Commercial ISSUE 5 | SUMMER 2017
matters
Hammer time! Why auctions are not just a last resort
PLUS: Property's investment appeal in uncertain times | Taking the risk out of planning | The changing face of chartered surveying | Time for a rates shake-up | The advantage of interactive maps
Welcome
contents
A dynamic place to invest
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Welcome to the fifth edition of Commercial Matters, which sees us yet again in election mode with the potential changes that brings.
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The firm itself has undergone some recent changes. Following the appointment of Pam Over to chief executive in January this year, I am now leading the Commercial division, and we have rebranded to Galbraith to reflect the continuing evolution of the business. Although our name may have slightly changed, our values, ethos and commitment to providing the highest quality of personal service remain central to all that we do. Change is a constant. At the time of writing, Prime Minister Theresa May has announced a General Election to be held on June 8, soon after Scotland’s local elections on 4 May. Despite the perceived uncertainty of the General Election and continued noise around a second Scottish Independence Referendum, we remain confident in our marketplace and Scotland as a whole as a secure and dynamic place in which to invest, live, and conduct business. We are fortunate through our wider business operations to work with a range of overseas clients. Sometimes our own perspective needs to be challenged, and it is encouraging that they see Scotland as a vibrant and attractive place to invest, with clear longer-term potential for economic and asset value growth. That’s why we continue to develop and invest in the firm and we’re pleased to welcome our new, experienced investment agency team who introduce themselves with their article on this page. Enjoy the issue. Richard Higgins richard.higgins@galbraithgroup.com 01786 434625
Galbraith is Scotland’s leading independent property consultancy. Drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing more than 250 people in offices throughout Scotland.
Cover story: When selling at auction is the right choice.
The rating system: Time for change?
6 Interactive maps give a new view of data.
7 Deal round-up.
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Changing face of the industry: A mother and daughter compare notes.
9 Advice for occupiers on the move.
10 Added value from the Office Agents Society. Avoiding a schedule of condition on a new lease.
11 Taking the risk out of planning.
Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances. Follow us on Twitter.
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It is fair to say that Brexit is the focus of most economic and market commentary at present – and for good reason. It will be some years until we see the final result of triggering Article 50 and, yes, that creates uncertainty in the markets affected, but as John Lennon once said: “Life is what happens when you are busy making other plans.” It seems that for a decade now we have been living against a backdrop of one event or another creating uncertainty: the global financial crisis, the Scottish Independence Referendum, the General Election; the Scottish Elections, the EU Referendum, the US Presidential Election; the triggering of Article 50, the prospect of a second Independence Referendum in Scotland, and now another General Election on June 8. Is this the new normal? It feels like it, at least for the foreseeable future. Despite this, property remains a fundamentally safe asset class, providing strong income returns and, in many cases, secure long-term capital preservation. These characteristics of property remain true whilst bond yields and returns on cash are at historically low levels. Property risk premium is now evident and therefore bricks and mortar are an attractive prospect. Investor preferences may change over time as a result of continued political and economic uncertainties. Many investors, and in particular institutional investors, are now taking a more cautious approach to risk. This has led to a significant increase in demand for properties providing long secure income streams, resulting in increased competition for a limited number of assets and inevitably continuing yield compression in this area. Opportunities in logistics, alternative and PRS (Private Rented Sector) are favoured. Conversely, those investors who are seeking yield through adding value, such as wellfunded property companies, may have a bit less competition to deal with. Multi-let industrial, office repositioning opportunities and strategic development can provide this. For private investors in the sub-£5 million category, competition can still be fierce for quality assets for which debt is easily accessible. Transactional volumes over the last 12 to 18 months are down. However, this is largely due to lower stock availability/liquidity rather than lack of investor appetite for the sector.
The firm provides a full range of property consulting services across the commercial, residential, rural and energy sectors.
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Jamie Thain and Will Sandwell on the enduring appeal of bricks and mortar in uncertain times.
Commercial Matters is produced by J K Consultancy, Glasgow, and designed by George Gray Media & Design, St Andeux, France. © CKD Galbraith LLP.
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A slower, more selective development market has led to a lower level of development pipeline across the traditional sectors than we have seen in the past, and this is helping to support rental levels in the occupational markets. The drop in the value of Sterling has made the UK an attractive investment proposition for overseas buyers. Many of these investors operate on a global scale and see the UK –
The Galbraith investment agency team. From left: Will Sandwell, Head of Commercial Richard Higgins and Jamie Thain.
