Agenda Lambert Smith Hampton
Issue Two / Q3 2008
Regeneration and renaissance at the heart of commercial property Economic gloom spurs asset recovery demand
Lifestyles of the Welsh Riding the waves of opportunity in our western-most limb
Inside this edition
» The credit crisis and the public sector » Boris Johnson on ‘Planning for a Better London’ » Last train to Waterloo - Doug Sutherland talks rail and regeneration » What’s next for Empty Property Rates?
Agenda / Issue Two / Q3 2008 / Introduction
Many in commercial property are holding firm in this ‘perfect storm’ and are basing their strategies on the long term.
W
elcome to our second edition
plank of this growth was the recruitment at
that the past is for reference only, not for
of Agenda, Lambert Smith
the turn of the year of Tony McAteer and
living in. It’s the future that we must base our
Hampton’s (LSH) client magazine.
his 10-strong planning team. I am delighted
risk outlooks on.”
This quarter we focus on the theme of
to say that they have settled in well into our
renewal and revival.
Manchester office.
2008 marks the 30th anniversary of the
On that note, I have no doubt that this
Triathlon at Dorney Lake. Although
formal introduction of urban regeneration in
entrepreneurial spirit and resilience will see
unfortunately, I cannot claim that I
the UK and Ireland. The commercial property
the commercial property market through
experienced any renewal or revival as a
sector has played a starring role in urban
this economic crisis, as it did in the 1970s
result. Plain knackered is perhaps a more
renewal, which has revitalised our cities and
and 1990s. The worsening economy and
appropriate description!
towns nationwide.
tightening commercial property market has
Finally, resilience was crucial for me this summer when I competed in the Property
again demonstrated that both are cyclical.
Moreover, I am delighted to congratulate LSH’s winning team of Toby Chapman,
Involvement in this renaissance is something that we can all take pride in. Commercial
It is tough, but help is at hand. The UK
George Edwards and James Hearn who took
property’s resilience and determination in
Government’s £50 billion cash injection will
top place on the podium in the Men’s Relay
bringing forth many major inner city and
no doubt boost market confidence. With this
category. Well done all.
brownfield developments has not only left a
in mind many in commercial property are
lasting legacy for the built environment but
holding firm in this ‘perfect storm’ and are
helped to address many social and economic
basing their strategies on the long term.
ills that afflicted our communities. Once the market reaches the bottom of the There is no doubt that there is still more
cycle and begins an upward swing we will all
work to do. Planning, regeneration and
benefit from economic revival, albeit perhaps
development are key growth areas for our
at more realistic levels than of recent years.
clients. This is why, at LSH, we are investing in building on this service line to increase
A memorable quote from the last issue of
Mark Rigby
the strategic support that we provide: a key
Agenda springs to mind: “We must remember
Chief Executive
2 / Lambert Smith Hampton
PA
Agenda / Issue Two / Q3 2008 / Contents
Mark Rigby surveys the course at the Property Triathlon at Dorney Lake
Contents
PAGE 24 Doug Sutherland, Chief Executive of BRB (Residuary) Ltd, talks regeneration and his predictions on the property market
Lambert Smith Hampton Agenda Magazine Issue Two / Q3 2008 Editor Sandy Townsend Art/Production Director Nathan Turner Content Contributors Sandy Townsend, Nicola Hardy, Elizabeth Bartlett, Holly Rigby, Anna Silkstone, Maggie Austen, Shirley Feeney
04
Regeneration in the UK and Ireland LSH reveals regeneration to be at the heart of the political agenda
06
Market analysis and commentary from the past quarter
08
Policy Exchange and northern regeneration The truth behind the myths published in Cities Unlimited
10
An interview with Konrad Bartelski GB downhill skiing legend talks insider tips and the LSH Ski Challenge 2009
12
Economic gloom spurs asset recovery demand LSH responds to the uncertain market conditions with expansion of its asset recovery and restructuring service
13
Cutting through the jargon of LPA Receivership
16
Boris on ‘Planning for a Better London’ LSH questions the new Mayor of London on his pledge to commercial property
18
Empty Property Rates - could the end be nigh for the reviled tax?
20
City spotlight: Dublin How Dublin made its name as one of the friendliest cities in Europe
21
LSH takes on the Grim Challenge for charity
22
Credit crunch bites at public sector capital receipt projections
24
Lifestyles of the Welsh Commercial regeneration, investment and lifestyle in Wales
26
Compulsory Purchase Orders (CPO) How CPO can play a part in regenerating our towns and cities Lambert Smith Hampton / 3
Agenda / Issue Two / Q3 2008 / Regeneration
In 2008 it is 30 years since the introduction of the 1978 Inner Urban Areas Act, which introduced the concept of urban regeneration nationwide and delivered mass urban renaissance to our post-industrial centres.
Regeneration still at the heart of the political agenda By Maggie Austen
T
he 1978 Inner Urban Areas Act was
sector. This vision was then delivered in his
The Conservative Party, under David Cameron,
a reaction to the realisation that
Urban Development Corporations, Housing
also recognises the great strides that have
whole tracts of the inner areas of our
Action Trusts and City Challenge, creating the
been made in the transformation and
great cities were being abandoned, leaving
modern pattern. He later remarked in 2004
redefinition of our major cities and towns.
dereliction and a complex web of social and
to The Observer that we were witnessing
The Party has stated that it is committed
economic problems behind it. Since this
‘the biggest investment and regeneration of
to building on the legacy of previous
time, successive governments have kept
Britain’s cities since the Victorian age’.
regeneration initiatives, irrespective of the politics behind the idea.
regeneration at the heart of the political agenda, both in the UK and Ireland.
The regeneration torch was then taken up with vigour by New Labour. The return of
Regeneration is here to stay. The importance
Andrew Delaney of Lambert Smith Hampton’s
people living in the heart of our cities is a
of handing on a positive legacy of the built
Regeneration team said: “It’s easy to forget
positive achievement of the last decade,
environment to the next generation is an issue
that regeneration existed before the Blair
increasing urban vitality and commercial
that cuts across dogma and is perceived as a
Government. In reality it is a continuum of
opportunities.
necessity of modern political life.
from an agrarian culture to a modern
A key example of Labour’s impact of
For more information, please contact:
urbanised society.”
regeneration is Manchester’s continued rise
Andrew Delaney, Regeneration
as one of Europe’s great cities. This owed
E: adelaney@lsh.co.uk
The work started by the Conservative cabinet
as much to the steady hand of Howard
T: +44 (0)161 242 8028
member, Michael Heseltine, and colleagues
Bernstein as it did to its Urban Development
in the early 1980s had a profound and
Corporation and the flattening of Hulme flats
visionary influence. Heseltine pressed for the
in the early 1980s.
urban renewal that has followed our evolution
co-operation of the State with the private
4 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Regeneration
At the 30th anniversary of its legal inception, urban regeneration and associated development is undergoing a renaissance of its own.
