Commercial Property Blog
All posts from: November 2010
Being a bridge between the public and private sector is rather like living in the twilight zone. I am not in one camp or another, but focused on the sweet spot that will help move things forward in a productive way.
My apparent neutrality can lead to assumptions amongst some that I share their distrust of the property sector, and the ‘horror’ of its rampant commercial interests laying waste to our built environment.
The ‘privatisation of public realm’ is one of the areas for disdain. I heard it again recently, at a series of consultation meetings I am chairing for the National Trust.
The Trust is looking at its relevance to cities, and London in particular. In doing so it is returning to its roots. For it started as a campaign to provide green space for the urban working poor, when Octavia Hill was spurred into action by her failure to save Swiss Cottage water meadows from development.
The capital now has wonderful public spaces, which have expanded over the past decade with a stealthy sharpening up of our streetscape.
Much of it has been championed, delivered or paid for by the property sector. Such enlightened self interest brings a nicer place for everyone as well as improved asset values. This is why my early work to establish BIDs was largely funded by the property sector.
Yet there is a backlash; a fear that too much of our city has been bagsy-ed by the developer. Snatched from under the noses of the poor unsuspecting public, and placed in the vice-like control of the likes of Broadgate Estates, we are denied the right to use the space at will.
Bring it on, I say. Where once stood an inaccessible wasteland. More London (the arch villain, apparently) now offers public art, open air movies, and views to die for.
We’ve given ourselves a serious facelift, opening up bits of the city that weren’t in existence a short time ago.
Yet, this nip and tuck and botox treatment for our streets requires some different plastic surgeons.
I’m not alone at being a bit bored with the uniformity. So many places aspire to look like Kensington High Street, implemented seven years ago.
We love our village London, so let’s work harder – and more creatively – to respond to the distinctiveness that is so important. It’s time to innovate and differentiate.
It was May 2003 and Mrs Barrie took the call in our kitchen. `Is that the Barrie household? I have Mister Donald Trump for you’.
Yeah, right. Only I did have an inkling that before it might really be `The Donald’ who was calling me at home because I had met him in New York just a couple of weeks before.
I was thrown back into those pre-boom days last night by a BBC Two profile of Trump, presented by newsreader Emily Maitlis.
Whereas Selina Scott’s famous hatchet job on the developer in the 1990s focused only on him, Maitlis met the whole family including his sons Donald junior and Eric and daughter Ivanka.
Sitting where I sat, opposite Trump in his corner office overlooking Central Park, I was transported back to my own meeting with him.
What struck me was his attention to detail. Famous for not wanting to shake people’s hands, Trump’s delicate, manicured fingers toyed with a paper knife as he talked.
He had sheaves of architectural drawings on his desk, and in the corner samples of marble and other materials. This was a man who clearly lived and breathed buildings.
On the downside, he also employed the `hyperbole’ Maitlis identified as a Trump fault, notably when he claimed that 93% of local people support his giant Aberdeen golf course scheme.
Gerald Ronson is Britain’s closest equivalent to Trump – the type of developer where the name itself can add considerably to the value of the building.
The next British pretenders to his throne are the Candys. They will imminently reach practical completion at their One Hyde Park scheme in London and are still achieving sky-high values.
Trump, Ronson, the Candys.
All three have ridden the rollercoaster of development, but all three maintain their ballsy approach.
Love `em or hate `em’ property can’t live without them.
BCSC and MAPIC were yet again a welcome reality check in terms of the retail development pipeline and occupier commitment.
Back in the UK and reflecting on the whirlwind of the past 3 weeks I’m pleased to say that both events have bolstered my confidence, particularly the strong levels of European wide occupier demand - a pleasant contradiction to negative press coverage of late.
The retail market has always been dynamic and has great capacity to adapt. Interestingly, the occupier stands at BCSC this year were dominated by the foodstores including the Co-Op, plus value retailers Wilkinson, Poundland and Store Twenty One which just goes to illustrate the importance of the value driven occupier sector in the UK at present.
As you’d expect it got even hotter in the South of France with MAPIC opening to the breaking news that Forever 21 had paid a £14m premium for the HMV lease on Oxford Street. Teams from Superdry, Motivi, Desigual, and Abercrombie & Fitch and many others were out in force in full throttle expansion mode.