Is this the new normal? despite, or perhaps because of, the current environment – as good value, underpinned by a stable and transparent political and legal system when compared to many other areas of the world. The fact is that different investors have different drivers, such as attitude to risk, sector or locational requirements, target lot size, return requirements and so on. And these drivers are not always the same; they can change over time. The fund manager responsible for a £2bn portfolio will have a different investment rationale to the entrepreneur who has sold a business and wants to deploy £5m of equity into a single asset. Equally, the private individual who has £1m of savings to invest on a long-term basis will often be more cautious than the asset management specialist who only buys high yielding multi-let property and never aims to hold an asset for more than three years. So, life still goes on in the market, and, while we must pay close attention to the political and economic situation as it evolves, good
fundamentals and good stock selection remain the keys to a successful investment. Whatever type of investor you are and whatever your attitude to risk now more than ever it is important to seek considered professional advice. The investment team at Galbraith advises a broad range of investors and maintains a 100% client-led approach to investment agency. We have a strong track record as multisector advisors and will continue to identify opportunities for clients within a market, which still offers some exceptional prospects. We would be delighted to hear from you if we can assist in any way with your requirements.
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Good fundamentals and good stock selection remain the keys to a successful investment.
jamie.thain@galbraithgroup.com 0131 240 6994
will.sandwell@galbraithgroup.com 0131 240 6997
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It's hammer time! Pamela Gray and Harry Stott outline the benefits of selling at auction. Putting up a property for auction used to be seen as a last resort and linked to distressed sales, but this is not necessarily the case. Increasingly Galbraith is teaming up with auctioneer partners to give clients an alternative disposal route which suits a variety of property types and offers the potential benefit for the client of a quick sale – effectively concluded on the fall of the hammer when a deposit is paid – and completion within 28 days. Before the recent changes in the rates regime many owners of industrial stock were content to retain their vacant buildings as the holding costs of maintenance and insurance were reasonably modest. However, with rates now payable on all vacant commercial property with the exception of listed buildings, but including industrial, void holding costs can be considerable. Vendors are increasingly motivated to sell and the auction route is seen as potentially quick and straightforward.
Advantages Selling at auction offers exposure to a different type of buyer, usually less risk averse and willing to ‘take a view’. The traditional sale route can be protracted, depending on the complexity of the sale, with title searches and numerous other diligence requirements. Offers can also be conditional on obtaining planning consent or funding, resulting in delays. When selling at auction a title pack is available at the start of the marketing and the property is then effectively ‘sold as seen’. It is much harder for buyers to determine true market value at auction because comparison with other properties is more difficult and they won’t be aware of the vendor’s sale price expectations. This can lead to some unexpectedly high outcomes – although the reverse can also happen. The terms and conditions
are set by the vendor, as is the reserve price, which is fixed after collaboration with the agent and the auction house. If a property photographs well it can be incredibly persuasive in triggering interest and competition from bidders. Even when a property doesn’t sell, the vendor is commonly put in direct contact with the most likely buyer and they can still reach agreement outside the auction room. Parties coming together in this way is something that may not have occurred without the auction process. There is also merit in placing a property on a joint auctioneer basis – when an auctioneer and agent team up to jointly sell the property to widen the exposure to the market. In some cases the agent has already tested the property on the market and this in-depth knowledge is useful when carrying out viewings and can be invaluable to the sales process. The marketing time at auction is relatively short and intense. There can be offers made to purchase ahead of the auction or alternatively the offer of an underwriting contract – where a purchaser enters into an agreement to underwrite the sale at a certain price. If that price is exceeded in the room, then the underwriter shares in the upside. Galbraith were joint agents on the auction sale of 1-9 King Street, Aberdeen, a 19,000 sq ft building let to the Scottish Police Authority. The guide price was £500,000 and we entered in to a pre-auction underwriting contract at £600,000. The ultimate sale price achieved was £675,000. The underwriting contract forced the bidding pace, gave comfort to the client and ultimately resulted in further gains for both seller and underwriter.
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The competitive nature of an auction can cause people to bid higher than they originally intended and we have seen situations where the same bidder ended up paying a six figure sum more than they offered the day before the sale.
