Commercial property blog

By Richard Heap

I had my first nightmare about it last Tuesday.

In two weeks I’m taking to the stage in a bid to entertain the property industry at the first night of The Property Comic, the comedy event by the Property Merchant Group and Property Week for Land Aid (http://www.pmguk.com/comic/).

I’m due to perform on both nights. I can’t promise that I’ll drag property out of its gloom. If I wanted to do that I’d need more than jokes: I’d need to be onstage giving away large amounts of money and, as I’m a journalist who moonlights as a comic, I’m not exactly being lined up for The Secret Millionaire. But I’ll do my best.

It’s a long time since the idea surfaced on 3 March in The Goring Hotel. I was having breakfast with the Property Merchant Group chief executive James Bowdidge, sustainability director Richard Burge, and their PR man Nigel Henson. I mentioned my strange hobby, telling jokes to people in small rooms above pubs in London and Brighton (www.myspace.com/richheap).

I’ve been doing it as a hobby for about ten months. James liked the idea of running a comedy night for property, where laughs have dried up along with bank finance. I headed back to the office and didn’t think much more about it.

I found out more on 6.22pm on Thursday 23 April. Continue reading »

By Lydia Stockdale

I sympathise with consultants and developers hoping to win work from the public sector for the first time. Getting to grips with the language of the tendering process is a job in itself.

Researching my feature, ‘Could you work for them?’ in this week’s issue of Property Week left me mind-boggled.

GEMS, NePP and PAMCAM meant nothing to me, until I made numerous calls and spent a long time Googling… then, every definition I found inevitably involved yet another tricky term that led to yet another search.

The article in the Workplace section of the magazine is about the opportunities out there in the public sector, with property service firms doing whatever they can – including cutting fees – to win work from Government departments.

But these clients, with their responsibilities for spending taxpayers’ money, can’t justify their decisions to hire a particular service provider on costs alone.

Continue reading »

By Tori Turner

Sacked office workers carrying their belongings is becoming a common sight

Calling a friendly acquaintance at a big surveying firm last week, I had a bit of a shock.
Despite having dialled her direct line, some numpty picked up the phone.
Answering my queries with an unadorned, “She’s not here”, my mind was racing.
It was nowhere near lunchtime. I hadn’t heard of any holiday plans. Surely she hadn’t been made redundant?

That particular instance turned out to be a false alarm, but when my surveyor friend returned my call, our laughter was rather forced. Unlike many firms I could mention, her employer has not announced hundreds of redundancies.
However, it is covertly shedding staff in twos and threes.
This avoids having to announce cuts to the marketplace, which could be interpreted as a sign of weakness by all-important clients.
So my friend, like many of you, is watching her back.

Unless you know somebody really well – like “invited to their wedding” kind of well – they won’t call to say they have been canned.

The humiliation, sense of failure and betrayal from the bosses we have worked our butts off for hurts too much to publicise.
In a world where we are defined by our careers, it is the ultimate social stigma.
But does being laid off mean that you are not up to the job?

Over lunch with the head of a City agency firm last week, I asked him how he had selected the first batch of employees in his office to get the chop.
“Easy,” he said, munching his steak. Continue reading »

By Christine Eade

Black america has come a long way - how far has Northern Ireland come in a similar time?

The Presidents’ Club in Belfast was a fitting place to hear the televised inauguration speech of President Barack Obama on 20th January.
There was a fleeting opportunity to gage the reactions of Belfast businessmen to one sentence: ‘Old hatreds shall one day pass.’
While the television commentators marvelled at how far black America had travelled, I reflected on the journey made by Catholics and Protestants.
The journey led them on that wet, cold Tuesday evening to the Presidents’ Club on the top floor of the Midtown Center, a warehouse-in-to-business centre conversion by a local developer, Mark Finlay, chief executive of Barnabas Ventures.
He decided that the best use of the top floor space in the Cathedral Quarter was a club for those from the US, Southern Ireland and Northern Ireland who believed in ‘the island economy.’
And so we partied in the open-plan club with its IT facilities and bar. On the walls there were portraits of the eight US presidents who identified most frequently with their Irish ancestry – not just the familiar twentieth century ones like Wilson, Kennedy, Reagan and Clinton, but also the more obscure like McKinley, whose fame lies in being assassinated.
Four were Republican; four Democrat; four from the north, four from the south.
It was not as easy to categorise Tuesday’s guests. Yet when I first visited Belfast 39 years ago, everyone wore a label coloured orange or green. Continue reading »

By Christine Eade

Sometimes, property life collides with real life, and I find myself talking like a property person to an audience that is either hostile or indifferent.

I was reminded of this last week on reading the obituary of Professor John Barron, Master of St Peter’s College Oxford, until he retired in 2003.

While extolling the life of this great Hellenist, the Daily Telegraph wrote: ‘His other great passion was building. Three new buildings were added to the college on his watch; one of the disappointments of his time at Oxford was that his desire to acquire the land around Oxford Prison for St Peter’s never came off. As ever, he bore the outcome with equanimity.’

