Fisher German's plan to move the business forward

Resilience in the face of adversity

The past 18 months has been a rather torrid time for many businesses but with Brexit now ‘done’ and the pandemic increasingly under control, we talk to Fisher German managing partner Andrew Bridge on the plan to move the business forward.

How is Fisher German looking towards the future after a tough 18 months?

Our own business has held up unexpectedly well but we’re mindful that many of our clients have found the past couple of years extremely challenging. So, our focus is very much targeted on how we can best advise those we work with how to mitigate the impact of the big socio-economic changes we are currently experiencing.

What sort of issues are we dealing with?

Sustainable food production is going to become increasingly important, and our agribusiness team is heavily involved in helping producers find financially viable, long-term solutions. At the same time, our renewables team is working on practical initiatives to meet a wide range of environmental challenges, such as carbon sequestration. The Green Offset (see p.16) is a great example of a new service we wouldn’t have thought possible, or even necessary, just a few years ago and similarly our new Sustainability for Commercial Property Service (see p.8) shows how we are rapidly responding to new requirements. Our development team is helping to create much-needed new housing across the UK, arguably one of the most relevant challenges for society, while our infrastructure specialists are working with major utilities operators to adapt to a green agenda (see p.12).

Does that mean Brexit is simply no longer relevant for many businesses?

I wish that was the case! But sadly, I think that the effects will be with us for some time to come. What we need to do is tackle problem areas and that means being able to effectively identify them first. The pandemic has shielded or hidden some of the challenges that resulted from Brexit and I have come across many cases where the root cause of issues is not immediately apparent. Providing clarity on this will be important over the next six months.

Will some businesses be affected more significantly than others?

Undoubtedly that is the case and we are already seeing it happen. However, much attention has focused on the direct impact of Brexit on individual businesses. What I think needs to happen next, and I’m encouraging my colleagues across the firm to ask the relevant questions in their own sectors, is to consider what the indirect consequences of Brexit – say a change in travel behaviours – are likely to be. That will enable informed advice and, ultimately, decision making to take place.

Talking of behaviours, have the past 18 months caused businesses to think differently about how they interact with each other?

I should say so. Our experience has been that while many of us adapted very quickly to video conferencing and digital communication in general, we don’t see it as a wholesale replacement for working practices that have been refined over decades.

We operate across many sectors, and I can’t think of one where it isn’t important for our clients to be able to converse face to face. And, while it’s possible to do some things virtually, it’s very difficult to emulate the first-hand knowledge (and therefore ability to act efficiently and effectively) that comes from having visited a site, a home, a business premises or an estate in person. But what the pandemic has shown us is that we can certainly think differently about how we operate and we’re still processing some of those learnings.

We must accept that black swan events are likely to keep coming. But, if we approach them with the right mindset, and embrace them, they become opportunities.”

What sort of outcomes might emerge?

I think many businesses are re-evaluating how and why their people travel, though for the reasons I’ve already mentioned, I don’t foresee a wholescale slashing of travel budgets. That doesn’t mean that internal meetings with teams based in different geographical locations shouldn’t stay virtual if they are equally productive. And I think there will be an impact on how we occupy our offices, though like many companies we’re still working through what that will mean in practice. For me, it is vital that whatever decisions are made, they are always primarily based on client needs.

What have recent events taught businesses about workforce resilience in the face of difficult circumstances?

From my perspective, they have massively improved and accelerated our understanding of the importance of mental wellbeing in the workplace. This is an area Fisher German was already engaged in (see p.20) and I’m really proud of how positively the programme we are still developing has been embraced. I can’t promise that I’ll lycra up with some of my more supple colleagues to do yoga on the front lawn but I have no doubt that we will all find our own ways to support each other. As a result, our business can only grow stronger.

Many companies will be wondering whether it is safer to enter a holding pattern for now, rather than expand. How do you see things?