Disadvantages Clients worry about the potential to blight the investment if the property fails to sell. There is also a perceived relinquishing of control, with the ‘auction machine’ effectively taking over. The period between the auction and ultimate completion of the sale can be an uncertain time. Will the purchaser come up with the money? Are they cash buyers or will bank funding be required and if so, will funds come through in time? In one instance the seller waited a whole year before the sale completed. This is very unusual and we can only assume that the seller believed that it was still the best option for disposal. To sum up, if you are keen to sell quickly, an auction offers the best chance of selling by a specific date, although, like all property dealings, there are no sure-fire guarantees of success. Galbraith has acted jointly on a number of recent sales by auction and in all cases the sales have surpassed clients’ expectations. pamela.gray@galbraithgroup.com 0131 240 6963
harry.stott@galbraithgroup.com 01786 434630
Rating system: No longer fit for purpose? Calum Innes assesses the revaluation introduced in April. A rating revaluation is never welcome, but the system which came into force on 1 April has caused more unrest than its predecessors.
Sovereign House, Irvine- sold at auction for £500,000 on a guide price of £350,000. Galbraith was a joint agent.
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Selling at auction offers exposure to a different type of buyer, usually less risk averse and willing to ‘take a view’.
While some sectors are facing reducing values, reflecting lower rents post-recession, others such as renewable energy operators are dealing with unprecedented increases – in some cases of up to 600%. An outcry by various sectors confronted with punitive increases in business rates persuaded the Scottish Government’s Finance Secretary, Derek Mackay, to announce a range of reliefs covering limited property sectors, including hospitality and small-scale hydro electricity generation. But these are simply a one-year discount – a sticking plaster instead of a solution to a widening disparity. There is increasing concern that the rating system is no longer fit for purpose. The current system, established in the mid-19th century, has been adapted to meet social, economic and political aspirations. Manufacturing, for example, was treated favourably in the earlier part of the 20th century to encourage economic activity, but such benefits have now ceased. Meanwhile, agriculture enjoys exemption, a measure presumably introduced during times of concern over food security. So there is disparity over the treatment of certain property sectors and this is further distorted by a complex range of reliefs and penalties applied by the rating authorities responsible for collecting the tax. Of course property taxes have their place in the Chancellor’s toolbox. Property benefits from being an easily identified immovable asset and therefore tax collection is relatively simple and inexpensive. However, rates appear to be increasing to the point where they are an overly punitive burden. An example of this flawed system is that in an effort to maximise the tax-take, vacant property, which was previously exempt from rates, is now liable to tax regardless of there being no beneficial occupation. The Government’s rationale for such policy is ostensibly to encourage landlords to make their property available for let, but in reality it is simply a lack of tenant demand that results in vacancy, not landlords withholding property from the market. The result is the destruction and demolition of property to avoid punitive tax. Roofless cottages were a legacy of a similar historic rating regime and it seems that to pursue a similar strategy is not in the best interests of wider society where potentially useful property is destroyed.
The Scottish Government has tasked Ken Barclay, former chairman of the Royal Bank of Scotland, with reforming business rates to better support business growth and longterm investment. Will his recommendations be sufficiently far-reaching to restore an equitable tax burden? Public services seem to require ever-increasing levels of funding and Government wrestles with how to raise the necessary taxes, but property is currently worse off than other potential sources. The engines of UK enterprise are very different today, with globalisation and the new digital age bringing a disconnect between the landwealth nexus that persisted until the end of the 20th century. Property is a ‘sitting duck’ while other sources are perhaps better able to avoid the Chancellor’s aim and we are in danger of adding a further catastrophic burden to hasten the demise of the high street, manufacturing, hospitality and real estate in general, with all the resulting social implications. The consequence of tinkering by successive legislators is that the tax burden is shouldered by fewer enterprises that also pay a surcharge to cover the shortfall, resulting from smaller subjects being granted relief. If the current rating system is to persist and be seen as more equitable then it needs to be less punitive and be shouldered by a greater proportion of enterprise. Of course, there remains the question of what should be done about domestic property. Before the introduction of the ill-fated Community Charge, domestic property was also subject to rates and, following the demise of the ‘Poll Tax’, Council Tax was introduced. This is based upon capital values of property in 1991 and is now seriously out of date. There appears to be an unwillingness to improve the relevance and transparency of this system or to reconsider anomalies such as there being no change in liability resulting from property improvements until a property changes hands. Is there an argument that all property be put back into a single ‘pot’? Nothing will change quickly. Property owners and occupiers will have received valuation notices advising of the assessment to be effective from April 1, 2017 and corresponding rates bills. They should be mindful that there is a six month window to lodge an appeal to ensure that their proportion of the tax burden is appropriate.
calum.innes@galbraithgroup.com 01738 456075
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Dan Campanile explains the advantages of interactive maps.