Future proofing regeneration
A
By Sandy Townsend
ccording to leading south-east
Miff’s first scheme with Europa’s Noel Manns
developer, Miff Chichester (pictured),
and Rob Sim was the highly successful
regeneration and development in
225,000 sq ft Imperial Place in Borehamwood.
our towns and cities has well and truly gone
LSH’s London and St Albans offices were
green; a phenomenon led by corporate
involved in the sale and letting of the scheme,
occupier demand.
which saw it double in value in three years. They are now focused on their £200 million scheme which is due for completion in 2012.
Miff’s property development company, St Congar Developments, is building the largest town centre scheme along the M4 corridor in
Such is the partner’s concern to meet the
Windsor with financial partner Europa Capital
environmental needs of its future corporate
Partners. He argues that the pace of change
occupiers, that in addition to leading
within the development industry with regard
environmental architects, St Congar has
to its consideration of green building has
employed three different teams to advise
occurred at breakneck speed.
on its Windsor project: an environmental strategist, sustainability consultants and an environmental marketing group.
“When we started development 20 and 30 years ago it was a completely different process. Leaving a legacy of social and economic improvement for our inner city communities was not the prime concern. The environment was not even on the agenda,” Miff said. “Even 18 months ago the environmental needs and requirements of occupiers were not as intense as they are now. “The environmental lobby group is very credible, driven by real empirical scientific information. Corporate occupiers are responding to that but as developers we need to future-proof our buildings and predict what they will be looking for in five to ten years time.“
As a developer you must be strong in your convictions and exceed BREEAM requirements. If you do not provide an environmental solution for the corporates of the future you will jeopardise the success of your investment. Miff Chichester St Congar Developments
Miff said: “The environment is generally affecting our floor plate. Now we must deliver not only a social and economic legacy but we must also support the environment. “The truth is that at the end of the day we must deliver social, economic and environmental improvement so that we bequeath to our children a community that is worth inheriting.” For more information on LSH’s development and office agency services, please contact: Guy Gregory, Head of London E: ggregory@lsh.co.uk T: +44 (0)20 7198 2198 Tony Fisher, Office Agency E: tfisher@lsh.co.uk T: +44 (0)20 7198 2250
Lambert Smith Hampton / 5
Agenda / Issue Two / Q3 2008 / National Research Round-up
Research round-up Q2 - Difficult times deepen Lambert Smith Hampton’s national research reports provide analysis of the commercial property industry across our national network of 28 offices.
Visit www.lsh.co.uk to access our archive of economic and property research reports.
The LSH Weather Map
For further information, please contact:
Occupier demand is weakening
Arezou Said, Research
The LSH Weather Map, published July 2008
E: asaid@lsh.co.uk T: +44 (0)20 7198 2060
Occupier demand, the last bastion of the
Retail market trends
worsening commercial property sector, is
•
The retail market is facing its toughest
Ezra Nahome, Investment
weakening amid growing economic woes,
E: enahome@lsh.co.uk
negatively affecting rental growth. This,
T: +44 (0)20 7198 2222
combined with a slow investment market, is
is falling as the credit crunch, higher
expected to result in negative returns for 2008.
inflation and housing downturn impacts
time since the early 1990s. •
Tony Fisher, Office Agency
Consumer confidence and demand
disposable income.
E: tfisher@lsh.co.uk
The office market is to bear the brunt of the
T: +44 (0)20 7198 2250
softening occupier demand and falling values.
Lloyd Spencer, Industrial Agency
Dr Arezou Said, LSH Research, said: “As
E: lspencer@lsh.co.uk
the credit crunch took flight in 2007 the
T: +44 (0)1582 878 282
commercial property market had hoped that
Office market trends •
In London, the City is leading the office market slow down, while the West End remains stable.
•
The rest of the UK and Ireland is more
occupier confidence and therefore demand
resilient due to low vacancy rates with
Julian Welch, Retail Agency
would underpin the investment-led fall
headline rents holding in most centres.
E: jwelch@lsh.co.uk
in returns over the medium to long term.
T: +44 (0)1733 895 002
However, this is clearly not the case.
Industrial market trends •
Better outlook for distribution due to the
“As the property market enters the second
growth in internet, although the fall in
downward phase of the cycle, occupier
consumer demand will have an impact on
demand is clearly falling away, deepening
the sector.
market concerns and leading to a further fall
•
Despite slowing demand supply is likely to remain constrained, therefore LSH is
in values by year end.”
anticipating rental values to hold. •
The removal of empty property rates relief will curb speculative development until at least 2010.
624 / Lambert / Lambert Smith Smith Hampton Hampton
Agenda / Issue Two / Q3 2008 / National Research Round-up
Economic & Property Market Bulletin Capital values fall by 20 percent during the last 12 months Economic & Property Market Bulletin, published August 2008 The outlook for both the economy and the
2007 and July 2008, and we are anticipating
The Central London office market and in
property market has continued to weaken
a further fall of at least 6 percent in capital
particular, the City, is set to bear the brunt of
since LSH’s last report in May.
values by the end of the year.”
the downturn. The markets in the Thames Valley and the South East are better placed
The GDP figures for the second quarter of this year now show UK economic growth coming to a halt (0 percent) during the past three months. This has made the possibility of a technical recession (a decline in GDP for two or more consecutive quarters) more certain. Dr Arezou Said, LSH Research, said “The commercial property sector has seen capital
The economic outlook is impacting on the occupier markets. The IPD index shows a fall in rental values for office and industrial properties.
values fall by over 20 percent between July
this time round, given that they are not significantly over-supplied and the fact that supply of existing new space is very limited. Given the cyclical nature of the commercial property market which is characterised by the ripple effect from London to the provincial centres, the impact of the downturn will become more apparent in the provincial markets later this year and into next year.
UK Investment Transactions (UKIT) Transaction levels fall to the lowest in seven years UKIT Quarterly Bulletin 2008 Q2, published July 2008 The value of commercial property investment business undertaken in the second quarter of 2008 fell to its lowest level since the first quarter of 2002, with just £6.1 billion of deals recorded. However, the number of transactions has held up, with over 800 deals recorded. Ezra Nahome, Head of National Investment at LSH, said: “The market has become polarised. There continues to be a large number of small transactions but the big ticket deals have become scarce. The past quarter saw only five deals of more than £100 million whereas this time last year we were seeing 20 to 30 transactions of this size. “This has led to an inevitable reduction in average lot sizes. The latest quarter saw the
The average yield on transactions edged back down in the second quarter, reflecting the fact that many of the deals completed consisted of better quality property. This demonstrates that a market still exists for the right type of product at the right price.
UKIT highlights that most of the larger sales were made by institutional investors. They have been the most significant sellers since the start of the year, disposing of almost £6 billion of property (42 percent of market share) whilst buying a little under £1.5 billion (10 percent of market share), leading to net disinvestment of almost £4.5 billion. Ezra said: “This is the most significant sell off of UK property that we have seen from the institutions since the start of the decade.”
average lot size fall to £7 million compared to the £20 to £25 million that was prevalent through 2004 to 2007.”
