Strategic Real Estate Consultancy Flashcards
How would you describe strategic real estate consultancy?
Involves providing expert advice to help clients make informed decisions about their real estate portfolio
How does real estate help achieve an organisations broader goals?
- Boost productivity & employee well being
- Improves financial performance as a result of cost efficiencies
- Supports sustainable goals
What wider economic conditions have an impact on real estate strategy?
US trade tariffs could have an impact on real estate strategy due to
- uncertainty may lead to real estate projects being postponed or cancelled
- construction costs may increase and supply chain disruption may affect development projects
- general economic growth may slow down which could lead lower demand for real estate
What is a mark to market?
Analysing the market rents of properties within a portfolio to determine whether the passing rents are either above or below market rent
What lease events were you trying to identify?
- Lease expiries
- Break options
- Rent reviews
What opportunities did the mark to market identify?
- Opportunity to vacate surplus accomodation or relocate to larger/smaller premises
- Opportunity to regear leases
What is a lease regear?
The terms of an existing lease are varied by agreement with the Landlord
Give an example of when you would look to regear a lease?
- The lease may contain a break option
- The tenant may not have an intention to break
- The tenant could offer to remove the break, providing the Landlord with greater income security, subject to an additional rent-free period or reduced rent
- This would provide cost savings to the business
What is a KPI?
Key Performance Indicator - a quantifiable metric that helps businesses track and assess their progress towards specific strategic goals
Can you give some examples of KPIs?
- Current occupational data
- Headcount per office
- Headcount growth in say next 5 years
What is a stay vs go?
The decision making process used to determine whether to remain in an existing office or relocate to a new property
What other factors were taken into account besides the financial anaylsis in your stay vs go example?
- Specification
- Location
- Environmental credentials
In your critical date & opportunity assessments example, what opportunities did you identify?
- An office in Barcelona was highlighted as an opportunity to achieve cost savings
- From speaking to the local agent in Barcelona we identified that the rent passing was 30% above the market
- The lease contained a break option which provided an opportunity to relocate to a more cost effective property or regear the existing lease at a market rent
Critical Date Example
What was the predetermined set of criteria?
Identifying cost saving opportunites in underutilised offices that were over-rented and contained lease events in the next 24 months
If your firm did not have a Spanish office what would you do?
I would use my RICS network to find a company with the appropriate knowledge and experience and operated in line with RICS values
What are some of the nuances between different countries?
- In France for example leases typically have a minimum term of 9 years compared to the UK where lease terms range from 5 - 15 years
- Different local taxation i.e. will not have business rates
What is a commuter analysis?
Assesses the duration of commutes for employees using public transport
Can you talk me through how you undertook the commuter analysis?
- I obtained the postcodes for the employees home address from the client
- I used my firms internal system which calculated the time (in minutes) it took the employee to travel to the 3 shortlisted propreties and to their current office
What was your advice to the client in the commuter analysis example?
- The study showed that relocating the clients London office to Shoreditch would have minimal impact on employee commute times
- Shoreditch was a more suitable location for my clients marketing business and had better amenities
- This would assist the client in attracting and retaining top talent which was a major objective
- I therefore advised the client to focus negotiations on the Shoreditch options rather than the Southbank
How did you ensure you complied with UKGDPR?
- The data provided were only postcodes and not the exact address
- The data was securely stored in a password protected folder
Can you give me an example of a time you have advised a client in respect of the options available to dispose of a surplus secondary office building held on a long lease without break options?
- Assign or sublet the whole
- The landlord might be open to accepting an early surrender subject to the payment of a premium and dilapidations which may enable the Landlord to relet at higher rent if under-rented or repurpose the accomodation (office to resi) or redevelop the existing building
In view of the current economic uncertainty brought about by US tariffs what advice would you provide to a client with an upcoming lease expiry?
- If the lease is protected under the L&T Act 1954 the client may have an option to continue in occupation after the expiry date on a statutory periodic tenancy until the lease is brought to an end by either party (subject to required notice periods) or a new lease is agreed
- The landlord however may decide to take a different approach either seeking to terminate the lease or proposing terms for a new lease which the client would have to respond to
- If the lease is contracted out the client would have no options but to vacate or agree terms for a new flexible lease taking into the likely ongoing uncertainty
Tell me about the time your involvement with the provision of strategic consultancy advice to clients
During my time in the Transaction Management team we advised occupier clients regarding their lease events across their portfolio to advise on possible lease regears or renewals in line with their corporate strategy for that specific location
What have you learnt about strategic real estate consultancy from your training in this area?
The provision of expert advice can assist a client to make informed decisions about their property portfolio which can lead to cost savings and enhance the performance of the business
