Strategic Real Estate Flashcards
In your example in Piccadilly, what was the rental difference between Cat A and Cat B?
In one building, cat A was at a headline of £69 and Cat B was £74, but changed all Cat A floors to Cat B as wasnt letting.
What was the EPC rating of your clients building in Piccadilly?
E expiring in 2022
What was the implication of the E rating in Piccadilly?
It meant that if the property was going to be relet, it would need a new EPC. The boiler was gas and so it meant that there was a chance that the EPC rating would possibly now be lower. It would also potentially deter future occupiers.
Why did you think it would be better to get more rent free as opposed to a higher rent?
- Needed to be dealt with quickly before the break notice date came which was looming (6 months prior notice)
- If I increased the rent to my ERV it would be worth £50,000 over the 5 years
- If I decreased the rent free, it would be a value of £80,000
What are the risks associated with a tenancy at will?
Landlord can terminate whenever they want which was not in line with my client’s requirements.
Why did the landlord want to retain a block date of 2028 in your example in Marylebone?
Because the EPC was a D and expired in 2022 so if the new regulations of C had come in by then they would need to do significant works to bring the building up to standard
Why did you suggest 12 months rent plus LED install?
Because it was higher than the RV and would reimburse them for changing the LED lighting
Did the landlord really agree to conditional break with 12 months rent a LED upgrade costs?
Clumsy wording - we reduced compensation to 6 months which was £10,000 PA less than RV that they would be entitled to have they had the protection of the act. Agreed to 1/2 of the LED lighting because it wouldn’t be brand new anymore and wanted to get the deal done.
How was the matter finalised?
Left with the solicitors to deal with, but essentially via a deed of variation.
What were your clients ESG objectives in the City of London?
- Still finalising totally but to do this needed:
- Data granularity
- Trophy tenant so they could negotiate “Tenant Blacklist”
- Green building that would be fit for purpose for next 10 years
What upgrades did you suggest to the demise for your stay/go consideration in the City?
Asked our building team to put together a report, outlined:
1. Fancoil refurb and change to AC in comms room to accommodate cloud storage and resulting decreased heat
2. LED lighting upgrade to make building more efficient
Why did you ask your workplace team to get involved?
To see if they could adapt working pattern and use of space to be more efficient
Why did you ask your agency team to look at alternatives?
- Better negotiating position if there is something we could realistically move to
- European project manager for client who didn’t understand that London office buildings were better specified than theirs - understood that to keep employees it needed to be in a good building
- Benchmark against the green credentials of other buildings
- Genuinely to see if they wanted to relocate somewhere else
What costing data did you look at?
Rent, business rates, service charge, cost to move and do fit out. Current service charge in building was high and did make a difference when comparing to other new buildings. Also PPM report had been done by our building team which outlined there were some significant works to be done in the next 3-5 years.
Why didnt the alternative buildings align with client’s objectives?
- Couldnt be trophy tenant in most buildings due to them being towers so couldnt have control over who else was in the building
- Most were still gas heated which our ESG team had indentified it would be best to have an all electric building
- Too expensive for them when considering relocation fees
- Amount of space didn’t work for them and they’d have to take more space than required.