Lambert LambertSmith SmithHampton Hampton/ /25 7
Agenda / Issue Two / Q3 2008 / Cities Unlimited
What the report says: The first instalment of the three reports, Cities Limited (2007), established that regeneration in a sample of 18 British towns and cities (see map below left) had “failed” to achieve its goals, based on the following evidence: •
Gross Value Added (GVA), the local equivalent of GDP, fell from 90 percent of the national average to 86 percent between 1997 and 2005, with the proportion of the population living in regeneration towns and cities falling by about 5 percent.
•
Average income in the 18 regeneration cities has fallen from 1997 to date.
•
Unemployment remains 40 percent higher than the national average in regeneration towns and cities.
Cities Unlimited is the third in a series of controversial reports published by the Policy Exchange, an independent think tank whose mission is to develop and promote new policy ideas. Following the furore surrounding the Report’s suggestions that northern cities are beyond revival and that residents should consider relocating to the more prosperous south, Lambert Smith Hampton’s experts examined the facts to set the record straight.
Cities Unlimited went one step further and cited four reasons why the situation could not be expected to improve, these are: Industrial decline The decline of industry and manufacturing has impacted heavily on regeneration areas, with towns and cities that are already oriented to the service sector at a distinct advantage.
By Nicola Hardy
Unskilled workforce Regeneration areas typically have a much less attractive skills mix than London and other economically successful towns and cities. People in these areas were less likely to be highly qualified. High achievers would therefore be inclined to leave and, as a result, highly-skilled industries would be less likely to locate themselves in a regeneration area. Political change The Labour Government has been dominated by ministers who favour regeneration. However, with the next government likely to be under Conservative direction, ministers who typically represent affluent, leafy, shire town constituencies are unlikely to feature regeneration in their policies. Public spending With a squeeze on public spending, cuts are likely to be made from areas that the public will not notice. Regeneration does not involve a set number of projects or employ a set number of people, which therefore renders it incredibly vulnerable.
8 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Cities Unlimited
What LSH’s regeneration experts say: Andrew Delaney, LSH Regeneration,
LSH Location Performance Index (excluding London)
Manchester, said: “In my opinion, the report
130
was an unashamed eulogy to the power of the market. It harked back to Thatcherite days, when Norman Tebbit urged unemployed
110
people to get on their bikes and relocate to more prosperous areas in their search for work. Professor Michael Parkinson’s witty put down of the report as ‘teenage scribblings’
90
was wholly appropriate. The report is based upon crude generalisation
70
and, rather conveniently, ignored the huge economic powerhouses of Birmingham, Leeds and Manchester. Liverpool and Sunderland were singled out as regeneration failures,
50
indicating that the authors had not visited either recently to see the transformation that is continuing to happen. Liverpool in particular has seen unprecedented regeneration activity
Average = 100 Source: LSH Research
of late. The recent opening of Grosvenor’s Paradise Street, Europe’s biggest retail scheme, in the heart of the city, and the celebration of Liverpool as 2008’s European Capital
”However, cities such as Leeds, Sheffield
Dr Arezou Said, LSH Research, commented:
of Culture are manifestations of a vibrant,
and Newcastle have done well to reinvent
“While the ‘Leading Locations Index’ appears
confident and successful city.”
themselves following the decline. Following
to support Cities Unlimited’s claim that cities
their success are cities such as Bradford
based on highly skilled workers, such as
and Sunderland, albeit taking on a more
Oxford and Cambridge, are the most dynamic,
supportive role to the main cities in the region,
the outlook doesn’t look quite so bleak for the
but nevertheless important in the hierarchy of
north, with the major cities such as Sheffield,
the regional economy.
Newcastle, Manchester and Leeds all featuring
There is evidence to suggest that these towns are restructuring their economies to meet the challenges of the 21st century. Andrew Delaney Regeneration Lambert Smith Hampton
close to the UK average. ”The report failed to acknowledge that residents are emotionally tied to the area they
“In stark contrast, Chelmsford features well
were born and grew up in. A person’s social
below the UK average, contradicting Cities
network of family and friends cannot simply
Unlimited’s suggestion that successful cities
be uprooted to another area of the country.
such as London are able to support their relatively poor neighbouring communities.”
”Regeneration must be viewed in the longterm, taking one or two generations to really
For further information, please contact:
see improvements and benefits to the area.”
Andrew Delaney, Regeneration E: adelaney@lsh.co.uk
What LSH’s research says:
T: +44 (0)161 228 6411
Mark Hosea, LSH Regeneration, Leeds,
The ‘Leading Locations Index’, published in
said: “Cities Unlimited not only ignored the
LSH’s National Office Report in June this year,
Mark Hosea, Regeneration
progress and prosperity of the northern
provides an indication of performance for 28
E: mhosea@lsh.co.uk
economy over recent years, but also its culture
centres around the UK by comparing, scoring
T: +44 (0)113 245 9393
and history. Undoubtedly, some northern cities
and ranking each centre in relation to property
have suffered following the decline of industry
rental costs, availability of high-quality
Arezou Said, Research
and manufacturing and, as such, their rate of
premises, labour costs, availability of a skilled
E: asaid@lsh.co.uk
growth over the past 30 years may have been
workforce and recruitment potential.
T: +44 (0)20 7198 2060
slower than in the south.
Lambert Smith Hampton / 9
Agenda / Issue Two / Q3 2008 / Konrad Bartleski
Konrad Bartelski Great Britain’s downhill skiing legend prepares for LSH’s Ski Challenge 2009 By Holly Rigby
With the challenges faced in today’s difficult market, who better to join us than the man notorious for making an amazing comeback against all odds.
It is exactly this attitude which prompted
K
is definitely the same healthy sense of
onrad Bartelski, GB downhill skiing legend and veteran of three Olympic Games, will be attending the Lambert
Smith Hampton (LSH) Ski Challenge for the third year in a row. Six years after one of the all time spectacular downhill crashes, he became the first and only British male downhill racer to stand on a World-Cup podium. Famously, it even prompted a French TV commentator to shout, excitedly:
Ce n’est pas possible! C’est un Anglais!
Konrad to set his goal on becoming a successful British skier: “At age 10 I was already sick of everyone saying that British skiers were simply clowns and I became determined to prove them wrong. There competition and determination at the LSH Ski Challenge, with a few clowns thrown in too! “I have returned to the Ski Challenge every year not only to enjoy the stunning slopes and friendly banter, but also because it gives myself and all the other attendees a fantastic opportunity to meet people from the property industry, who all share the same passion for
But Konrad has revealed he had some pretty
skiing. The fact that the food in Italy is second
unusual warm-up habits when preparing for
to none is certainly an added bonus!”
a race: “When I was racing competitively, I refused to change my socks for the whole
Competitors at next year’s Ski Challenge,
winter season. When you find the perfect fit
which is due to take place from Wednesday
of a ski boot, you don’t want to risk altering
21 until Sunday 25 January in Courmayeur,
that by washing your socks!”
