Portal Group

What can occupiers do to minimise commercial property risks, post-Brexit

Recent industry analysis from the RICS UK Commercial Property Market Survey shows a significant deterioration in market sentiment following the Brexit vote reporting, “The heightened sense of caution is visible across both investment and occupier sides of the market, with uncertainty pushing rental and capital value projections into negative territory.”

RICS are not alone in their forecasts of what will happen after the fall-out of the EU referendum with Great Portland Estates citing a slow-down in the commercial property market as investors become more hesitant.

Whilst some of the statistics may paint a gloomy picture, like all predictions there is of course a high element of uncertainty and speculation, especially with Brexit, where there is no precedent.  The recent decision for the PM to trigger the UK’s formal departure from the EU next March has led to further market volatility with the devaluation of the pound and debates over future growth and investment.

One of the potential fall-outs of a decline in business confidence is that companies may stall decisions, especially when it comes to corporate real estate.

Keep calm and carry on

However, if it was possible to remove some of the uncertainty, then this would potentially liberate and encourage businesses to take advantage of commercial opportunities rather than wait.  As John Hawksworth, chief economist at PwC, recently advised: “Businesses need to hold their nerve through this unsettled period, take stock of the potential impact of Brexit on their markets and operations, and make contingency plans for alternative outcomes.”   This comment suggests that organisations should keep calm, but also acknowledges the need for a plan B.

So what if contingencies could be introduced to guard against risk or uncertainty? At the moment, making a capital expenditure for the purchase of a new property or signing a long lease is likely to be a commitment too far for many, but there are ways that businesses can push forward with their plans without being exposed.

Introducing cost certainty

Take an example of a company that had already ear-marked a property for a new site, pre-Brexit, but decides that investing now in an uncertain climate would be foolhardy. Do they stick or do they twist?

One way around the stalemate is to consider a property model that can enable the best of both worlds, letting an organisation have the property they desire and therefore realise their growth plans, whilst at the same time mitigate the risk.

Managed Office Solutions (MOS) has been designed to meet these exact challenges. Using an Opex costing model, MOS allows you the choice of a specific building at a specific location or a range of portfolio properties across the country. The property is fitted-out to your exact requirements including your own brand values. The contract is costed on an inclusive per workstations/month basis including any necessary refurbishment, furnishings, FM, utilities etc.

Typically the length of contracts are dramatically shorter than traditional leases (3-5 years) with a clean exit a term with no exit fees or dilapidations, or options for future use. The beauty of this arrangement is that a third-party takes all the risk, whilst you focus your resources on developing your business.

So whilst other economic variables are more difficult to foresee, there are no surprises when it comes to corporate real estate supplied by MOS.

Stealing a march on the competition

The ability to flex your operations is likely to be crucial over the coming months and years and as PCW has hinted once the post-referendum shock begins to fade, 2017 GDP predictions range from -1 percent to +1.5!,  so you need to be in the best position to take advantage of market opportunities or contractions. If you want to steal a march on the competition, but without the gamble, then MOS could be a practical and cost-effective solution.

Director of Risk & Business Services at Hastings Direct, David Walker, said: “This has resulted in a low risk and cost-effective property strategy that allows us to focus on our core business.”

Read the full article / case study just published in Corenet Global’s The Leader magazine: Click Here

– Why managed office solutions can facilitate backshoring

By Iain Shipley, Sales and Marketing manager, Portal Managed Office Solutions.

“A renewed focus on customer service, a decrease in the cost differential in labour are two key reasons whilst an increasing number of organisations are returning their contact centre operations to the UK, or are considering “boomerang outsourcing…”

“A return to in-house can pose significant legal, operational and financial challenges”

Peter Dickinson, a Partner and Co-Head of the Business Technology Sourcing Practice at international law firm Mayer Brown.

The above are a few extracts from a recent article published in Outsource Magazine (http://outsourcemag.com/the-boomerang-outsource/) that focuses on the significant challenges faced when considering this repatriation of contact centre services. In particular it highlights the importance of having a clear understanding of the operational and financial implications of leaving off shore operations.