160 Dundee Street, Edinburgh.
A new view of data The term GIS, meaning Geographical Information System, can sometimes be misunderstood. People not regularly exposed to geographical work sometimes view GIS as synonymous with maps or plans. Plans can be critical to the communication of key information at various stages of a project, particularly where it is difficult to visualise data in other formats such as tabular data or written reports. But whilst the presentation of static geographical data is one vital component that GIS can bring to project work, it is also only part of the picture. Galbraith recently pitched for work with Bunzl, one of the largest suppliers of cleaning and catering material across the UK. As part of this pitch, GIS was used to demonstrate one of the resources we use to enhance our service. In the era of Google Maps the idea of an easy-to-use interactive map that displays relevant information is almost taken for granted, but many people may not know that we have similar capability to provide this level of interaction with data relevant to our day-to-day business and, more importantly, to our clients. This capability is exactly what was used to strengthen our pitch. We created an interactive map displaying a subset of the client’s sites. The map is easy to navigate around and it’s straightforward to pan to
Lionheart Industrial Estate, Alnwick.
sites of interest. If the operator selects a site or zooms to a particular area, relevant information, such as the name of the site, nature of the site, and rateable value is displayed in a pop-up on top of the map. This type of functionality is well established within GIS and it’s an uncomplicated process to integrate whatever data on our clients’ sites is required. The data can easily be displayed along with the mapped location thereby providing geographical context of the asset.
Bughtlin Market, East Craigs, Edinburgh
The use of mapped data alongside tabular information has a distinct advantage over more conventional spreadsheets or wordheavy reports in that many people can process images and geographical space much more readily. This means potentially critical information can be absorbed more easily and patterns in the data tend to become clearer. What’s even more exciting is that data visualisation is only scratching the surface; there is a wealth of analytical tools also at our disposal, which can enhance and add value to this type of information. It is this type of novel use of GIS that helps to distinguish Galbraith from its competitors.
dan.campanile@galbraithgroup.com 01786 434634
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66 Hanover Street, Edinburgh.
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DEAL round-up Thain House fully let
The final suite at Thain House, 226 Queensferry Road has been let to ASME. The medical education association relocated from Queen Street to the 95 sq m (1,028 sq ft) suite on a five-year lease at £14.75 sq ft. Galbraith has secured five tenants over 2.5 years to occupy the 4,500 sq ft office building on behalf of landlords Lorne Properties Limited.
Two tenants for Silvermills Court Galbraith has secured a double deal at Silvermills Court, in the capital’s New Town, in four months. International recruitment agency Meraki Talent has taken 224 sq m (2,417 sq ft) at number 21 on a five-year lease, while private equity and advisory boutique, JB Equity, let number 17 of 108 sq m (1,167 sq ft) in March 2017 on a five-year lease at a rent of £17 sq ft.
Bell Group takes penultimate unit One of the largest contract painter and decorators in the UK has let Block 2, Unit 3 at Maxwell Town Industrial Estate, Dumfries, which extends to 83 sq m (895 sq ft). Bell Group has taken the space for their decorating business on a five-year lease at a rent of £5.59 sq ft. Only one unit remains available.
Garage sale success Galbraith has sold a double garage on Dublin Street Lane in Edinburgh’s New Town for more than £162,000. The premises, marketed at offers over £110,000, saw a rush of interest with early offers made by multiple parties. Under the advice of Galbraith the landlord went to a closing date with bids raised by around 25%.
for the 127 sq m (1,362 sq ft) to Amnesty International in eight weeks.
Alzheimer Scotland lets OneSixty Dundee Street The leading dementia organisation in Scotland has relocated from a traditional townhouse accommodation in the West End to the Grade A office building at 160 Dundee Street in Edinburgh’s Fountainbridge area of the city centre. Galbraith secured Alzheimer Scotland for the top floor open plan suite of 533 sq m (5,735 sq ft) on a 10-year lease at £18 sq ft. They join occupiers Jacobs Engineering, Experian and Bell Geospace.
