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

O is for...

Outsourcing:

Non core activities outsourced, not a news topic you may say, but how far does this extend within your organisation?  The opportunity to outsource these types of non core activity has increased in recent times.  You are probably familiar with the “run of the mill” in outsourcing, from catering to waste management, office supplies to ICT.  But what about the outsourcing of your HR activity?  Or payroll?

The opportunity to bring in specialist services without the requirement to employ these on a full time basis is one of the backbones of the outsourcing principle.  Another is the opportunity to access specialist advice on non core activity, advice which would otherwise be expensive to maintain on an in-house basis.

The increase in legislation surrounding employment has seen a rise in the opportunity for SMEs (small to medium sized enterprises) to bring in specialist consultants and providers to keep them on the right side of employment law and up to date with current staffing requirements.

Similarly, there are opportunities for occupiers to get help with their accommodation and real estate services.  Many larger occupiers will have provision in place, but the smaller occupier can seek support with real estate related issues too.  From the outsourcing of facilities management to landlord and tenant issues there are opportunities to seek professional support in ensuring your organisation is fully up to speed.

James Alexander Consultants can help you understand your property, facilities and compliance requirements, 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.

I is for...

Innovation:

Changing times call for ever more thoughtful approaches to your asset management challenges.  The current marketplace within commercial property is even more volatile than usual, and, whilst geography plays its part, the general view of the marketplace is that conditions are hard and likely to be so for the forthcoming time.

Spending time in careful consideration of the challenge this places on your business with regard to your built assets and liabilities is therefore well worth it.  In a previous post we have talked about the place within your business the build estate holds and the opportunity for the review and assessment of the estate in the light of this.

Detailed knowledge of your real estate liabilities will enable you to clearly plan ahead and, in conjunction with you business requirements, determine whether there are any opportunities to do things differently.

There may be scope to reorganise finances through the asset and balance sheet, to renegotiate terms with your landlord or reorganise loans on freehold occupancy.  Assessment of the utilised estate and how it could be improved, could allow for sub-letting (should the terms of the lease allow).  Group companies can potentially co-locate to reduce costs and vacating premises can save costs, even if the lease is still in force, with running and occupancy costs reduced to near nil and the potential for rates relief.

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.

G is for...

Growth:

A few brief thoughts today on how your real estate supports your organisation in times of growth.

The key word in the previous sentence is the word support.  It was once commented that a £100,000 building will house £1,000,000 worth of equipment that will produce £100,000,000 worth of product.  The message being, that without the £100,000 shed the production is not going to happen.  In themselves the built assets do not form part of the core activities of you r business, but without them, or with the wrong assets, the business is not going to function in the correct way.

So, where is your £100,000 shed?  Is it the right size & shape, is it adaptable and flexible for your needs and, most importantly is it going to keep up with the business development that you have planned?

Regular review and assessment of the facilities you occupy will help you determine whether this is the case:

• Can developing new working practices and work patterns help with your business growth?
• Can your site accommodate new temporary buildings to address immediate requirements for additional accommodation?
• Do lease restrictions mean that your current facility will not, over time, be suitable for your purposes and is now the right time to plan to move?
• Will new compliance regulations in your business or industry mean that refurbishment is required?  Will this prove to be prohibitively expensive in the current location?

 You will be aware that property related transactions do not move too quickly and, sometimes, not too smoothly either.  Planning well ahead for your businesses operational real estate requirements will be key in achieving success.

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.

D is for...

Dilapidations:

There comes a point in every lease when the subject of dilapidations raises its head.  This need not be as daunting a prospect for the tenant or lessee as it may seem, however it is one that should be approached carefully.  In general terms most institutional leases will require the lessee to return the asset to the landlord at the end of the term in the same condition as they originally took it over.

However……!

Negotiation is the key.  In general terms the landlord is looking to make sure that their asset has not been adversely affected by the tenant’s occupation.  Now, being good lease abiding tenants, all clauses in the lease relating to refurbishment and alterations will have been abided by.  These usually form a requirement for redecoration on a periodic basis in longer leases and for any alterations, upgrades or refurbishments requiring approval from the landlord before proceeding.  Therefore, the landlord will know what general condition the asset will be in and, with regard to tenant upgrades and refurbishment, these will have been undertaken up to the latest regulations, so will, potentially be seen by the landlord as improvements.

If you are intending to exercise a break in the lease, your lease will determine the notice period to give, if the lease is terminating then the date will be well known. These are the ideal timeframes to commence discussion with the landlord with regard to dilapidations.  Each landlord will be different as will each situation.  Remain open to suggestion and do your best to limit your liability.

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.

A is for...

Asset.

After your staffing costs, your built assets, your business’ occupied accommodation, is most likely to represent your biggest cost centre.  Achieving the most efficient and effective usage of your accommodation portfolio is a constant challenge for business and one that, if not managed well, can cause major difficulties and, of course, unnecessary expense.

The opposite of asset is liability.  Many businesses will focus on their real estate in terms of their ability to run their operations; however, not focussing on the whole aspect of their asset responsibilities can lead to difficulties.

Here are my top 5 tips:

1)      Utilisation: Nothing worse than having too much accommodation, unless it’s having too little!  Undertake some assessment and analysis of your occupancy and how well it relates to your core business requirements.

2)      Lease: Have you ever reviewed your lease?  The last time many occupiers will have viewed their lease is when their lawyer was showing them where to sign.  It may be dry, but get a glass, mug or cup of your favourite beverage and have a look through.  You do know where your lease is, don’t you…..?

3)      Liabilities: Following on from Lease, do you know what your liabilities under the lease are?  A lot of companies get caught out with this one.  Insuring and repairing liabilities are onerous and taken very seriousy by the asset owner, your landlord.

4)      Location: Does your business require to be in its current very expensive accommodation?  Could a review of the business objectives, processes and customers reveal that a carefully planned and considered move to less expensive, more flexible accommodation could save your business money?

5)      Contracts: There are, undoubtedly, a large number of contracts keeping your buildings and your business running.  When was the last time these were reviewed, not just for cost but more specifically for suitability and relevance.  You may surprise yourself!

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.