Italy, will once again have the opportunity to attend a giant slalom race clinic hosted by Konrad. He will be helping skiers warm up for the racing and fine-tune their skills.
10 / Lambert Smith Hampton
Agenda / Issue One / City Spotlight
Agenda / Issue Two / Q3 2008 / Konrad Bartelski
However, if the idea of mouldy socks is not quite your thing, Konrad also had some other suggestions: “Try listening to some music that really gets your mind focused and in the mood for competition. Before every race I always listened to the second half of a Little Feat album called ‘Time Loves a Hero’. “I suppose I was hoping that maybe one day I would be a hero too!” There is no denying that Konrad is truly a great British skiing hero, and it looks like ‘Eye of the Tiger’ may be appearing on iPods across the slopes of Courmayer very soon… For more information, please contact: Sandy Townsend, Marketing and PR E: stownsend@lsh.co.uk T: +44 (0)20 7198 2070 Keep your eyes on www.lsh.co.uk for news and event updates.
Lambert Smith Hampton / 11
Agenda / Issue Two / Q3 2008 / Asset Recovery and Restructuring
Asset recovery and restructuring in uncertain times According to Lambert Smith Hampton’s Head of National Investment, Ezra Nahome, the commercial property market has witnessed a dramatic fall in capital values which has accelerated over the past few weeks.
E
zra explained: “As the credit crisis is
LSH has responded to this changing market by
deepening our research is showing
expanding its asset recovery and restructuring
that occupational demand is softening.
services to provide strategic advice to banks,
Many businesses are feeling the strain under
borrowers and advisers alike. Its Asset
both inflationary pressures and the lack
Recovery and Restructuring Team (ARRT),
of liquidity. The continuing fall in capital
works across the firm’s national network of 28
values has placed a significant number of
offices, drawing on LSH’s 20 year track record
commercial property loans into default.
in LPA Receivership and its leading investment, banking and asset management services. The
At the present time cash flow generally remains strong but we see this deteriorating during the course of 2009. “The debt market has significantly dried up and it will require Government intervention to recapitalise the markets and help to restore some confidence amongst the banks. “In difficult markets, knowledge is the key element in strategy planning. At LSH we have the UK’s largest national network of offices and accordingly we can provide our clients with both the micro and macro solution. If there is value out there, we will find it.”
We are uniquely positioned to provide the micro and macro advice needed. If there is any value out there we will find it.
firm harnesses the full strength of its national
Ezra Nahome Head of National Investment Lambert Smith Hampton
network and local expertise to provide strategic advice at an early stage in the review of potential difficult assets. Given that LSH transacts more deals than any other commercial consultants in the UK and Ireland, it is uniquely positioned to provide a ‘finger on the pulse’ view on the property market. Estates Gazette recently named LSH, once again, as the UK’s number One national adviser and revealed that the firm was involved in over 2100 transactions across the market in 2007. This impressive statistic is equally matched by the fact that its nearest competitor had done 55% fewer deals.
In addition to LSH’s national LPA capability the Asset Recovery and Restructuring Team offers the following services: •
Discreet strategic property overview
•
Asset management
•
Occupational agency
•
Business rates advice
•
Building consultancy
•
Investment advice
•
Valuation
For further information on the services of LSH’s Asset Recovery and Restructuring Team please contact: Ezra Nahome, Head of National Investment E: enahome@lsh.co.uk T: +44 (0)20 7198 2222
12 / Lambert Smith Hampton
»
Agenda / Issue Two / Q3 2008 / LPA Receivership
LPA Receivership
Cutting through the jargon of insolvency
»»»»»»»»» T
he current economic climate provides much opportunity for talk of insolvency. The law surrounding it is complex and
the liabilities and obligations of the various parties involved vary widely.
»»»»»
The focus is upon realising best value from the asset. Julian Healey Property Management Lambert Smith Hampton
However, riding to the rescue is a much simpler mechanism when dealing with
By Julian Healey
Any fixed charge receiver therefore needs an expert understanding of the asset upon which the charge is secured, be it land and buildings, plant and machinery or a business. They must have an understanding of the relevant legislation surrounding receivership and be prepared to coordinate and manage the various roles of asset management,
property: Fixed Charge Receivership (also
The LPA mechanism has material advantages
property management and accounting,
known as LPA Receivership). This is not a
over other forms of insolvency:
valuation and agency.
reference to the provisions of the Law of
•
Speed and ease of appointment
For further information on LSH’s
Property Act 1925. It is that Act, the mortgage
•
No necessity to appoint a licensed
experience in LPA Receivership and
insolvency practitioner
related services, please contact:
The ability to appoint receivers with
Julian Healey, Property Management
specialist knowledge of the asset
E: jhealey@lsh.co.uk
•
Simplified Companies House procedures
T: +44 (0)115 950 1414
•
The ability to focus upon the asset
new idea. An LPA receiver is appointed by
deed and the detail of the fixed charge that enables a receiver to be appointed by the
•
lender in the event of default. Appointment by virtue of a fixed charge means that one is not concerned with the insolvency or liquidation of a company;
charged and not the company •
Much reduced costs of the receivership
instead, the focus is upon realising best value from the asset that has been charged. That
Dependent upon the nature of the mortgage
asset may be real estate but may also include
deed, a fixed charged receiver may be
plant and machinery, a business (and the staff
empowered not only to sell the property in
and TUPE implications which run with that
order to discharge the debt, but to also have
business) or any other specific asset.
authority to work, or trade, the charged property to best commercial advantage. There is a clear duty to the borrower to maximise value.
Lambert Smith Hampton / 13
Agenda / Issue Two / Q3 2008 / Boris Johnson
Boris bites back The new Mayor of London, Boris Johnson, has started work on shaping London’s planning and development agenda. Lambert Smith Hampton (LSH) questioned him on how his decisions will affect commercial property and London’s regeneration. By Elizabeth Bartlett
I
n a statement to LSH, Boris Johnson
as a platform to promote fellow Tories, to the
When questioned by LSH, the Mayor re-
pledged his full support to the commercial
detriment of the greater good of London. This
enforced his commitment to commercial
property industry, saying that:
follows his recent decision to remove Labour
developments which support investment in
representatives from the LDA Board and does
the city’s existing fabric, stating that he is:
little to help the reputation of a government
“Committed to London’s regeneration
body which has already suffered from a lack
and supporting the role that commercial
of credibility over recent years.
development will play in that.”
LSH raised this concern with the Mayor.
It seems that the Mayor is in danger of being
The Mayor’s office defended his decision,
caught in the middle and needs to be careful
stating: “Our principal tool is the LDA and the
if his priority lies with the London’s heritage
Mayor has taken steps to ensure that it is the
and aesthetics or with the much needed
strongest board and management team since
regeneration of the city.
