Property is like a garden that needs to be tended

Many years ago, the Royal Institution of Chartered Surveyors published a research paper that identified some interesting facts about businesses, their properties and the bottom line of their P+L accounts. Few businesses had a dedicated property person, either internally or externally, to advise them on their holdings. By holdings, they meant properties that they occupy for their business with most businesses renting their properties.

Without someone to keep a watchful eye over the properties that they occupy, billions of pounds of profit was being taken off companies’ bottom line every year. Similarly, many companies, when looking for new business premises, appeared to rely on the least qualified person in the company to identify options, namely either secretaries, PA’s or office juniors as the management team were more concerned with running their day to day business. Quite often, their staff would also be involved with negotiating the transaction too.

Surprisingly, these trends appear to continue today although perhaps with so much on line data available, management teams are probably better informed today on availability and values than in the past.

But on line data only goes so far and merely provides an opaque view of what is really going on in the property market and where values and costs really lie. Occupying property is ongoing and requires continual awareness of events and costs. Simply signing a lease or purchase contract and then neglecting the holding could have undesirable effects.

Over the last 12 months, we have worked with companies that have missed break clauses which they would have operated had they had the chance, been caught out on forgotten rent reviews and lease expiry events and failed to consider other property related issues that could affect bottom line profitability.

In contrast, we have also worked with companies that are more aware of their property holdings and have proactively sought to deal with future lease events, settle rent reviews by value rather than affordability, mitigate for business rates increases and gratefully see the return of long forgotten rent deposits.

After staff, property remains a business’s biggest cost and biggest liability. Keep aware and keep profit on your bottom line!