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THE MAGAZINE FOR THE CONSTRUCTION INDUSTRY
BUILDING DESIGN &
CONSTRUCTION MAY 2014 ISSUE 197
MAY 2014
ISSUE 197
ROYAL BIRKDALE GOLF CLUB
THE 19TH HOLE BUILDING DESIGN & CONSTRUCTION
PLUS
PAGES 14-15 KEMSLEY LLP
ONE-STOP PROPERTY MANAGEMENT
ENVOY PROPERTY MANAGEMENT MANAGE A WIDE SPECTRUM OF PROPERTIES IN THE SOUTH WEST PAGES 38-39
WE TALK TO TOM KINLOCH PROPERTY AND ASSET MANAGEMENT DIRECTOR AT KEMSLEY LLP PAGES 32-37
KNIGHT FRANK
LOCAL KNOWLEDGE, GLOBAL OUTLOOK PAGES 24-31
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK
LOCAL KNOWLEDGE, GLOBAL OUTLOOK KNIGHT FRANK IS THE LEADING INDEPENDENT, GLOBAL REAL ESTATE CONSULTANCY PROVIDING AN INTEGRATED PRIME COMMERCIAL AND RESIDENTIAL OFFERING, OPERATING IN KEY HUBS ACROSS THE GLOBE. ounded in 1896 and now the leading and largest independent global real estate consultancy the firm has 330 offices worldwide and 12,500 professionals across five continents. Property management is becoming increasingly important to Knight Frank. “The property asset management team is fundamental to what Knight Frank does because it’s a solid business in a volatile economy,” states Proprietary Partner and Head of Property Asset Management Tim Robinson. “It doesn’t tend to change because it’s a consultancy-based business on three to five-year contracts or longer. We have worked with some clients for 25 years and management potentially feeds additional business to other parts of the firm. Most importantly it is a service line that our clients expect us to offer.
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It is also very important that our business is sustainable from a financial perspective.” DIFFERENT CHALLENGES The company has 44 million square feet of UK commercial property under management with a total value of over £8.5 billion. There’s a separate team to handle residential properties, the management of mixed-use buildings depending on the residential proportion and all, as Tim recounts, presenting different challenges: “Shopping centres present a different set of challenges due to public access and as a result health and safety issues. Industrial and office buildings, which form the bulk of our managed portfolio are more straight forward especially when they’re single let assets for which the tenant has responsibility. Where we can really demonstrate our expertise and experience is on
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK
large multi-let assets where there is a service charge and a building manager or facilities manager on site and we have significant involvement.” The extent of our role very much depends on our clients’ needs and remit we are offered. Many clients simply want us to cover the day-to-day basics of property management whilst others have appointed us to strategically asset manage. In these scenarios Knight Frank identifies and delivers value enhancing initiatives. That’s typified by a recently won £200 million portfolio of fifty properties around the UK where the client has handed over control with a remit to enhance its value through planning swaps, new lettings, rent
reviews, re-gears and re-lettings, where we have agreed a performance-based fee dependent on a value uplift. “This portfolio was taken over from several managing agents and we are currently in the final stages of collating all the information onto our single database,” recalls Tim. “That includes the basics of the rent amount through to all the licence and lease documentation so there’s plenty data collection, data clarification with strict checks to make sure it is 100% accurate before that information is fed into our new web base3d asset management tool ‘Prophecy’. Once we know the assets back to front, we can have discussions with the occupiers and client to evaluate how we can improve add value. One reason we won this contract is because, though our UK regional network, we inspected every single asset prior to our pitch in addition to the fact that our enthusiasm was unrivalled. FACILITIES MANAGEMENT A big part of the service is the provision of FM, which is delivered through subsidiary company Knight Frank Promise. The larger properties have
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK a full-time building manager while facilities managers each look after a number of buildings in a particular area. Some staff come with the buildings under TUPE rules and specialist work is undertaken using preferred suppliers. Tim says: “They are all regularly audited and we have technology to make sure the property asset management team is streamlined and offers the best service. We have a Supplier Web database with details of all preferred suppliers so I can, for example, find the best three lift engineers in Leeds and ask them to tender for work quickly. It’s a list we audit every six months and, if contractors aren’t winning jobs due to quality of work or being sufficiently competitive, we may take them off the list.” An emphasis on proactive property management brings into play all the other service lines the firm provides, with the property management team having a good knowledge of the skills available. However, the aim is to use the best skills and so, when they’re not available within Knight Frank, they’re obtained elsewhere. Tim says: “There are parts of the country where we don’t have an office and don’t have specialist advice. In that case, we would appoint a local agent.” Increasingly, aspects of proactive management include addressing energy usage and sustainability issues that reduce costs and enable clients to meet CSR targets. “Sustainability is embedded in our core business strategy and we are one of the few property services companies that has integrated a sustainability team within its property asset management department,” claims Sustainability and Energy Associate Etienne Cadestin. “Most companies have separate teams but we’ve done that to offer the best sustainable solutions to our clients who have corporate and social responsibility strategy targets to meet. Most of them have already picked the low hanging fruits and now want to go the extra mile, get further savings and