‘Equanimity’ is not the word I would have used.
I used to go to social events at St Peter’s while my son was an undergraduate there. The portly master would bellow: ‘Who is this terrible fellow Trevor Osborne? I’m told he’s gone bust before.’

Masters of Oxford colleges boom rhetorical questions, and do not expect answers.
The reason for Barron’s anger was that the Trevor Osborne Property Group had outbid St Peter’s in buying the prison.

Barron wanted the prison as overflow space for his college; Osborne succeeded in converting the prison into a Malmaison Hotel.

I tried to engage Barron in conversation, telling him that Trevor Osborne had a reputation in conservation, and had turned Wimbledon Town Hall into a shopping centre before his former company, Speyhawk, went into receivership in 1993.

But the Master would not enter into an argument and was never curious as to why the mere mother of an undergraduate knew so much about his adversary.

He continued on all social occasions to hope for the worst to happen to the Trevor Osborne Property Group.

When it was time to return to Oxford for the age-old Latin graduation ceremony at the Sheldonian, I stayed in one-and-a-half former prison cells at Malmaison.
Last Christmas, Osborne hosted a dinner at Oxford Castle, next to the former prison, to celebrate winning 12 awards for the prison conversion.

I hope Barron went to his grave reconciled to the fact that his adversary had done a good job.

By James Whitmore

Shoppers visit 'struggling' retailers in Oxford Street

Retail rents fell in July – the first month since 2001 that they have done so, according to the latest CB Richard Ellis Monthly Index.

Is it now time, then, for landlords to ask their retail tenants to pay their rent six months in advance to help with cash flow?

The norm is three months in advance, but retailers want to change existing contracts to monthly to help with their own cash flow problems in a battle initiated by Sir Philip Green and Carpetright founder Lord Harris.

I’m afraid I have absolutely no sympathy for the retailers. They accuse landlords of being inflexible, unrealistic and out of touch. Some, indeed may be, but the major retail property owners are not. They offer a menu of options with new leases and all say that retailers have been most keen to get large rent-free periods and contributions to store fit-out costs and that the rent payment schedule was way down the list.

If retailers want to pay rents monthly on existing leases, they should have negotiated that when they signed the lease.

Last week B&Q property director Terry Hartwell told Retail Week: ‘We are asking landlords to wake up. The market is worse than we’ve seen for 15 to 20 years, therefore now is the time to compromise a bit and try to help retailers with their cash flow.’

It is Hartwell and other retailers that need to wake up. The property market is also in its worse state for 15 years and many landlords are struggling to keep the wolf from the door. The values of their properties have fallen by more than 20% over the last year, which means many will be in negative equity territory.

Property owners and retailers are both suffering. The difference is that property owners are not whinging about it.

By James Whitmore

For Sale Signs

Take two stories that were published today in the Financial Times and the Telegraph. ‘House prices are expected to fall by almost 30% during the next three years,’ says the FT. ‘Falling output from housebuilders could lead to a 30% increase in house prices between 2009 and 2012,’ says the Telegraph.

The 60% differential is plainly ridiculous. The FT’s source is the prices of residential property derivatives, while the Telegraph’s is the Centre for Economic and Business Research.

If I had to choose between the two extremes, I would plump for the 30% increase. While mortgages are difficult to come by, prices will continue to slide. But, once the mortgage market returns to normal, then prices will once again rise quickly. After all, mortgage interest rates are still historically low – my own is 5.14% (0.14% above base rates) secured only last December with my existing lender, and there is still a nationwide shortage of family houses.

Before the credit crunch began a year ago, the newspapers, if you remember, were full of stories saying there was a huge shortage of houses in the UK and Gordon Brown was making an increase in the development of houses his priority. That situation is now even worse, because far fewer houses are being built this year.

The medium and long-term trend for house prices is up. We are enduring one of those nasty short-term blips. When it will finish, I have no idea, but surely by 2012 prices will once again be soaring.

By Christine Eade

I often bluff about my extensive travels. Wigan Pier? Of course I have been to Wigan Pier.

When I was invited to breakfast at the Southwark Lido, I pretended I knew the lovingly listed and restored 1930s open air swimming pool, reopened to hardy swimmers.

In reality, I wondered how I could have worked in Southwark for five years without having discovered its lido.

When I arrived at 100 Union Street SE1, the joke was on me.

The quirky developer, Roger Zogolovitch, chairman of Solid Space, had taken the site for which he had consent for offices, flats and restaurants and installed a lido. It was less than a meter wide and as long as the average ornamental fish pond.

As part of the celebrations for the London Festival of Architecture, Zogolovitch had covered the site with shingle and installed 10 beach huts and a few dozen deckchairs. Festival workers lived in the beach huts during the month-long festival.

It was a cheerful way to keep interest alive in one of many hundred of development sites where nothing else is happening in property development.

Zogolovitch was upbeat as the trains thundered behind and above him on Southwark viaduct and the social housing tenants on the opposite side of Union Street must have wondered was going on.