Cross Court, Bishopbriggs, fully let The final first floor unit at the Cross Court, Bishopbriggs, which extends to 128 sq m (1,383 sq ft), has been let to the the Dojang Martial Arts Academy Limited for use as a leisure and sporting centre for classes and fitness activities on a three-year lease on a stepped rent basis.
East Craigs retail centre bought for £1.6m Acting on behalf of a private investor, Galbraith has acquired a retail parade at 1-4 Bughtlin Market, East Craigs, Edinburgh for £1,600,000 with an annual income of £128,000 leading to a NIY of 7.57% allowing for purchaser’s costs. The retail parade comprises more than 7,700 sq ft of retail space with 38 dedicated parking spaces. It forms part of a mixed-use development completed in 2010 by Mactaggart & Mickel, which also encompasses 72 residential units. The centre covers about 0.7 acres and is well situated at the entrance of the development. Occupiers of the retail parade currently include a Co-op,
LloydsPharmacy, Barnardo’s and Sultan Turkish Takeaway.
Trade counter investment acquisition On behalf of private clients, Galbraith has acquired Unit F at Lionheart Industrial Estate, Alnwick, and let to MKM Timber on a long-term lease at a rent of £96,500 per annum. The price paid reflects a net initial yield of circa 6.3% after allowance for purchaser’s costs. The most prominent trade location in the Northumberland market town, the Lionheart Industrial Estate is home to well-known trade occupiers Howdens, Plumb Centre and Screwfix. The property, of steel portal frame construction, totals 14,250 sq ft and the unit benefits from 5.25m eaves, three roller shutter doors and a 36,910 sq ft concrete surface storage yard.
Interest in Duckburn Park Galbraith has managed and let the unique Duckburn Park in Dunblane for many years. It is a well-located estate of business units lying at the southern entrance to Dunblane adjacent to Marks and Spencer Simply Foods, a short distance east of the A9. We have recently re-let many of the units to existing occupiers and re-configured the estate, which is attracting interest from a wide range of new potential occupier tenants. The estate accommodates a range of businesses from Tilhill Foresty, architects, accountants, DS2 furniture, environmental consultants, the Post Office and others. Currently only four of the 22 units in the estate are available, varying in size from 1,027 to 1,098 sq ft, with two of these units under offer. Asking rents for the units are £7/sq ft.
Surplus suite let in eight weeks On behalf of a private client, Galbraith was asked to market a confidential client office lease at 66 Hanover Street, Edinburgh pre-Christmas and achieved a speedy let
Duckburn Park, Dunblane.
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Standing out from the crowd Chief executive Pam Over and her daughter, Louisa, a rural surveyor, both alumnae of the University of Reading, discuss the opportunities and challenges of the industry then and now. Louisa: What’s the biggest change you’ve seen in the last 35 years? Pam: Today, there are far more women in the profession. Graduating in 1981, I was one of only six women from a year of 120 and it actually helped to stand out from the crowd. Now the balance has shifted and as a firm Galbraith has as many female as male surveyors and there are four female partners, including myself as chief executive. The pace of technology and how that has changed our daily lives has made a big impact. When I was your age I had to dictate everything to my secretary and woe betide me if I got it wrong or wanted to make an alteration. It had to be right first time. Now life is dictated to me by email with instant responses required 24/7. Louisa: What has been the most interesting project you’ve been involved with? Pam: I’ve been lucky enough to be involved with everything from the development of shopping centres, to castles, nursing homes, hotels, skyscrapers, industrial units to auction marts and
everything in between. Each project brings a new team of consultants so I couldn’t pick a favourite. The biggest fee was from office building Skypark in Glasgow and it took the longest (six years). In truth, the current projects are always the most exciting and at the moment they range from industrial units in Tottenham to a big shed in Belfast and a salt cave in Leicester. Louisa: If you could do it all again what would you do differently? Pam: I was lucky enough to have a career break of six years to allow me to have three children. I worried unnecessarily that I would never get back into my career but if you apply yourself anything is possible. It is, however, quite some juggling act and the worst-case scenario is not being good at either role - mum or surveyor. Louisa: What did you think when I chose to follow you into the profession albeit in a different area? Pam: I was highly relieved you chose a career I could understand and relate to. It’s a very varied, interesting career with endless opportunities so
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it will provide you with lots of choices. Louisa: What’s the biggest challenge facing new graduates? Pam: New graduates need to avoid being pigeonholed too early. They should try to get the broadest training possible to enable them to ascertain what aspects of the job they are best suited to following qualification. Louisa: Where will the profession be in another 20 years? Pam: I am concerned over the lack of understanding in schools about what a chartered surveyor actually does. The RICS should take a stronger lead here and ensure career advisors are fully conversant with the opportunities available and the grades required. You followed me into surveying because you could see at first hand what a good career it is. That’s why so many children of surveyors follow their parents. This educational issue needs to be resolved if we are to ensure there is a new generation of young people coming into the profession.