No one wanted to miss an opportunity with the likes of Mango taking a stand for the first time in 10 years - yet a further sign of the increasing levels of competition.
We should not underestimate the importance of international brands on the UK retail scene and indeed we welcome them with open arms. However, are we as keen to embrace their model of index linked leases, in favour of our traditional (some might say unattractive) UK open market rent review model?
The reality is that we have moved from a supply driven industry to one where asset management and therefore occupier demand are key. In the UK, the occupiers’ ability to respond to changing consumer confidence in the light of impending public sector cuts, the impending rise in VAT and the knock on impact on spending patterns, particularly multichannel, will be major differentiators of success.
It will be very interesting to see how much influence these top international brands will have on the market and what this could mean for rental growth. Only time will tell? What we can be sure of, based on this year’s experience, is there won’t be much let up in activity any time soon, and that BCSC and MAPIC will be even busier next year !
Justin Taylor is CEO UK Retail & Leisure Teams at Cushman and Wakefield
Perception is a fascinating thing. You can see the effects of how one person can alter reality to their way of thinking with Gillian McKeith on ITV’s I’m a Celebrity Get Me out of Here! If you have not caught a bit, it is worth a two-second viewing.
Anyway, if you are being filmed there is not much you can argue, though, some still do. There have been numerous other examples.
One of the perennials a property manager faces is the wild exaggeration and extrapolation. This is particularly true with timescales and measurements. Days and weeks get interpreted as months; tens and hundreds become thousands.
Two recent resident meetings I went to last week highlighted this quite spectacularly. The first one was a resident association where they had a bad history and need help but are intent on stretching timescales and seeing suspicion in everything.
The second was a West End building where the freeholder and leaseholders work closely, however, the major list of ‘issues’ is nothing of the sort. Of course if it matters to someone then it is important.
Any management is a game in trying to match expectations but when someone says they have not heard from their manager for six months, it becomes fact. Even though, by their own admission, I had spoken with them a week before the meeting and the day before with the property manager!
Service needs differ from one person to the next but what is really unpleasant and galling is rudeness, lying and bullying.
What I am about to do can go one of two ways. If I am successful in what I am about to attempt then my rotund friend Jay, who currently lives in China, will be forced to run naked around Tiananmen Square. If I fail then I will have to call him “Sir James” for the rest of his life.
So what I am about to attempt? Well, for success I have to not only run the Virgin London Marathon, but run it in 3 hours and 20 minutes. If that is achieved then my friend Jay could be facing the wrath of some fairly angry Chinese policemen. (Incidentally, if I do it in under three hours he’ll stick a picture of Chairman Mao to his bottom.)
On first impression I may have the better part of this deal (I’ve heard Chinese jails aren’t particularly nice). However, I think this only shows how hard the challenge I am taking up will be. Incidentally, I also foolishly took up another marathon-related bet (£100 to the person who completes it in the fastest time with my annoyingly healthy colleague James Thompson – another consequence of the pub.)
My lifestyle over the past couple of years has probably varied quite drastically from that of Paula Radcliffe, for example. Whilst we both may take the odd moment to relieve ourselves in the street, a diet of fags, booze and large amounts of food have not put me in peak marathon-running condition.
Now, thanks to housing charity Shelter, who found me a place in the London 2011 race, I am on a strict regime of healthy food, limited alcoholic consumption, and no fags. The strict regime has not gone 100% according to plan – but then the pressure of training often leaves me feeling in need of a spot of relaxation in my local hostelry.
However, I am determined to achieve this (it would be really embarrassing to have to call my friend Sir James). I’m aiming to raise £1,500 and anyone kind enough to help me with a bit of sponsorship can do so by visiting my Just Giving page.
If anyone else is getting involved in the London marathon or any other then do let me know by joining the marathon runners group on the Property Network.
Sometimes London reminds me of that game where you have to recall the items that have been removed from a tray; what was there before?
Its changes – subtractions and additions – can be so incremental that we do not readily notice or celebrate its evolution.
I was thinking about this over tea with Peter Rees in Land Securities’ newly minted One New Change, perched overlooking Watling Street.