Commercial property has an important role to play in the development of London. I have outlined proposals to champion mixed developments, and make the planning process more efficient. I will champion high quality, well designed commercial developments.” Boris Johnson Mayor of London
it was first created and has every confidence in their ability to drive regeneration
Last word…
and redevelopment forward in a wholly
London’s success as a leading financial hub
professional way.”
inevitably lies in its ability to attract business and investment and the challenges currently
The Mayor’s faith in the LDA’s ability
facing London’s commercial property market
inspires confidence. However, critics of
are substantial. The Mayor’s apparent
the authenticity of his interest in London’s
enthusiasm for planning and development
regeneration also shine the spotlight on
is certainly encouraging but commercial
his policy for tall buildings in London. The
property needs a Mayor who demonstrates
Mayor vowed to protect London’s skyline
decisiveness, otherwise he could be at risk of
and refuse planning permission where the
being accused of offering empty gestures.
City’s heritage would be damaged. Just one example where the Mayor flexed his
For further information, please contact:
Following his election success, the Mayor
planning muscle is P&O’s proposed £1 billion
Guy Gregory, Head of London
released ‘Planning for a Better London’
skyscraper scheme in Waterloo, dubbed by
E: ggregory@lsh.co.uk
which set out a ‘direction of travel’ when
critics, the ‘Three Ugly Sisters’. The Mayor
T: +44 (0)20 7198 2198
planning for London’s continued growth. An
refused planning permission. Had it been
encouraging sign of things to come.
approved, the scheme would have brought investment, employment, renewed interest
However, there are now murmurs of political
and much needed regeneration to this area
factionalism and concern that the Mayor is
of London.
using the London Development Agency (LDA) 14 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Boris Johnson
Planning for a better London? Lambert Smith Hampton comments: At the start of Boris Johnson’s four year term
Another priority for the Mayor is the retail
Boris Johnson has said that he will not do
of office, a key question for the property
sector – seen as one of London’s strengths.
the boroughs’ work for them and will focus
sector is how will the new Mayor’s views on
Further planning guidance on town centres
on strategic issues rather than matters of
planning differ from those of his predecessor,
and retailing is planned which will make the
planning detail. At LSH, we will closely
Ken Livingstone.
most of London’s town centres. Planning
monitor how this change progresses.
agreements will also be used to provide The new Mayor’s recently published ‘Planning
affordable small shops in large schemes.
The Government gave Ken Livingstone additional planning powers in 2007. Boris
for a Better London’ sets out the key areas he wishes to address in reviewing the London
Housing is another area where Boris Johnson
Johnson said he will only use these powers
Plan – the spatial strategy for the capital. It
has signalled a change in the direction
sparingly. It’s vital that the Mayor gets the
signals a number of policy shifts in relation to
of travel. Ken Livingstone’s 50 percent
balance right between the strategic and
housing and planning.
affordability policy looks set to be scrapped
the local. Furthermore, while co-operation
with individual boroughs setting their own
and partnership with the boroughs sounds
There has already been much comment about
affordable housing targets. This forms part of
encouraging, the Mayor also needs to ensure
the Mayor’s views on tall buildings. He said
a wider plan to deliver 50,000 new affordable
that the boroughs deliver his strategic vision.
he will support proposals for tall buildings
homes in the capital by 2011. For further information, please contact:
particularly where clusters already exist, but new standalone tall buildings will face a
Dispite recent criticism from Hazel Blears,
Kevin Gleeson, Planning and Development
tough test as will those having an impact on
Labour MP, the change in the approach to
E: kgleeson@lsh.co.uk
London’s heritage.
affordable housing reflects a new relationship
T: +44 (0)20 7198 2292
between the Mayor and the boroughs.
Lambert Smith Hampton / 15
Agenda / Issue Two / Q3 2008 / Empty Property Rates
Empty Property Rates – could the end be nigh? As the financial year unfolds and the economic crisis deepens, LSH continues to monitor the effects of business rates as an additional cost to businesses across all commercial and industrial sectors. By Elizabeth Bartlett
A bleak picture
Fighting back
The effects are alarming and we are reading
The property industry is in real danger of
increasing accounts of businesses facing
suffering losses which will be extremely difficult
bankruptcy, owners choosing to demolish
to recover resulting from the double whammy
existing buildings rather than face empty
of the credit crunch and empty rates.
rates and developers scrapping plans out of fear of being left holding hard to let space.
Clients are being advised by LSH to consider all legal routes to mitigation either
LSH’s Empty Rroperty Rates (EPR)
through the statutory appeals system,
research published in April foretold the
the Completion Notice procedure or by
dire consequences of the Government’s
managing occupations carefully and seeking
bombshell decision to tax ownership as well
to negotiate appropriately with the councils
as occupation at 100 percent. Rates have
or superior landlords.
therefore effectively become an asset tax for investors in England and Wales.
LSH Rating has successfully sought to manage empty rate liabilities through short
‘’This was purely and simply a tax raising
term occupations. These have triggered
measure under the guise of regeneration,”
the six month exemption from rates for a
said Richard Wackett, LSH Rating. ‘’The link
large national industrial portfolio, producing
between rates on empty commercial buildings
significant savings which can be achieved on
and regeneration is tenuous to say the least
an ongoing basis.
and indeed the tax has had the opposite effect of slowing development and even
Recently, LSH successfully challenged local
encouraging demolition.”
authority Completion Notices issued by Hull City Council for a joint venture client, British Land, in respect of the St Stephen’s Shopping Centre at Hull and on behalf of Wilton Developments at Castleford. Other smaller development projects have seen LSH negotiate the removal of buildings from liability through a proactive approach to deletion from assessment with the Valuation Office Agency.
16 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Empty Property Rates
Without some change there will emerge a shortage of supply of good quality accommodation which will inevitably lead to a rise in occupational costs in the medium term. Richard Wackett Rating Lambert Smith Hampton
Mounting pressure The body of anti-EPR protestors is gathering volume, witnessed recently when 35 highprofile Labour MPs mounted a backbench revolt over the tax against Gordon Brown. The Conservative party has jumped on the bandwagon with its vow to review the hated tax ‘as a priority’ if it wins the next election.
The UK Government faces an embarrassing £50 million empty rates bill, which undoubtedly the tax payer will end up footing.
In a welcome Government concession to widespread protest, the Department of Communities and Local Government plans to issue a survey to local councils to gauge the effects of the removal of empty rates relief. However, recent conflicting announcements from leading Labour MPs Hazel Blears and John Healey leave shrouded the future of the legislation amid more uncertaintly. The commercial property industry continues to
Richard said: “We have written to those politicians who are sympathetic to the
‘’With a bit of backing and the return of
argument that the current rules will slow
confidence, transactions will begin to flow
regeneration and freeze town centre
and prices will rise. Uncertainty and rising
For further information on EPR and to see
initiatives affecting construction jobs and
overheads are putting people off at the
how LSH can help you, please contact:
property investment.”
moment and deals are falling through.