Mother and daughter, Pam and Louisa Over.
Below: Pam was one of only six women out of 120 graduates back in 1981.
Joined-up thinking for office relocation Katie Gibson has advice for occupiers on the move. It’s a big undertaking to find a new office. It involves managing the search, negotiation, legals, fit-out design and project management of a new space – not to mention the work involved in leaving your existing office. Our commercial team has the experience, breadth of knowledge and joined-up thinking to make a very stressful process much easier and more affordable. You’ll need two main surveyors: a commercial agent to find a new office and a building surveyor to deal with your existing office. Here’s our timeline for office relocation from appointing the experts to moving in.
24–12 months in advance
New office: Appoint a commercial agent to assess the office requirements and market availability. They’ll discuss future growth expectations, company culture, and make a list of priorities, such as car parking, meeting rooms, budget, location and office type.
Pam questions Louisa Pam: What is it about rural chartered surveying that attracted you? Louisa: You always told me to go into a career in which I had a genuine interest. Growing up in the countryside and being involved in country pursuits led me naturally into a career involving rural assets. I strongly believe that if you are interested in what you do and enjoy it then, chances are, you will be much better at it. Pam: How do you think your career will be different from mine? Louisa: Although the sectors we work in are different I hope my career follows as successful a path as yours has. I’ve obviously only seen your later career where you have been involved with the management of a partnership so I’ve seen firsthand how rewarding the peaks and troughs are that management can bring. I hope that I will be as involved with the firm I work for with the ultimate aim of climbing up the career ladder to lead from the top. I think it’s very important that whatever you are doing you make a positive impact and set personal goals. To be able
to grow and shape a business would be hugely rewarding. Pam: What would you say is the biggest challenge facing new graduates? Louisa: I graduated in 2014 and while the industry has always been competitive, it is only likely to increase. The ability to stand out from a crowd of university applicants is becoming more and more difficult. Pam: What advice would you give others starting in the profession?
0131 240 6965
Extracted from an article originally produced for Reading University’s Graduate of the Month series.
12–6 months to go
The search for the new office begins. The agent will organise a tour of properties matching the occupier’s various needs and timescales for occupation. A shortlist of properties will be drawn up for the agent to negotiate the main details of the lease such as rent, service charge, schedule of condition and incentives since they understand the current market rates and demands.
6–3 months to go
Louisa: Seize the opportunities that come your way and always volunteer to help. When starting out in a new job it’s important you show your willingness to learn and help where you can. Employers don’t expect you to know it all on day one but they do expect you to apply yourself. There is a huge amount to take in with a new job but just remember there is no such thing as a stupid question. Don’t be afraid to ask. pam.over@galbraithgroup.com
Existing office: Appoint a building surveyor to undertake a dilapidations assessment to establish the cost of a landlord’s potential claim. Instruct your solicitor to review your current lease and advise on timescales needed for servicing valid notice to quit.
New office: Your solicitor will finalise the new lease while the building surveyor obtains landlord and statutory consents to fit-out the new office, completes the fit-out design, and tenders for and appoints a contractor to undertake the work. Existing office: The building surveyor starts negotiations with the landlord for surrender of the lease.
3–1 month to go
New office: Commence new lease and start fit-out work. Existing lease: Commence procurement of end of lease repair or agree settlement with landlord.
Moving day!
Although every office move will be different, working with a joined-up team of professionals to guide you through this period means you can focus on running your business. katie.gibson@galbraithgroup.com 0131 240 6981
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Agents adding value Katie Gibson reports on initiatives and events organised in her role as chair of the Office Agents Society in Edinburgh.
I have been Chair of OAS Edinburgh for three years, representing the interests of more than 60 office agents in the capital. We organise networking, educational and CPD events, and work to achieve a level of transparency between agents through confidential quarterly statistic sharing. My term will come to an end this year and I hope to add a little more value to the society before I stand down by providing further progressive and forward thinking CPD events that our network of professionals can apply to their work.