Looking at our client base, most of them have no intention of standing still. And if your clients are growing, I believe you must be ambitious and grow alongside them. If you take Fisher German as an example, we opened a new office in Exeter (see p.10) during the pandemic and that's trading very successfully. If your business is stable and built on strong foundations, then I think it makes sense to ask what additional services/products your clients really need and how you can deliver them, whether that is by extending what you do already or developing something new.

Looking longer term towards the end of the decade, how do you see the wider business environment compared with now?

Well, you're speaking to an eternal optimist! Yes, there are going to be hurdles. Yes, there will be challenges. We must accept that black swan events are likely to keep coming. But, if we approach them with the right mindset, and embrace them, they become opportunities. All businesses can grow and thrive if they are able to adapt.

Andrew Bridge

07836 214878

andrew.bridge@fishergerman.co.uk

Reaching net zero

Fisher German’s innovative new service for commercial property aims to help property owners improve the energy performance and sustainability of their building stock with the ultimate goal of achieving net zero by 2050.

The clock is ticking towards the UK’s commitment to net zero greenhouse gas emissions by 2050 and earlier this year the Government upped the ante by setting a new target of a 78 per cent reduction by 2035. Achieving these targets will require all sectors of the economy to contribute to emission reductions; however, increasing the sustainability of commercial property through toughening regulation is set to be a key focus area.

For owners of commercial property, it isn’t necessarily clear how they can best improve their buildings to achieve compliance with tightening minimum energy efficiency standards, which are now a legal requirement for any commercial letting. While ‘Energy Performance Certificates’ (EPCs) show improvements that can be undertaken, these are theoretical, often basic and take little account of the practicalities associated with commercial lets, including fundamental asset management considerations.

Fisher German has recognised the problem and devised an innovative new service in response. “It is something we have been working on for over 12 months, bringing together key minds in the business. Internally we refer to it as ‘Concordia’ who was the ancient Roman goddess of harmony or peace and our mantra is: ‘Property at harmony with the environment’.

“The service offers a one-stop-shop that enables property owners to understand where their buildings currently are [in terms of sustainability] and provides a clear pathway of measures, which can be implemented to enable the asset to achieve a net zero status (or as close as is possible) by 2050,

or before, if the client so wishes,” explains Fisher German partner and head of sustainable energy Darren Edwards.

“One of our USPs is that we see the bigger picture from the client’s perspective – we don’t simply focus on the measures to improve the building’s EPC rating, though obviously those are really important, but in addition we consider other factors. These include the client and tenants’ Environmental, Social and Corporate Governance (ESG) commitments, the long-term management plan for the asset and the all-important contractual terms as set out in the lease, which can either help or hinder progress."

The landlord of an industrial estate, for example, will not only receive advice relating to each of the individual properties on the estate, but the Fisher German team will also consider how shared structural elements of a building (like roofs) can be utilised for PV and how best an array might be set up to optimise a return on investment. The team can also consider the creation of social benefits, for example, by introducing green spaces or Electric Vehicle (EV) charging to help achieve wider ESG [sustainable investment] goals.

“Our experience is that some property owners are already setting their own ambitious targets so that they will be significantly ahead of any legal requirements,” says Darren. “However, government policy is continuously evolving. For example, we reviewed recent consultations on changes to EPC requirements and a new framework for energy performance of offices larger than 10,000 sq ft. Keeping abreast of policy changes is critical, so that we can build maximum flexibility into how property owners can proactively and costeffectively manage the necessary changes to the buildings in their portfolios.”

The pathway towards sustainable commercial property starts with a high-level desktop review of all of a property owner’s assets. “This enables us to prioritise which properties should be dealt with first and where the greatest opportunities for renewable energy exist,” says Fisher German surveyor and policy expert Tom Beeley. A more clinical audit follows, during which each property is reviewed in detail, including an on-site visit. Tom notes: “We’re not just looking at reducing the owner’s impact on the environment, but also at how buildings can be made more attractive to [potential] tenants, which in turn increases capital values. In some cases, occupiers may be willing to undertake and fund improvements because they will result in reduced energy costs.”

