in recent days.

Reports suggest that there is keen interest from China to enter the UK’s nuclear power generating market place by developing a plan with DECC to build up to 5 reactors at a cost of over £35 billion.  The initial premise is for CNNC and another state owned organisation, China Guangdong Nuclear Power Corporation, to bid against each other for a stake in the Horizon consortium to construct new atomic plants at Wylfa in Wales and Oldbury in Gloucestershire.  It is also understood that the sites at Bradwell in Essex, Heysham in Lancashire and Hartlepool in County Durham are also of interest to the Chinese state.  The French giant EDF currently has the developmental interest in these sites.

China has operated its own atomic plants since 1994 and Keith Parker, chairman of the Nuclear Industry Association in London, said it was "highly encouraging" that China wanted to invest in the UK. "They have 14 of their own reactors in operation and 25 under construction and they use both Areva and Westinghouse designs that could be used here. It was clear from my discussions with them that they have international ambitions."

It is believed the Chinese see setting up in the UK as an opportunity to show they can operate in one of the world's toughest regulatory environments so they can then move into other markets in Africa and the Middle East.

Whether the Chinese enter the UK market is yet to be seen, however their state backed industry would appear to be aggressively chasing opportunities that the UK market offers and, whether the UK taxpayers’ money goes to France or China, it is certain that this represents an important development in the battle to keep the lights on in the UK.

Olympic Efficiency

In April we posted about new working methods and achieving efficiencies in the working office (http://www.blogger.com/blogger.g?blogID=5846477312477271059#editor/target=post;postID=2402608171377203908).

We now learn that Government departments are taking steps to implement new ways of working to create flexibility, cost efficient and improved productivity.  It appears that numbers of civil servants will be relocating, on a temporary basis, from central London to a base in Croydon.

The move is being championed as an opportunity for central government to implement some of the more efficient practices of the private sector whilst also “helping to reduce pressure on London’s transport network during the Olympics” according to Cabinet Office Minister, Francis Maude. 

It is not certain whether this move is purely temporary, as, if the hoped for improvements are achieved then a more permanent solution could be found.  It has long been the stated goal of Central Government to move more of it’s London based activity out into the regions.  Spearheaded by the Government Property Unit, opportunities for estates rationalisation and collaboration by Departments are promoted.  Opportunities for interdepartmental estate rationalisation and co-location are continually being pursued and this latest Olympics based initiative has seen additional accommodation become available in St Leonard’s on Sea, Bedford, Dorking

and Reading.

Review the Asset Base

James Alexander Consultants are helping bring clarity to the challenges the asset portfolio’s of their clients bring.  Determining the relevance your owned or leased assets has to your business and its long term effect is fundamental to ensuring you have the correct profile in place.  Planning and managing the utilisation of those assets and their place in your business is our speciality.

James Alexander Consultants are expert in assessing your portfolio and, with you, determining a strategy to develop the correct balance of assets, their relevance and performance for you.  We develop, plan and implement the strategy, leaving you to focus on core activity and opportunity.

Our focus is to maximise the opportunity your built and land assets brings to your business whilst minimising the liabilities.  Get in touch with us to see how we can help you address lease related problems, acquisitions or disposals and help bring your portfolio into line for your business needs.

eMail us on innovation@jaltd.co.uk or see our contact page for our numbers.  We look forward to speaking with you.

Olympic Update – Rental Mania!

A couple of weeks ago we blogged on the opportunities for private and commercial landlords to rent their premises out for the duration of the Olympics.  News comes today, courtesy of the International Business Times (http://www.ibtimes.com) that a property in Covent Garden has let for a staggering £115,000 per week.

Surely an Olympic record!!

Unfortunately, no details of the property are mentioned, the mind boggles as to what it might be!

It has already been suggested that the Opera House might be up for grabs next!

Shop Norwich:

In February we reported on a development in the hotly contested shopping mall wars in Norwich.  Chapelfield Shopping Centre has been attracting many of the new retailers coming into the City, at the expense of the other shopping destinations and our report on Valentine’s Day related to the recent signing by Boux Avenue, the lingerie retailer.  The pressure has continued and the Castle Mall, which was once Norwich’s premier shopping destination has been sold, primarily due, we understand, to underperformance for the owner.