Peter is rightly chuffed about this latest addition to the City, particularly its retail and dining offer, which is already transforming the Square Mile at the weekend.
So it seemed churlish to hark back to the day when the City fathers initially resisted the Millennium Bridge, for fear of pesky marauders from south london spoiling the City’s then monoculture.
But that was then. Meanwhile the combination of the market and City Corporation’s stewardship has been incrementally shaping and improving – building stock, public realm, retail and restaurants.
All this is keeping the City at the top of its game, creating a place for people to go, not just to work.
London’s shape shifting is particularly evident where the City has burst its eastern banks into the city fringe. Its adjacent area has gone from cool and edgy to cool and increasingly upscale, a sort of London Tribecca.
It has been my destination of choice in a week that saw me eating for London. Five nights of dining out included two top favourites: Conran’s Boundary and Galvin’s la Chapelle (so good I went twice), as well as local Bermondsey fave, The Garrison.
I did get tempted further west to join 450 of my closest friends at the newly restored Savoy Hotel for the inaugural Midtown Business Club Annual Dinner.
Founded by Farebrother’s Alistair Subba Row, with Land Sec, RBS and CBRE, the club aims to improve and promote the area between the City and the West End, to make it a location of choice rather than the gap in the middle.
Midtown is agent-speak, but since part of area’s strength is its diversity and collection of historic and characterful ‘villages’, MBC knows it mustn’t be treated as a single entity.
The trick is to pull in enough new investment and amenities to raise its game without watering down the character that makes it so special.
As proved by its City cousin, this requires a long-term vision and stewardship. Watch this space.
Last week I had the pleasure of spending two days at the Leasehold Valuation Tribunal (LVT), acting against my client’s tenants. Now two things struck me. Firstly, I have never seen the Tribunal so busy and, secondly, our legal friends will argue black is white!
I guess the busyness of the Tribunal could be down to a number of things. It could be a factor of the recession, where flat owners are paying closer attention to their service charges; there is more awareness of leaseholders’ rights; the quality of management and services is declining; or the intertwining legislation, rights and regulations make flat living ever more complicated, resulting in more and more disputes needing resolution.
I won’t go into the details of the case – that will get reported in due course. However, what legislative drafters had in their minds when they wrote some of the intricate technical points is anyone’s guess!
Now, this is where the Government should realise that they could bring in regulation to try and make everyone’s life easier and avoid huge costs at LVT.
Of course our Coalition leaders have decreed that they do not want any regulation, they have a policy of one Act out for one Act in and in reality MP’s do not actually see the difference between regulation for necessity over their general principles.
I am a big fan of small Government but they need to take action in the right areas.
Of course for the advocates and advisors it would put a dent in our livelihoods!
Just back from a week in New York, to catch up with the city and get a fix of ‘Big Apple juice’, an antidote to the CSR blues. I’m always ‘up’ after a trip.
I love the energy and the ‘what you see is what you get’ attitude, but I’m increasingly fascinated by its contradictions.
I’ve pinged back and forth over the past decade or so, trading know-how to re-shape our respective cities. From BIDs to bonds, we’ve built on their innovation. But they’ve also looked to London – jealous of our early wins on public realm.
In that respect New York may have leapfrogged London. Mayor Bloomberg has sanctioned a wholesale shift towards space for pedestrian plazas, bike lanes, pocket parks, and they are cracking on at a gobsmacking speed.
Keen to check out progress, I hot footed to the recently opened Brooklyn Bridge Park, to soak up the Indian summer sunshine and see how it’s come on since my site visit last year. This former redundant docklands is now a marvel of a waterfront park. It’s gorgeous, with the added advantage of the sublime Manhattan backdrop.
Meanwhile, banners across Midtown celebrate ’50 years of REITs’, another reminder of the innovative spirit of this entrepreneurial city.
New Yorkers like deals. Many of city’s capital improvements have been achieved through Tax Incremental Financing (TIFs), bonds and imaginative rezoning – trading community benefits for additional development rights.
The quirky High Line and waterfront parks are testaments to this can-do pragmatism. And, there’s the New York’s dichotomy.
How can this rich and swanky city still remain a chequer board of kempt neighbourhoods juxtaposed with swathes of urban grime and grot?