How the service works

Based on client data, we have created a notional property investment company to illustrate how the service works. Our notional client holds a portfolio of 200 properties, including 72 offices/retail units, 125 warehouses and 600 acres of bare land. • An initial desktop review of the client’s asset portfolio was undertaken to assess the buildings against current and future regulatory compliance and to consider key lease events. • Our initial review identified six ‘high priority’ properties that would become non-compliant with regulation. Eighteen more were identified as having lease trigger events within the next two years, presenting opportunities for engagement with tenants and improvement of those buildings. Five buildings were identified as occupied by high energy consumers with potential for green energy investment, while the bare land was reviewed for renewable energy opportunities. • Individual property reports on the high priority assets identified short- and long-term options for making practical improvements to environmental performance. • Our experience meant that wider asset management and lease considerations were taken into account, for example, considering simultaneous replacement of roofs where these are shared between assets and how this can be best covered within existing

leases. We also reviewed funding models for roof-mounted PV arrays to determine the best fit for the client and tenant in relation to the building and lease terms. • Our specialist teams are working with building managers to ensure work is carried out with minimum impact on tenants, while Fisher

German’s planning team has provided expert guidance on planning requirements for specific energy investment options. • We proposed new solar PV installations on two buildings and are reviewing two sites for EV charging and land-based renewables. • The client is, with our assistance, exploring options for offsetting some of the emissions associated with their business, but also considering wider environmental offsetting as part of its ESG commitments.

At the end of the audit, the property owner is presented with a list of practical actions, which take into account existing landlord-tenant relationships as well as long-term objectives for each building. Once the recommendations are clear, design solutions can be explored and all of the proposed works can be costed. At this stage a commercial evaluation can determine the optimum timescales for works to be scheduled on individual buildings. “One of the advantages of our service is that Fisher German has building consultancy and planning teams in-house, so we can provide all of the necessary expertise in a joined-up manner,” says Tom.

Finally, the recommendations are implemented, either by a client’s own contractors or those managed by Fisher German, working closely with dedicated commercial property managers. Installation of renewable energy technologies can not only reduce a building’s carbon footprint but also offer the potential to generate additional income.

However, it is not possible for every building to become carbon neutral, in which case property owners will need to consider offsetting associated emissions by sourcing carbon offsets or green energy projects elsewhere.

Darren says: “Fortunately for property owners, we have just launched The Green Offset (see p.16), which enables them to easily and quickly find parcels of land suitable for offsetting purposes – another advantage of Fisher German’s multidisciplinary approach. It highlights what we set out to achieve for property owners: making the complex and potentially expensive pathway to net zero as simple and cost-effective as possible.”

Darren Edwards

07918 677571

darren.edwards@fishergerman.co.uk

Tom Beeley

07970 698729

tom.beeley@fishergerman.co.uk

South West Water provides water and wastewater services throughout Cornwall and Devon and beyond. Delivering to such a vast area means huge numbers of properties, so Fisher German is on hand to help manage development opportunities and disposal projects from its new Exeter office.

Imagine the amount of water in an Olympic-sized swimming pool. Now multiply that by 90. That’s the amount of drinking water (on average 462 mega litres) that South West Water produces for its customers every day. The Pennon Group-owned utility company covers all of Cornwall and Devon, as well as parts of Somerset and Dorset. Perhaps unsurprisingly, given the large geographical area, the business owns significant land areas (totalling circa 15,000 acres) and more than 1,000 properties, from small pumping stations to major sewage treatment works.

Dealing with so much property is a major task and to lighten the load South West Water employs specialists from Fisher German. Associate director Hannah Rose, who is based in Fisher German’s new Exeter office, and is partly seconded to South West Water, manages development opportunities and the disposal of land and properties that are no longer required for the utility company.