Capital and Regional have disposed of the shopping centre for £77.3 million to refocus its Mall Fund towards its primarily London based assets.  The new owners are Infrared European Active Real Estate Fund, who are making their third acquisition in shopping centres since returning to the sector last year.  The Galleries in Bristol and St john’s in Liverpool were acquired during last year.   Chris Huxtable, Director at InfraRed said “we plan to add considerable value to the centres through additional investment”.

The Castle Shopping Mall occupies an iconic location in the City, being built directly underneath Norwich’s 12^th Century Norman castle.  With 33,000 m² of lettable space and 80 units and an 8 screen multiplex cinema InfraRed has an ideal opportunity to take advantage of Norwich’s 10^th place UK ranking in retail market

It will be interesting to see if capital investment will help return it to its former position as the City’s premier shopping destination.

Planning to Fail - Failing to Plan?:

In March this year we posted on the new National Planning Policy Framework and the likely impact it would have on the process for new development in the UK.

The Department for Communities and Local Government issued their Impact Assessment yesterday, which at 79 pages is longer by a margin than the Framework document itself.  Amongst much else, the Impact Assessment contains some fascinating insight into the projected costs of the consolidation of the planning processes proposed in the NPPF and by whom these are to be borne!  Read the full document here:

http://www.communities.gov.uk/documents/planningandbuilding/pdf/2172846.pdf

Three months on and the jury is still out.  Lining up in one corner of the green field is the “pro development” lobby and, currently, they would appear to be reassured by the legislation, in that there is a presumption in favour of sustainable development.  In essence, if a proposed development is well located, with good public transport links and connection to the town center, is of a high quality design and the construction materials can be proven to be sustainable then all should bode well.

In the opposite corner are those who, let’s not say they are “anti development” but are most concerned for the future of our green and pleasant land and they too are feeling encouraged.  Leading the charge are Friends of the Earth and the National Trust who, with many others have heard the Government state that the green belt is sacrosanct and that the natural heritage of the nation needs to be defended for future generations.

So, peace and love abounds with both sides feeling satisfied that their concerns have been listened to and addressed, at least in part.  However, as the expression goes, “something’s got to give”.

I think we can look forward to the detail of applications that come under opposition fire being thrashed out in the courts of the land, over many hours and at much cost.  The much heralded, new and slimmed down, planning framework may be about to get a lot fatter as each challenge is mounted. 

Anyone for a Judicial Review?

Dilapidations – Time to Act:

In April we posted on the subject of dilapidations and the importance to the tenant of making sure the obligations contained within the lease are adhered to.  See our original posting here:

http://propertyforum.blogspot.co.uk/2012/04/d-is-for.html

A new report from Tuffin Ferraby Taylor suggests that there has been a rise in the number of tenants who are ignoring their requirement to repair and refurbish under the lease and who are therefore running into difficulty with their landlords.

This has led to a significant rise in the number of claims being lodged by landlords against tenants who have not maintained the property in a satisfactory condition, leaving the landlord with additional costs to return it to a lettable condition.  TFT suggest that claims as high as £2 million can be pursued against errant tenant companies.  Each claim and case is, of course, different and individual and it will be interesting to see how The Dilapidations Protocol, revised for January 2012 will perform in this time of heightened activity.

Read TFT’s report into dilapidations liabilities here, on their specialist website: http://www.dilapidations.uk.com/tft/be_aware_of_your_dilapidations_liability

Take Stock of the situation

The commercial property sector is to come under further pressure during 2012 in the light of the current economic climate and the uncertain times ahead for the Euro Zone.  Both rental and capital values started to show sign of weakening during the Q4 last year and are expected to continue to decline during 2012 as the continuing uncertainty over the future of the British recovery continues.  Tough market conditions in the retail sector have led to have affected high streets across the country.  Even the usually resilient London market is starting to show significant stress with rental levels and capital values starting to decline as the number of potential transactions slows.

However, all is not lost!  With the decline in value for the landlord comes the increase in opportunity for the tenant.  Now is the ideal time to undertake a comprehensive review of all your lease and occupancy arrangements.

·                     Are you able to exercise any lease breaks?

·                     Are any leases up for rent review?

·                     Are you holding over?

·                     Have your business needs changed?

·                     Is your occupancy at the optimum?

·                     Could you place any non essential requirements in better value accommodation?

·                     Is there an opportunity to outsource activities?

Every cloud has a silver lining, see what lies behind this one for your business.

Innovation@jaltd.co.uk