Richard Wackett, Rating
In some cases there have been reports of
E: rwackett@lsh.co.uk
The emergence of a two tier market,
wholesale demolition and non-completion of
T: +44 (0)113 2976 246
particularly in the industrial sector, will affect
developments,’’ said Richard. “Those who seek
the analysis of rents at the revaluation due
to demolish should be wary of the potential
on 1 April 2010 and ironically a fall in rental
for anti-avoidance rules being introduced and
value now will benefit ratepayers in two years
backdated in a worse case scenario.
suffer while playing the waiting game.
time. As developers accept low initial rents a shortage of supply will increase competition
‘’Without some change there will emerge a
and is likely to increase rents at first review.
short supply of good quality accommodation which will inevitably lead to a rise in
The Government should use its own offices
occupational costs in the medium term.”
to relax the rules relating to empty rates, particularly given the current lack of credit
The anecdotal evidence appears to suggest
available and the lack of confidence among
that the Government is benefiting from over
investors and developers.
£1 billion of additional tax revenue. In effect, the Chancellor has awarded himself a large revenue increase while industry has been asked to operate restraint.
Lambert Smith Hampton / 17
Agenda / Issue Two / Q3 2008 / City Spotlight
Spotlight on Dublin
T
By Holly Rigby
he Celtic Tiger made Dublin as expensive
Vendors are reluctant to accept the first
On the Professional Consultancy front, the
as New York and almost as cosmopolitan
decline in property values in almost 12 years,
team are regularly appointed by the main
– and it all happened in a dizzying
and potential buyers are experiencing extreme
financial institutions and were the principal
decade. These days Dublin ranks among the
difficulty in securing debt finance. The Irish
valuers to Anglo Irish Bank and Bank of Ireland
top tourist destinations in Europe, and this
market over the past six months has been
on the Pavilions Shopping Centre in Swords.
vibrant city hums with a palpable sense that it
characterised by a lack of transactional activity. Although Dublin’s confident sheen may be
is creating a new cultural heritage. However, Dublin isn’t going down without a
slightly faded at the moment, with over
Ireland has always been Europe’s loveable
fight. There is a weight of money building up
half the residents under 35, what remains
rogue – there is the accent everyone has tried
for investment in property in Ireland, just not
special here is the spirit of the people who
to impersonate, the pint of Guinness nobody
at current pricing levels. With Brian Cowen
ensure that despite whirlwind changes,
can finish, the red beards we have worn on St
taking over the position of Taoiseach from
Dublin will always remain one of Europe’s
Patrick’s Day and even the infallible belief in
Bertie Ahern in May 2008, the challenge to
most prosperous, down-to-earth and
leprechauns. All have meant that Ireland has
restore market confidence and activity will be
accessible cities.
always stood out from the rest of Great Britain.
on his shoulders.
This is still the case when it comes down to
LSH’s Dublin office has not let its small
business. Unlike the rest of Europe, almost
size affect its punching power even in this
100 percent of property investment activity in
difficult climate. The 16-strong team have
Ireland has been domestic-led, due largely to
been involved in a number of high profile
the high transaction costs which currently stand
instructions, including the sale of the Veterinary
at 11.42 percent. However, even Ireland cannot
College in Ballsbridge on behalf of the state for
escape the widespread impact of the downturn
a record figure of €172 million.
in the world economy on its domestic markets.
18 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Grim Challenge
Peter Rowan Head of Dublin E: prowan@lsh.co.uk T: +353 (0)1 6110741 Favourite local pubs Doheny & Nesbitt Best pint of Guinness O’Donoghues Home to the Dubliners Ron Black’s Yuppy hangout Favourite Dublin hotels The Shelbourne Hotel Magnificently refurbished The Four Seasons
Mud, sweat, pain LSH gets grim This December, a group of brave souls from LSH will be running eight miles through mud, water, obstacles and the pain barrier for charity. The question is, have they got what it takes to endure The Grim Challenge?
Home to the infamous Ice Bar The Merrion Hotel Exquisite service, opposite Dail Eireann
Teams of three from across LSH are battling
The first race in April 2002 was a huge
it out in this gruelling test of endurance
success, and the Challenge has grown year on
to raise money for LSH’s corporate charity
year with over 1,500 people now competing.
partner, CLIC Sargent, which provides care
With such strong competition, LSH’s 21
professionals to look after children and young
competitors have begun training in earnest!
people with cancer and their families. Alternatively donate by visiting: The race involves a cross country run across
www.justgiving.com/lshgrimchallenge
demanding terrain, formally used as an army
All donations gratefully received!
training camp. Ex-paratrooper and race organiser, John Gladwin, said he started the Challenge to offer an off-road race which is accessible to the masses.
Lambert Smith Hampton / 19
Agenda / Issue Two / Q3 2008 / Public Sector Advisory
Public sector disposal strategy The credit crunch bites the public sector’s capital receipt projections. By Anna Silkstone
M
any public sector organisations,
Also impacting is the removal of empty rates
In poor market conditions, private treaty
and in particular local authorities,
relief, which was formerly seen as a safety
negotiations via targeted marketing will
are reliant on generating an
net by developers and landlords alike.
usually offer the best means of securing a disposal. Such a route can however
income through selling assets from within their land and property portfolios to
Outcome
present difficulties where there is a need to
commercial and residential developers.
The downturn is likely to have a significant
demonstrate best value.
impact on many local authorities’ land sales Yet as the credit crunch continues, public
and development proposals. As a result,
At present a more suitable method of
sector organisations are questioning whether
reappraisals will need to be considered for the
disposal is likely to be through informal and
they should continue to dispose of sites,
values originally projected for capital receipts.
formal tenders. Both fully test the market and allow local authorities to demonstrate a
accepting lower prices or should they play the waiting game?
Residential land values have, in most areas,
full appreciation of market conditions.
fallen by at least 30 percent and in some Market conditions
locations, such as London, they have fallen
A formal tender provides certainty and
The general consensus is that economic
further. The only purchasers that now
deliverability; however some purchasers will
recovery is not expected until 2010-11.
appear to be buying land are those tied
be put off by this process as it involves the
Inflation, rising oil prices, lack of available
to a contract, specialist developers and
cost of tendering and arranging finance.
funding, higher cost of food, utilities and
opportunistic purchasers. Compounding
Ultimately this could impact on the sale prices
redundancy are leading to a significant
this is that certain sites pose too much risk to
achieved. Informal tendering is a more flexible
reduction in spending and investment.
purchasers. For example, large sites present a
process as it does not bind a purchaser,
problem to developers as they are uncertain of
however there is always the risk that
their liquidity.
purchasers will try to renegotiate a reduced
The outlook for the commercial and residential
sale price prior to completion.
property markets has taken a turn for the worse as occupier demand drops and the lack
Moving forward
of available funding is bringing construction
With all of this in mind, the previous “one
In the current market there are few purchasers
to a halt. It is anticipated that residential sales
size fits all” approach will no longer satisfy
who will buy a site unconditionally. It
will fall by as much as 30 percent in 2008 and,
the strategy needed to dispose of most
is therefore imperative that the vendor
in the case of new flats, a drop of 50 percent
sites. Many public sector organisations
completes detailed feasibility work.
is expected due to the withdrawal of buy-
have historically sold sites via auction in
to-let investors. This is expected to cause an
order to prove best value and meet disposal
overall loss of at least one year’s supply of new
timescales. In a buyers market this method is
housing stock between now and 2010.
likely to become inappropriate as purchasers
The risk of over-supply within the commercial
at auctions will tend to be those looking to
property market is also leading to a reduction
pick up cut-price sites.
in the number of schemes being developed.