City officials are hidebound by middle-class angst over legislation to ban the plague of illegal traders, fearing criticism over class and race.
Its subway appears to be held together by gaffer tape.
Responsibility for this creaking transit infrastructure now falls to ex-Transport for London’s Jay Walder, Chairman of Metropolitan Transit Authority, who I caught up with over coffee.
Just twelve months into the job, his first task was to tackle an inherited budget hole that he thought stood at $100 million yet ballooned to nearly $1 billion.
Nonetheless, the man that gave London the Oyster card and introduced US-style bonds to finance the Tube upgrade, is determined to get New York into the 21st century, with trials of such basics as electronic indicator boards.
So, I guess, both places have their strengths and weaknesses: maybe together we’d make the perfect world city?
Patricia Brown runs Central, a consultancy that develops partnerships, alliances and projects to shape towns and cities.
I was delighted to see former Labour minister Phil Woolas found guilty of misleading the electorate last week – having got into hot water for calling him Phil `Wool-ass’ in May 2007.
Why was I so rude? Because Woolas was the Treasury ‘lackey’ who had just scrapped empty rates relief.
We continued: `Property Week supported Labour in the last two elections. Now we are being driven further away from its arms by, ironically, a move that will damage its following among less well-off readers up north’.
Fast forward to November 2010 and Woolas has been ejected as a Lancashire MP, and, as anticipated, empty rates have created carnage across the property world.
It’s even sadder that scrapping empty rate relief has wreaked the worst damage outside London and the south-east, forcing landlords to demolish perfectly good properties and choking off new supply.
Yet there are, at least, some chinks of light.
At our Public Property Summit last week Communities minister Baroness Hanham promised BPF chief executive Liz Peace that empty rates would be re-examined as part of a wide-ranging review of business rates.
A ministerial platitude, perhaps, but Peace’s plea was given added weight by an interesting idea floated by Land Securities chief executive Francis Salway at the same event.
He suggested that all new development should be exempt from empty rates.
While some local authorities have turned a blind eye to empty rates bills that industrial developers in particular should have paid, town hall austerity will surely see this leniency end.
If David Cameron is serious about adding growth to his cost-cutting agenda, this idea should go straight to the top of his list.
Meanwhile, Phil `Wool-ass’ will go down as a footnote in property history – as the man who showed in 2007 that Labour was beginning to lose the economic plot.
More evidence that Property Week’s “Regulate Resi Now!” campaign was right to demand the regulation of residential letting agents has emerged.
This week, Investors Chronicle has published a 6-page investigation into the rise of lettings fraud, which is costing landlords and tenants dearly. We have been overwhelmed with reports from our readers – a fifth of whom are buy-to-let landlords – regaling shocking stories of letting agent incompetence, insolvency or worse.
Tales of missing rental payments, vanishing deposits and (in one case) a cannabis factory which caused £20,000 of damage are borne out by industry statistics. Arla, the Association of Residential Letting Agents, says that reports of letting fraud are “as high as they’ve ever been”. And the Property Ombudsman has received a 27% increase in complaints against letting agents this quarter, with call volumes dwarfing those about the estate agents the body was originally intended to regulate.
Sadly, many of the letting agents causing these problems turn out to be unregulated, and this makes it tough for landlords and tenants to obtain redress. They have to rely on the vagaries of Trading Standards and the Police – two overstretched public bodies who struggle to understand the ins and outs of property law, and have little time or sympathy for landlords who are victims of malpractice.
As readers know, housing minister Grant Shapps scrapped plans to regulate letting agents in June. At present, estate agents who sell property must be regulated, but for letting agents who rent property – and handle huge wads of cash from rent and tenancy deposits – regulation is entirely voluntary. Our report shows that 40 per cent of the sector remains unregulated, which does not bode well for the coalition’s plans of a flourishing “private rental sector”.
Savills’ prediction this week that the UK will “do a Germany” with people renting till their 40s until they buy the “ultimate home” means the government is relying on private investor landlords to fill the housing gap. In return for investing millions of pounds of their pensions into residential property, amending the Consumer Estate Agents Act 2007 to bring all letting agents under the banner of an approved redress scheme would be a quick win. Remember, Mr Shapps: nobody has to be a landlord.