Harnessing Local Authority Real Estate Assets

Utilising SME Property Consultants for Effective Asset Strategies

SMEs and the Public Sector

Over the course of the last decade, the government has made great strides increasing the proportion of spending on goods and services supplied by small and medium – sized enterprises (SMEs). In 2010 the government set a target of 25% of spending to go to SMEs by 2015. This target was impressively achieved by 2014 and a revised target was set in 2015 to achieve 33% of spending by 2020.

Copping Joyce Surveyors are delighted to have recently been awarded a position on the Crown Commercial Service Framework. As an SME firm of Chartered Surveyors, we are clear evidence of the government’s drive to ensure that smaller companies with specialist skills and knowledge are included in the procurement process. A key difference in this Framework compared to the previous one, was to include both national and regional mandates. This gave regional specialists like us the opportunity to tender for the Framework for the first time.

In our experience, tendering for public sector work can involve lengthy and challenging processes. Nevertheless, the tendering process ensures appropriately qualified firms are instructed by the public sector. While value for money will always be a key aim for any private sector procurement, matters such as professional accountability, social value policies and risk assessment procedures are also very important.

Going forward, it is still likely that SMEs will continue to be on an unequal footing in sourcing public sector work compared to large enterprises. While bodies such as the CCS have endeavoured to open the door to SMEs, suppliers also have the responsibility to market themselves and the Frameworks they are on, to ensure public sector customers are aware of their services. As any organisation knows, business development and marketing will require time, resource and specialist skills to be effective. In this respect, SMEs are often going to be at a disadvantage compared to large organisations who will invariably have greater resources at their disposal. However, in our experience, effective marketing will not only assist in securing new business, but can also inform existing and prospective clients about services they may urgently require.

Providing real estate and surveying services to the public sector has been a significant area of growth for our business. As an independently owned company we frequently find we are more competitive, flexible and efficient than our larger competitors, utilising our local market knowledge in our key operational areas to deliver excellent value for money.

Filling the Budget Gap – Utilising Local Authority Real Estate

Asset Management, Investment and Development

Following the recession Local Authorities have seen shrinking budgets for service delivery. There are now greater financial pressures to find additional ways of funding public services and reducing costs. Seeking to maximise and secure long-term income from land and real estate assets, while ensuring any investment into such assets stimulates economic activity, provides housing and community services, is now of paramount importance.

Best value or value for money is often understood to be a primary concern of the public sector. However, political, economic, regulatory, reputational, financial and environmental concerns are often crucial factors in the decision-making processes of any public-sector organisation. In addition, where the private sector may only be concerned with profit or shareholders, Local Authorities have to take into account the wellbeing of their citizens and stakeholders, delivering social value where possible.

The following provides a brief overview of the considerations a Local Authority may wish to undertake when seeking to improve the utilisation of their property portfolio.

Formulating Effective Asset Strategies

In our view, Local Authorities should take professional advice early on in formulating a portfolio or asset strategy. Every asset should be assessed, with assets identified for disposal, ‘soft’ asset management (e.g. rent reviews, leasing), conversion to either higher value, income producing or priority uses, development or regeneration.

Accurate valuation is key to deciding the future of any real estate asset. At Copping Joyce, we have a well-regarded team of RICS Registered Valuers. Often working with our development specialists, they provide detailed appraisals of initial feasibility studies to help guide the decision-making process.

Efficiency Savings – Reviewing Working Practices

Some Local Authorities have gone to great lengths to ensure their staff are utilising their office portfolio efficiently. However, it is not uncommon to find local authority departments spread across numerous buildings, often with underutilised or vacant floors.

As office costs, particularly in London, have increased over the last 5 years, many corporates in the private sector have employed hot desking, flexible working hours, reduced storage needs, smaller desks and endeavoured, where possible, to consolidate operations into one building, as opposed to several. Some Councils have embraced a similar strategy. We have secured hundreds of thousands of pounds of yearly rental income for one local authority client through advising them on the leasing of underutilised office accommodation.

Development and Regeneration

Initially a range of feasibility studies should be undertaken, with advice founded on comprehensive market research. A justification of proposed uses, densities and tenure mixes should be formulated. In addition, housing or mixed-use regeneration should respond to local circumstances, reflect the needs and interactions of local communities, labour markets and local businesses.

We believe plans to regenerate an area should be built on extensive work with existing residents and businesses. As the consultancy stages of a significant regeneration scheme can take many months if not years, the requirements of a scheme may change, and any consultancy programme will need to be flexible enough to adapt to these changes.

Land Assembly

Purchasing adjacent land and buildings can be crucial to the success of a regeneration scheme. When the public sector therefore engages with or partners with the private sector, there is often difficulty in aligning objectives and competing priorities. Equally, the same problems can occur when Local Authorities attempt to engage with national government bodies that may have divergent aims and strategies. A competent advisor should gain a good understanding of all parties aims and aspirations, acting as an effective negotiator and mediator on behalf of their client.

Procuring Investment Partners

In order to complete a regeneration project, Local Authorities will usually need to procure finance, developer partners, including Housing Associations, or joint ventures with other public - sector partners. A competent advisor will assist with procurement processes in the selection of development or investment partners, together with associated property advisors such as architects, where required.

Potentially creating a partnership in which the Local Authority, a private developer and a housing association are included, will ensure a broad range of skills are utilised in the regeneration process. The private developer will usually be able to secure funding and provide and bring traditional construction and cost management abilities. Housing Associations will be used to working with and understanding the needs of different stakeholders. Using the financial and technical skills of approved private investment partners will assist in delivering a regeneration scheme on budget and on time.

It is important that a single team culture is created between the Local Authority and any private or public-sector partners, who all share an understanding that regular communication with stakeholders will be key to the success of a proposed scheme. In our view, the employed real estate advisor should be instrumental in fostering common aims and understanding between parties.

Development Management

Implementing a system of benchmarking for construction or service delivery should underpin any development programme. An effective strategy for managing communications between development partners, stakeholders and technical and professional service providers is also fundamental to ensuring success. Constructive working relationships will be encouraged between parties. Where requested we will also assist the Council in the procurement of construction services, ensuring best value is achieved from contractors with the capabilities to deliver the scheme. Regular milestones will be set for construction delivery and regular meetings held to ensure projects are on schedule. Incentives and rewards can also be built into to a development programme to encourage contractors to deliver projects on time.

Mitigating Risk and Accountability

When undertaking any asset or portfolio strategy, Local Authorities must be aware of the financial, political, reputational and environmental risks and challenges they face at every stage of the decision-making process. An effective risk identification and management strategy must be put in place by the Local Authority’s advisors, with consultancy staff trained and instructed in the identification of risk and where possible. This training can be used to upskill the Local Authority where appropriate.

Risk management roles and accountabilities should be allocated, with identified risks documented in a risk registered and ownership of that risk attributed to a ‘risk owner’. Identified risks, together with the management strategy and action plan will be communicated to the Council via agreed pathways. Measures to reduce or control risk will be identified at the management stage. Action plans will be formulated to allocate resources to deal with risk, with deadlines and KPIs to be agreed for their resolution.

About Copping Joyce

We are an independent multi-practice firm of Chartered Surveyors, carrying out work across Greater London, the South East and East Anglia.

As an established SME with a company history dating to 1898, we are pleased to be a firm large enough to offer a comprehensive range of professional services while retailing the agility to tailor our services to the individual needs of our clients.

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