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really show investors that they are getting the best value for the money invested. Instead of offering compliance services only, we go beyond to achieve real operational cost efficiency.” FUTURE-PROOFING INVESTMENTS This service starts with the receipt of a new property instruction and includes an assessment of our Clients’ position in relation to the Carbon Reduction Commitment Energy Efficiency scheme. We do a full scan of the property portfolio to ensure compliance and a future-proofing of investment risk to 2018 minimum standards. Where any property has an EPC rating of F or G, an energy audit is commissioned and action taken to enhance the property to at least the minimum standard. That, as Etienne confirms, sometimes
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PROPERTY & FACILITIES MANAGEMENT: KNIGHT FRANK includes the installation of PV panels: “One of our main Clients is installing solar PV on every suitable property, a £3 million solar PV project covering fifteen properties. “We manage the negotiations of power purchase agreements for the tenants who receive a 13% reduction on their energy procurement price for the electricity generated while the owner gets the Government subsidies and income from the power sold. The installation increases the value of the property and is a very safe, long-term investment backed by Government with guaranteed income. It works well for pension funds that can get returns up to 12% on the low risk investment.” The reception area refurbishment project at Aldwych House in Central London achieved a ‘gold’ sustainability rating under the Royal Institution of Chartered Surveyors SKA environmental assessment tool. The refurbishment created a sustainable office environment through the implementation of 45 measures across energy use, CO2 emissions, waste, water, materials, pollution, transport and occupant wellbeing. It included the installation of energy-efficient lighting, the diversion of 100% of inert waste from landfill and the use of materials and furniture with a low environmental impact. “We’ve developed a bespoke green benchmarking service where we compare and measure the environmental performance of properties quarterly. The results are included in the management reports we share with the tenants because we
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believe in accountability and transparency to improve performance. On one large property, we implemented several energy efficiency projects and reduced energy consumption more than 20%. So in the long run, we save tenants and the landlord a lot of money.” REGULAR DIALOGUE Providing full information is part of a regular dialogue with clients tailored to individual needs and includes quarterly or monthly reporting. All relevant information is recorded to Knight Frank’s property database and, in keeping with the company’s beliefs, is available to clients. “We have developed a web browser known as Prophecy,” comments Tim. “It’s a user-friendly and intuitive package where the client can see everything we are doing, the lease expiries, a full document store and they can adapt the browser to the way they work. We have excellent rent collection statistics of 98% within 5 days of the relevant quarterday and they can check on Prophecy to see if that is being maintained, so it is totally transparent.” Maintaining strong relationships applies equally to tenants, Tim believes that good property management is about knowing tenants really well and that a failure to do this can result in missed opportunities. Good communication has been particularly important during the recent economic downturn, helping to identify those experiencing financial difficulties where a payment plan may be applied alter-
BUILDING DESIGN AND CONSTRUCTION MAGAZINE
natively other measures can be put in place to reduce the risk of bad debts. Other challenges over recent years have included an increase in legislation and bureaucracy relating to health and safety and other matters, with an on-going need to remain fully compliant. That’s being met through the company’s health and safety manager, the acquisition of OHSAS 18001 accreditation and the use of Track Record software. The latter records all requirements in terms of lifts, air conditioning and other equipment in buildings, ensuring a high compliance rate on the portfolio that new clients tend to look for. Our compliance across the UK now exceeds 93%. CONTINUING INVESTMENT The continuing importance of property management is reflected in an ongoing investment in the department and particularly in technology and people. Tim says: “We have opened property management offices in Manchester and Birmingham over the last six months and are opening another in Aberdeen shortly, giving us full coverage for the whole country. When managing a property, we need to be within an hour’s travel distance to do a proper job and we can now reach the whole of the country within that time.” www.knightfrank.co.uk/commercial/ property-asset-management Tel: 020 78611194
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