To complement this, organisations must also have a full understanding of the costs of returning operations “home”. Whilst used nationwide by a number of organisations including E.ON, Sky, Vanquis Bank and Hastings Direct, many companies are unaware there exists a business-driven property solution that can present unrivalled cost certainty and mitigate many of the risks associated with relocation of a contact centre operation.

Portal’s Managed Office Solution provides a property, fit out, facilities management and support services solution, aligned to an organisation’s requirements at a location of their choice. It removes Capital Expenditure (fit out, IT equipment etc.) and presents an operating charge over contract term, enabling business funds to be directed more effectively. It also provides cost certainty; there are no dilapidation or exit fees so organisations can effectively budgetary forecast.

To facilitate a clear and comprehensive understanding of the costs of relocation, Portal, at no obligation to the client, can provide a detailed proposal that includes commercial information, workspace design and floor plan images and a detailed FM scope of supply. IT hardware and support can also be encompassed into the package, with the client determining the level of provision required.

Portal removes the need for organisations to use internal resources or consultants to undertake this discovery process and can also provide additional support by liaising with Local Authorities to ensure any incentives/ support packages are fully utilised.

The aforementioned cost certainty that Portal’s model delivers to its clients is mirrored operationally by the guarantees the solution provides. Portal are contractually obliged to deliver an operational building on time, and ongoing FM delivery is underpinned by stringent SLAs.  All associated risk is transferred to Portal, who have an unblemished track record in delivery.

If the decision is taken to backshore, Portal’s model delivers an aligned property solution that allows the client to focus on their core activity- removing potentially costly distractions.

Portal can enable organisations to make an informed property decision about returning their operations back to the UK and deliver unrivalled financial and operational certainty should they chose to do so.

To discuss any of the issues in this article please contact Iain Shipley:

E-Mail: iain.shipley@portalgroup.uk.com
Telephone: 0207 495 5672

This month, national insurance provider, Hastings Direct celebrated a year in Leicester at its customer service centre, St.George’s that now houses more than 560 staff.  Representatives of charities, businesses and Leicester City Council came together at the St George’s Way office – part of the Blue Tower – to toast the business which has already become one of the city’s biggest employers.

Staff from Portal who have provided a Managed Office Solution to Hastings, joined the celebrations (pictured Phil Sugden, Andy Bodey and John Glennon) with City Mayor Sir Peter Soulsby, Hastings Office Manager Andrea Gray and CEO, Gary Hoffman.

One year ago, the new Leicester office had just 36 staff in temporary accommodation on the other side of the city centre.

Having recently launched a claims department, Hastings Direct’s Leicester office has now taken more than 1.2 million calls and has raised more than £4,000 for charity.

Chief executive Gary Hoffman welcomed guests to the event and expressed his thanks to the business community for the warm welcome it has given Hastings Direct.

He also donated a cheque for almost £2,000 to the company’s chosen charities in the county – The Dorothy Goodman School and The Bridge.

Read more: http://www.leicestermercury.co.uk/Celebrations-Hastings-Direct-s-year-city/story-29249815-detail/story.html#ixzz48njFCtun

“Convergence of People and Place” – Read our recently published article in Human Resources Management Guide that summarises the latest findings of the whitepaper “Redefining Commercial Property Performance” and how they affect HR professionals

The HRM Guide article is available here:

http://www.hrmguide.co.uk/guest/people-places.htm 

For any enquiries relating to issues raised by the article please contact Iain Shipley, Sales and Marketing manager at iain.shipley@portalgroup.uk.com.

Portal’s on-site manager Karen Martin looks back on last year’s activities: “2015 marked a busy year of for Sky’s customer care facility at Tannochside. Amongst some of the charities we supported included a local special needs school for whom we collected money towards a new Sensory room.”

“In addition, money was also raised for childrens’ charity Cash for Kids through fun days, raffles, tombolas, volunteering days and toy drives. We had an amazing response for the toy drive and sent away over 150 toys. As a result, Sky has been invited to celebrate their fund-raising efforts at Glasgow’s Clyde 1 Radio Studio for breakfast. In 2016 Sky will be focusing on raising money for local charity St Andrews Hospice. A big thanks to everyone involved.”