He called his un-started development SoSo to catch the glamour of Soho and Noho.

Yet the whole cheerful open air breakfast was reminiscent of the early 1990s.

Then, everyone enjoyed stories of naïve shed agents who leased out empty warehouses unknowingly for ecstasy-fuelled raves. My own experiences were more cerebral because office agents hired gold chairs and experimental theatre companies to try out new works in unlettable office space.

I have not yet swum in Southwark Lido, and don’t know whether it will be reinstated for the next London Festival of Architecture. But maybe in this downturn, I’ll discover the next Pinter of Ionesco.

By Christine Eade

Occasionally, I am first into the office at Property Week.  Invariably I am first to leave.

When the computer shuts down at 5.31, there is an hour to idle away between leaving Ludgate House and arriving as first guest at a party.

If the event is in the City, I take sanctuary on a seat in a churchyard.  If it is in the West End I shop at H&M.

But on July 1st I found the coolest place in London for the pre-party hour: More London.

I had only ever been to particular buildings on the south side of the Thames by Tower Bridge, like City Hall and the Hilton, and so I had never appreciated the implementation of the Ken Shuttleworth masterplan. The buildings seem tweaked to frame the Tower of London or the Gherkin.

On the hottest day of the year, children paddled in the fast-running water of the gutters between the buildings.  The water erupted into jets outside the Gaucho and Strada restaurants.  The children ran forward as the jets subsided and were soaked when the water leapt into seven foot geysers. Everyone was part of the fun; fathers rushed with children in pushchairs through the deluge, while mothers stood at the side with outstretched towels.  They were so prepared that it must have been an organised activity. (‘Come on, mummy, we’re going to run through the More London fountains.’)

There were no prohibiting notices, and no evidence of Princess Diana fountain-type accidents as in Kensington Gardens.

The only voice to come on the loud speaker was plumy and familiar.  It came from the Scoop, the amphitheatre beside City Hall.

Mayor Boris Johnson was launching Gay & Lesbian Pride Week.  The Scoop, unlike the fountains, was surrounded by barricades and policed by intimidating bouncers.

The gays and lesbians were falling in love with Boris, who said how much he looked forward to going on their march in this city where everyone can contribute, not judged by their ethnicity nor sexual orientation.   Ken Livingstone could not have put it better.   More London brings out the best in everyone.

A woman speaking in broken English asked me: ‘Who is this man?’

I said that it is the Mayor, and asked her where she came from.

She said she was from the Czech Republic, adding: ‘My friends have told me about this man.  They said they couldn’t believe he was elected.  He’s different, isn’t he?’

The Lawrence Graham press party was different too.  After on-line voting from the guests the lawyers chose a Middle Eastern theme, complete with belly dancers, kebabs in the staff canteen.

Catherine Diggle, the real estate partner, said that she had never seen a better use of public space than More London.

Stephen Stephens said that Lawrence Graham partners had voted to relocate to More London three hours after the neighbouring Norton Rose partners had come to the same decision. Yet only a few partners knew the name of the secretive landlord who bought More London from the Kuwaitis.

As I left with my goody bag containing Turkish delight and a smart pen, the gays were still partying in the Scoop.  I hope that the rest of the summer’s pre-party hours will be as entertaining.

By James Whitmore

According to Nationwide Building Society, UK annual house prices are now 6.3% lower than they were a year ago after prices dropped 0.9% in June – which is hardly catastrophic.

I’m a homeowner and, frankly, I don’t much care. If I did want to move house today, then I guess I would sell my house for 6.3% less than I would have got a year ago and I would buy my new house for 6.3% less. In other words, there would be no net change.

Likewise, if the market was still booming, and I sold my house for loads of money, I’d have to pay an equally preposterous price for my new home.

I’m far more concerned with rising petrol, food and utility prices, which involves cash leaving my bank account at an ever increasing rate. Why are these price increases considered bad, while house price rises are deemed good?

OK, refinancing your house and extracting cash can have short-term, selfish benefits, but, truthfully, most of us would benefit from lower house prices. For the rising generation the first rung of the housing ladder is way out of reach and for the more mature, looking to move up after having kids, the second and third rungs are invariably only reached with a pole vault.

I appreciate the current housing crisis is not great for first-time buyers, because they are struggling to get mortgages. But this really isn’t a bad thing, either. Until the credit crunch started, first-time buyers could get away with putting absolutely no money into the price of the house – 100% loans are frowned upon in the commercial world, as they should be in the housing sector.

Today, buyers can still get mortgages that are 90% of the price of the house, which is still a very high level of gearing.

At any rate, the pain won’t last for too long. Thanks in large part to our slow and complicated planning system, only 185,000 new houses are usually built a year. France, with roughly the same population, builds at least double that number. This year there is likely to be only 100,000 new homes built.

Such a low level of supply – particularly of anything that isn’t a city centre apartment – will ensure the recovery in the housing market, when it comes, will be rapid.