Here are some of my highlights: Manchester field trip, March 2017: Our main CPD event this year involved 13 Edinburgh-based office agents from a mixture of global and national firms making the journey south to visit three developments and gather insight on Manchester City Council’s excellent reputation for regeneration under the leadership of Sir Howard Bernstein. Neo: A collaborative workspace of circa 45,000 sq ft with a strong community ethos. The community idea was pulled together by having a large breakout area with informal meeting areas, outdoor pre-bookable meeting pods for 12 people and a coffee tap, which
produced barista coffees free of charge to occupiers, controlled via an iPad. It felt like the next generation of serviced office space to fit the ever-changing needs of an occupier, especially focused at start-ups. The property used app technology to allow lift and meeting room access avoiding the need for fobs and keys. 55 Spring Gardens: A refurbished property with a cooling system, which used Air Sox, a system not previously used in Edinburgh. The Air Sox can be removed for maintenance and comes in multiple colours. The producers claim it is 30 to 70% more cost effective than the normal duct system. In addition, the look and feel of the building’s reception felt more like a hotel than an office and tenants are encouraged to use the area for drinks receptions and events free of charge. The Spinningfields area: Although still under development it was impressive how the buildings tied together the urban realm and retail elements. The
Keeping buildings in good repair Lewis Thompson sets out how landlord’s works can avoid a schedule of condition on a new lease. Galbraith was recently instructed to specify and carry out landlord’s works to a Grade II* listed building on behalf of a private client. The property, at 33 Stonegate in York, has an estimated construction date of the early 17th Century. Although a plaque on its façade marks the construction date as 1489, this is disputed by Historic England. Originally built as a house, the property has been converted into retail premises and commands a central position on one of central York's main shopping streets. The most recent tenant failed to carry out adequate maintenance, leading to the steady decline of the building fabric internally and externally. In the summer of 2016 the tenant went into liquidation, triggering the search for a new occupier. Given its prominent position, there was strong interest in the property, but it quickly became clear that its condition would be a sticking point when agreeing a lease with a new
tenant. All interested parties insisted on a comprehensive schedule of condition to limit their repairing obligations during the period of the lease. A schedule of condition is often regarded as an excuse for tenants to do little or no building maintenance while limiting their dilapidations liability at lease end. Given the age and condition of 33 Stonegate, it was deemed unacceptable for the property to go without substantial repair and maintenance for the term of the new 15-year lease. Galbraith undertook a survey of the property to identify all urgent repairs required to the building fabric with a schedule of landlord’s works developed and negotiated with the tenant’s representatives. This formed part of the lease agreement and satisfied the tenants that the property would be left in such a condition to circumvent a schedule of condition. Landlords often view a schedule of condition as a necessary evil as they mean a slightly less desirable property, or one in poorer condition, can be let. This works when leasing the space is the top priority. However, in some cases – like 33 Stonegate – preserving the value
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33 Stonegate had fallen into disrepair.
of the building and keeping it in good repair is equally important. Undertaking landlord’s works can of course be expensive, but the long-term benefits to the value and condition of the property should not be overlooked and will help avoid even more costly repairs in the future. There is also the added bonus of steering clear of a schedule of condition, which limits the tenant’s liability for dilapidations at lease end. lewis.thompson@galbraithgroup.com 0131 240 6964
development has managed to make the bars and restaurants a destination, which is down to tenant mix and a management ethos that sees the benefits of making Spinningfields function as more than simply a place to go to work. Indian Summer Party: In 2015 we raised more than £2,500 with some excellent prizes for charities Headway and Action for Children at this social event. More than 100 professionals across all aspects of the property industry, from developers and asset managers to fitout specialists, attended the Penthouse Suite of Edinburgh’s Double Tree Hilton. Bi-annual OAS UK Edinburgh meeting: We welcome a number of members from the OAS UK committee to build relationships in the wider UK markets and to ensure our views are being heard at a national level. katie.gibson@galbraithgroup.com 0131 240 6981
The Office Agents Society visits 55 Spring Gardens.
Engagement the best way to de-risk planning Lauren Springfield explains the importance of engaging with the Local Development Plan preparation process.