She explains: “There are many sites that have been used for water supply or treatment for decades, but which are eventually no longer required. Part of my role is to identify what should happen to each site in the future. As each one is different – from a redundant reservoir to surplus buildings – it is very bespoke work. A one-sizefits-all approach definitely wouldn’t work here.”

Hannah points out that disposing of land the company no longer requires fulfils two key purposes – it reduces financial and legal liabilities, whilst bringing in additional revenue: “There are many elements to consider such as any

As each opportunity is different – from a redundant reservoir to a more complex operational site … a one-size-fitsall approach definitely wouldn’t work here.”

impact on retained land and infrastructure, the cost of any decommissioning works and site preparation, the nature of any restrictive covenants, overages or rights of access required and whether a disposal fits with Corporate objectives.

“I need to ensure that there are no occupancy issues and that the boundaries are clearly defined. And whatever the site is, I need to have an overarching view to make sure that I’m assessing every avenue possible.”

Drift Reservoir; Dam; Cornwall

South West Water in numbers

462m

litres of water produced each day

675m

litres of sewage transported each day

17,515 15,525

kilometres of water mains kilometres of sewers

1,200+

sewage pumping stations

650

sewage treatment works

Source: SWW

Bucking the trend

Opening a new office in the middle of a global pandemic might seem brave but, for Fisher German, the establishment of an Exeter office in 2020 was part of the firm’s strategic growth plan. And, amazingly, the switch to virtual communications necessitated by Covid-19 has been something of a boon.

Hannah explains: “We’ve made contact with so many more people than we would otherwise have done, as people have been much more willing to attend a video call than they would a face-to-face meeting. That’s partly because there is no travel time involved, which can take a fair chunk out of the day when visiting someone in person.

“The other benefit is that if we find we need specialist knowledge, for example, planning or telecoms, we can tap into the expertise within Fisher German by bringing the relevant person onto the call, even though geographically they are hundreds of miles away. I’m not saying that we want to do everything virtually going forward but the positives associated with that way of working have definitely helped us get the Exeter office off to a flying start and probably much further ahead than we might have been in ‘normal’ times.”

Recent development and disposal projects

The sheer diversity of South West Water’s holdings means that no day is the same for Hannah. She says: “I act as a hub for many individual projects, which may have a number of consultants working on different angles, so it’s my responsibility to bring everything together and ensure that overall viability targets are met. I may be working on presenting an internal report to the board one day and dealing with an engineering team the next. It certainly keeps me on my toes, but I really enjoy being a key link in the process.”

Recent and ongoing projects Hannah has worked on include: • The water treatment works (1) A large facility has been replaced by new works elsewhere. Hannah has been working with engineers on a decommissioning programme, while simultaneously assessing what development options might exist and whether those are best progressed solely by South West Water or with a joint venture partner. • The water tower A defunct structure that was marked for sale. Hannah investigated whether a planning consent should be obtained before the tower was marketed but decided it would be better to leave any potential conversions to a new owner. The property was offered at a guide price that covered its decommissioning costs; however, it attracted so much attention it eventually sold for 750 per cent more. • The water treatment works (2) A major works is being replaced by a new facility being built alongside, but the existing works, which is reaching the end of its working life, cannot be decommissioned until the new one is complete. Hannah is responsible for the promotion of the surplus land through the Local Plan to enable redevelopment of alternative uses. The timing of engagement with stakeholders and consultants is crucial to ensure deadlines are met.

As well as the development opportunities and disposal programme, Fisher German also manages the land and property portfolio for South West Water. Fisher German partner Matt Trewartha says: “The current portfolio comprises a diverse range of property across a wide geographical area so it is essential that we have a good working knowledge of the sites and the tenants. The portfolio is run on a commercial basis and each site is visited at least annually.”

Hannah adds: “Although removing risk and liabilities from land and property is hugely important for us, our top priority is to ensure that our work never adversely affects South West Water’s core business.”

Hannah Rose

07917 993518

hannah.rose@fishergerman.co.uk