Organisations must not be misguided and decide to simply delay all land sales until the market stabilises - this will not provide any guarantees.
20 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Public Sector Advisory
As the credit crunch is prolonged, public sector organisations are questioning whether they continue to try to dispose of sites, or should they play the waiting game?
Some sites will only require a minimal amount of work, but more detailed feasibility work could provide the security purchasers are looking for. If these steps are taken a vendor could increase the eventual sale price of a site and save tens of thousands of pounds in abortive fees. It should be noted that where deficient or inappropriate outline consent is obtained, the benefit of the feasibility work will be lost as developers will then be reluctant to proceed without detailed planning consent. Timing is everything The time taken to complete this feasibility work could also result in the site being brought to market to coincide with a shortage of new housing stock. Those sites with planning in place will be the ones able to command the highest sale price from developers keen to fulfil occupier demand. Action required To combat the slowing market, public sector organisations need to evaluate each site on a case-by-case basis. Those that boast a good location have appropriate planning in place and are not heavily focused on high density residential development will fare the best. Organisations should not be misguided and simply delay all land sales until the market stabilises – there are no guarantees as to when values will improve and even then future growth is likely to be modest. The next two years may not be the right time to initiate new schemes, but they provide the time to work up plans to coincide with an improving market in 2010/11. For further information, please contact: Chris Parkes, Public Sector Advisory E: cparkes@lsh.co.uk T: +44 (0)1727 896 238
Lambert Smith Hampton / 21
Agenda / Issue Two / Q3 2008 / Way of the Welsh
“Croeso i Gymru!“ Welcome to Wales; a country known for its beautiful countryside, love of rugby, fierce patriotism and an abundance of famous names…Tom Jones, Catherine Zeta-Jones, Ryan Giggs, Joe Calzaghe and Roald Dahl to name but a few. By Elizabeth Bartlett and Shirley Feeney
W
ith a population just short of three
You can’t discuss Wales without mentioning
waterfront and Maritime Museum. It is the
million, you could be forgiven for
its love affair with sport, especially rugby.
Gower Peninsular, however, with its natural
assuming that it would not have
Wales is the current holder of the Six Nations
coastal beauty, which reflects the relaxed
much to offer….this could not be further from
Grand Slam for the second time in five years -
and friendly nature of the Welsh people. The
the truth.
a title which the Welsh squad will fight tooth
Gower boasts many of the UK’s most stunning
and nail to keep hold of in 2009.
beaches, including Rhossili Bay and Langland – a paradise for surfing, sailing and other
Lee Mogridge, LSH’s Head of Wales said: “Our capital city, Cardiff, has enjoyed huge
Global sporting organisations have also
regeneration over the last ten years and high-
caught on to Wales’ potential as a host
budget developments like Cardiff Bay and the
nation, choosing Cardiff to host many
Millennium Stadium have attracted thousands
prestigious sporting events including the
of visitors and entrepreneurs alike who are
Rugby World Cup, FA Cup, World Rally
keen to experience the Welsh way of life.
Championship and World Boxing Organisation Championships. 2010 will see the Ryder Cup
“The next 10 years will see Wales’
come to Newport, and Cardiff will welcome
regeneration boom continue with
training Olympians from across the globe in
developments like the International Sports
2012 in the new International Sports Village.
Village and the £675m expansion of St David’s Shopping Centre, making it one of the largest
Moving West along the M4 corridor and you
shopping centres in the UK and re-enforcing
come to Swansea, Wales’ second largest city,
Cardiff’s place as a top ten retail destination.”
which has also enjoyed great regeneration recently with developments such as the SA1
22 / Lambert Smith Hampton
water sports fanatics!
Wales offers a perfect work / life balance, with all of the opportunities afforded by a steady economy, coupled with great quality of life. Lee Mogridge Head of Wales Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Way of the Welsh
Lee commented “Wales offers a perfect work/
The Report also reveals that the Welsh market
Recognising Wales’ potential, in May 2000,
life balance, with all of the opportunities
is remaining surprisingly resilient to the
LSH expanded its national office network
afforded by a steady growing economy,
current economic climate. Cardiff ended 2007
into Cardiff, a highly successful move which
coupled with great quality of life. With
with office space take-up exceeding long
prompted the opening of a further office in
so much development and regeneration
term averages, and favourable demand and
Swansea in 2006. LSH now employs over 40
happening in Wales, we are seeing more
rising rents are forecast to encourage further
staff across the two offices and is the only
and more businesses, both from the UK and
development and investment in both Newport
national commercial property consultancy
overseas, deciding to relocate here.”
and Swansea.
with offices in both Cardiff and Swansea.
This view is supported in LSH’s National
Eager to continue this trend, the Welsh
Demonstrating its unrivalled local expertise,
Office Report, which places both Swansea
Assembly has introduced the Small Business
LSH has recently been appointed as adviser
and Newport in the top five locations out of
Rates Relief Scheme, Single Investment Fund
on the regeneration and development of
an analysis of 28 regional centres across the
and other commercial funding initiatives to
Newport City Centre, a great opportunity to
UK and Ireland. This Location Performance
further encourage commerce and tourism
give something back to the local community.
Index is based on favourable rental costs,
into the country. Their success is reflected in
availability of high quality space, skilled
Foreign Direct Investor magazine’s FDI 2008
Lee said: “The success of our Cardiff and
workforce and labour potential, all of which
Cities of the Future ranking Cardiff seventh in
Swansea offices is a testament to the
are abundant in Wales.
the top 50 European cities overall, and seventh
endeavours of our people, and I have no doubt
in terms of attracting foreign investment.
that our success will continue despite the challenging economic conditions ahead. The true spirit of LSH is alive and kicking in Wales!” For further information please contact: Lee Mogridge, Head of Wales E: lmogridge@lsh.co.uk T: +44 (0)29 2043 4691
Lambert Smith Hampton / 23
Agenda / Issue Two / Q3 2008 / Doug Sutherland
Last train to Waterloo For numbers man Doug Sutherland you could say that fate led him to his role as Chairman and Chief Executive of BRB (Residuary) Ltd (BRBR).
Following the privatisation of British Rail in
By Sandy Townsend
railway staff.