Facilitating engagement to influence local planning policy: The most effective way to influence local planning policy is by front-loading this process with proactive, managed, and patient engagement, including with the planners themselves.
Development is inherently an imprecise and risk-laden process and, for many involved, interacting with the planning system in Scotland is a perceived and proven obstacle to success.
Preparing concise and effective representations for sites and ideas: We recently submitted representations for a number of clients to the Cairngorms National Park Authority’s ‘Call for Sites & Ideas,’ which completed in early February 2017. Our objective was to prepare concise and effective representations that identified positive development opportunities for the client, the Park, and neighbouring communities.
In our experience, the best way to de-risk large and/or complex development projects is to influence planning policy by engaging with the planning system directly. Here’s why the Local Development Plan preparation process is the platform to do just that. Identifying strategic development opportunities: The LDP preparation process is deliberately designed to provide landowners, developers, investors, stakeholders, communities, and individuals the opportunity early in the preparation lifecycle to meaningfully influence local planning policy and, ultimately, the pattern of future development.
The Cairngorms National Park Authority, like most Planning Authorities, uses this process to welcome the public’s planning-related ideas, issues, and to identify development sites. A Main Issues Report is then compiled, outlining all the potential development and policy options for the development area, which is followed by a public consultation period. Once the Cairngorms National Park Authority’s MIR is published later this year, we will follow up with our clients to prepare a strategy that ensures their
interests are effectively managed throughout this crucial stage. The value of playing the long game: During this process we spoke with current and potential clients and heard a spectrum of experiences and viewpoints. While some clients were well aware of the benefits of engaging in the LDP preparation process and the importance of representing sites and ideas, others were uncertain of the value in ‘playing the long game.’ A number expressed concern about the risks in committing resources to engagement when the outcome is not guaranteed. Many questioned the impact their engagement could have in the short- and mediumterm given that the LDP preparation process has a five-year lifecycle. In our experience, the initial investment of resources spent on engagement with the LDP preparation process is often small when compared to the latent value that is unlocked when sites, which otherwise may not be considered suitable for development under existing local planning policies, benefit from favourable planning policies and allocations. In submitting sites and ideas for consideration by the planning authority there is an opportunity to build a positive working relationship between them and the client. By frontloading engagement, we can de-risk planning. lauren.springfield@galbraithgroup.com 01786 435 040
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our expertise l Asset management l Building surveying l Commercial valuation l Facilities management l Investment consultancy l Professional services l Project co-ordination l Property management l Sales, lettings & acquisition In addition to our specialist services, we manage in excess of £450 million of commercial property across the UK. We deal with around 750 tenants in more than 120 properties from single units to large multi-let environments such as shopping centres.
contacts Kash Bhatti Property management, facilities management 0131 240 6970 kash.bhatti@galbraithgroup.com Martin Cassels Building surveying 0131 240 6992
martin.cassels@galbraithgroup.com
Jill Gayford Property management, asset management, professional & valuation 0131 240 6987 jill.gayford@galbraithgroup.com Katie Gibson Agency (office, retail & industrial) 0131 240 6981 katie.gibson@galbraithgroup.com Jamie Grant Planning 01786 434638
jamie.grant@galbraithgroup.com
Pamela Gray Asset management, professional & valuation, property management 0131 240 6963 pamela.gray@galbraithgroup.com Richard Higgins Agency (investment, office, retail & industrial), asset management, professional & valuation 01786 434625 richard.higgins@galbraithgroup.com Calum Innes Agency (development & commercial), planning, project co-ordination, professional & valuation 01738 456075 calum.innes@galbraithgroup.com Pam Over Asset management, project development & co-ordination, property management 0131 240 6965 pam.over@galbraithgroup.com Will Sandwell Investment agency 0131 240 6997
will.sandwell@galbraithgroup.com
Peter Scott Aiton Building surveying 0131 240 6967
peter.scottaiton@galbraithgroup.com
Harry Stott Agency (development & commercial), planning, professional & valuation 01786 434630 harry.stott@galbraithgroup.com James Taylor Building surveying 01786 434610
james.taylor@galbraithgroup.com
Jamie Thain Investment agency 0131 240 6994
jamie.thain@galbraithgroup.com
Offices across Scotland | Sales & Lettings | Farm & Estate Sales & Acquisitions | Commercial | Rural | Energy Forestry | Property & Land Management | Sporting | Agricultural Loans | Subsidy Trading & Advice
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