Property and the railways are in Doug’s blood, his great grandfather was a signalman in northern Scotland, his grandfather a station master and father a surveyor – you cannot get a better heritage than that for the man in charge of Britain’s non-operational rail property portfolio. A Financial Director by background, Doug worked at Black & Decker, Grand
Corporate social responsibility; leaving an environmental and social legacy through regeneration is definitely a consideration for us when selling our sites. Doug Sutherland Chief Executive BRB (Residuary) Ltd
Metropolitan, Dairy Crest, and North of Scotland Water before a call came from Richard Bowker to take up the challenge of Finance Director of the Strategic Rail Authority. A wide ranging role, this included chairing South Eastern Trains when it was brought temporarily under government control and also led him to BRBR. Doug’s team of 40, and related agents, now preside over the management and disposal of some 300 sites and 4,000 structures – all former British Rail properties - covering brownfield and major development sites, offices, railway arches, closed branch lines and bridges. Its most famous site is perhaps the Waterloo International Rail Station, no longer used for international services following Eurostar’s move to St Pancras but shortly to be brought back into use for domestic services. The extent and variation of properties within the portfolio is truly mind boggling. “Such is the extent of the portfolio that you are probably never more then 10 miles from one of our properties or structures anywhere in the more populated areas of the country,” Doug said.
24 / Lambert Smith Hampton
1994, BRBR was created in 2001 and charged with the unusual task of administering the railways non-operational portfolio to fund its £25 million per year liability for property maintenance and medical claims from former
BRBR aims to extract maximum value from the timely disposal of its property – this year selling £50-£60 million - to meet its legal obligations and to deliver profit to its government shareholder. Core property needs include strategic portfolio management, asset management, development and disposals. Much of the property is sold for regeneration and development in inner cities. Among a wide range of uses, sites have already been sold to form part of the 2012 Olympic site in East London, to build affordable housing and a football stadium at Brentford. Doug commented: “Corporate social responsibility; leaving an environmental and social legacy through regeneration is definitely a consideration for us when selling our sites. “We will always take a commercial view but we are also keen to see our sites going back into use. The majority of land sales are brownfield sites so regeneration and future usage is very important to us. Our inner city sites in particular have great potential.” Interestingly, despite the economic woes of late, Doug said that BRBR’s disposal programme remains on track although sales are slower and values are lower. “Property is going through tough times. Like the economy it is cyclical and it is experiencing a downturn but it will correct itself,” he said. “There are still deals to be done if people are sensible. At BRBR we are still on target to complete £50 to £60 million of sales this year.”
Agenda / Issue Two / Q3 2008 / Doug Sutherland
BRBR is in a comfortable and enviable position. With minimal debt exposure its development and refurbishment projects are funded via cash flow. A present case in point is the £25 million refurbishment of British Rail’s former northern office headquarters, Rail House, at Manchester Piccadilly Station. The ultimate example of reuse and recycling, this eco friendly development is expected to receive a BREEAM excellent standard; a status that is notoriously difficult to achieve with refurbishments. Once complete the project will provide accommodation for Government Office North West, Highways Agency together with the Training and Development Agency who are relocating from London. BRBR’s programme of bringing former railway sites back into use is helping to keep the vibrancy of our inner cities alive. For more information on the forthcoming BRBR sales and October auctions including 40 sites across the country please visit www.brbrlandsales.co.uk or contact Helen Dodd (LSH) on +44 (020 7198 2121. For further information, please contact: Guy Gregory, Head of London E: ggregory@lsh.co.uk T: +44 (0)20 7198 2198
Lambert Smith Hampton / 25
Agenda / Issue Two / Q3 2008 / Compulsory Purchase
Compulsory purchase Regenerating our towns and cities
Compulsory Purchase has long held a notorious reputation as a power used to enable acquisition of private land for public purposes, such as a new prison or motorway. However, James Ogborn of LSH Land Assembly has found its real powers far more wide-ranging.
Planning and Compulsory Purchase Act 2004 The 2004 Act was introduced to simplify the process and make it easier to promote a Compulsory Purchase Order (CPO). The new legislation now only requires a local authority to demonstrate that the land is both suitable and necessary for its purposes, and that they think the land is likely to contribute to the economic, social and environmental well being of the area. One of the principal changes relates to the scope of those affected by CPO. Apart from existing land owners and occupiers within the development area, the list has now been widened to include parties located on the fringe of a development. Encouraging urban regeneration Current planning restrictions on the development of greenbelt land have forced developers to consider urban areas and brownfield land. Nevertheless this often requires the use of compulsory purchase powers as many of these schemes comprise large sites in multi-ownership and occupation.
Early consultation can turn even the most determined objector into an active supporter of the scheme. James Ogborn Land Assembly Lambert Smith Hampton
26 / Lambert Smith Hampton
Agenda / Issue Two / Q3 2008 / Compulsory Purchase
In these cases, every effort is made to acquire
informed of the scheme. This can turn even
mastic asphalt to produce quieter running
the land in advance and CPO is always used
the most determined objector into active
road surfaces, and the installation of high
as a method of last resort where negotiations
supporters of the scheme and, in doing so,
pressure sodium lighting designed to reduce
have failed. LSH was closely involved in The
influences other stakeholders positively at the
light spillage.
Marsh Way Redevelopment in Wakefield city
same time. A brown future
centre. This retail-led scheme includes a food superstore, market hall and approximately 50 residential units, creating in the region of 500,000 sq ft of new floorspace. LSH was part of the development team, advising on drafting the CPO and acquiring various third party interests on behalf of the developer. The CPO was successfully confirmed without modification in 2007, enabling the remaining property interests to be acquired. Early consultation is the key to success Detailed project analysis with representatives from the local authority, the developer, the architect, the solicitors, the surveyors and the referencing team can often negate the need for a Public Inquiry. This is especially pertinent in town centre schemes, particularly where local residents are affected. On several recent projects, LSH has been involved in public meetings with local owners and occupiers to ensure that they are
Even when no land is taken for a development, CPO can still have a major impact on businesses, occupiers and home owners. Compensation claims can be a minefield for all parties involved. Land Compensation Act, (LCA) 1973 Part 1 of the LCA provides that compensation is payable where physical factors, such as noise, vibration, smell, or any liquid or solid discharge impinging upon a claimant’s property caused by the use of new public works, will result in a diminution in value of the claimant’s property, where no land has been taken for the development. Acquiring authorities should consider carrying
The construction of the Olympic Park in Stratford, East London is one prominent example of how a CPO can transform tracts of rundown brownfield land and regenerate urban areas. “The onus is now on developers and local authorities to deliver more regeneration projects. While there will continue to be many hurdles to overcome in bringing forward brownfield land for redevelopment, the Act does demonstrate how the Government is beginning to listen to the concerns of the private sector over the complexity of this process. For further information please contact: James Ogborn, Land Assembly E: jogborn@lsh.co.uk T: +44 (0)161 242 8007
out mitigation works to reduce the likelihood of claims being received, such as noise fences to reduce noise levels, the laying of stone
Lambert Smith Hampton / 27
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