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News and Views from CKD Galbraith's Commercial team on current issues affecting Commercial Property.
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www.ckdgalbraith.co.uk
ISSUE 1 SUmmEr 2015Commercialmatters
How to build a portfolio
maximising the asset of land
the social media marketing effect
review: Permitted development
rights in scotland
assessing the challenge of the
r22 gas ban
the art of valuation
How to build a portfolio
the social media marketing effect
Page 2 | Commercial Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial
CKD GalbraitH is Scotland’s leading independent property consultancy. Drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing more than 250 people in offices throughout Scotland.
The firm provides a full range of property consulting services across the commercial, residential, rural and energy sectors.
CKD Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances.
Our associate, CKD Kennedy macpherson, is based in London.
Follow us on Twitter: @CKDGCommercial
Like us on Facebook: www.facebook.com/ckdgalbraith
Join us on Linkedin: www.linkedin.com/company/ckd-galbraith
WELCOME
WelCome to tHe very first edition of Commercial Matters, a new publication from CKD Galbraith, which aims to highlight the key issues
of the commercial property sector and the work we’re involved in.
At the time of writing the political map of the United Kingdom has been redrawn and once again Scotland seems to be at the centre of attention. It will continue to make a significant and dynamic contribution to the wider UK and European economy with commercial property an essential factor in this continued success.
In the following pages, we discuss a wide range of matters which are intended to be thought-provoking and useful: from the growing importance of social media in marketing property to dealing with specific (and potentially costly) changes to air conditioning gas. The fundamentals of landlord and tenant relationships remain critical in the efficient use of property assets. Investment activity is high with some very attractive returns available for the right asset. Combined with asset management, agency and professional expertise, those returns can be enhanced further over time.
As we emerge from a deep recession into a growing and more confident market tempered with constrained funding availability, making the right decisions is critical to maintain value, occupancy levels and provide appropriate return to the investor/occupier. The right advice at the right time is central to this.
We would be delighted to hear your feedback and suggestions for future topics, plus any burning questions or requirements, so please get in touch by telephone, email or social media.
Commercial matters is produced by JK Consultancy, Glasgow, and designed by George Gray media & Design, St Andeux, France. © CKD Galbraith LLP.
CONTENTS
4Weighing up the case for office conversion legislation in Scotland.
Before or after? When to submit change of use application.
5Increasing land values at Torbreck Farm.
6Cover story:The art of valuation.
8Sidestepping the issues of FRI from the tenant’s perspective.
9Air con and the options to replace banned R22 gas.
10Private portfolio – investing your money wisely.
Deal round-up.
11Let’s get social: the impact of Twitter et al.
the
believe it or not, the average lease length on commercial property outside central London stands at just over four years. It is a rarity
to see a 20- or 25-year commercial lease on office, industrial and retail property.
Today, most tenants demand maximum flexibility and know the potential financial liabilities that come with committing to a long-term lease without breaks. This is despite the fact that some tenant fit-outs are amortised over 10, 15 or even 20 years, particularly in the leisure sector.
While the overall lease length may still be 10 or 15 years, many tenants will seek to negotiate break clauses to give them protective leverage.
One notable exception is new build projects where longer terms of 10 years
Pamela Gray reports on the trend towards shorter term leases and its effect on tenants and landlords.
www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial | Commercial Matters Summer 2015 | Page 3
plus are necessary for projects to be viable for lenders, developers and investors.
This general shortening of leases has added a new layer of risk for landlords: shorter leases increase the prospect of rental voids, with the associated liabilities for void rates (except on listed buildings), void insurance and also service charge (in multi-let properties). There are also the potential costs of property obsoles-cence, particularly with a growing trend towards tenants’ limitation of repairing liabilities. All these factors impact on property values.
This situation does not necessarily favour the tenant. It very much depends on the state of the market and this is particularly pertinent in Scotland, where there is no security of tenure for tenants.
As the market improves, the pendulum swings back in favour of the landlord. It is
all very well having a break option, but in a buoyant market it is a high-risk strategy and landlords know it.
I have seen bullish tactics from owners confident they can achieve higher rents in the open market. With no security of tenure, tenants may be forced into a costly competitive situation. Tenants underesti-mate the significant costs of relocation at their peril – not forgetting the terminal dilapidations liability on exiting the previ-ous lease.
As the market tightens, landlords may also seek to reflect the risks of a shorter lease into the overall rental package, resulting in higher occupational costs for tenants in the short to medium term. In leases with a break and a rent review in year five, it often comes down to brinks-manship between the parties. Some tenants (not intending to break) will try to use the break option as collateral to
secure ‘improved terms to stay’ rather than the more traditional rent review negotiation process.
The market continues to deliver variety and we will still see longer leases agreed in certain cases, mainly by retail and office occupiers certain of their future and who know they will get a good deal in return for their longer-term commitment.
However, the general move towards shorter leases poses a challenge to avoid voids and maintain security of income. Landlords who continue investing in their buildings and who look after their tenants
will be those most likely to thrive in this new era.
impact of the shorter term lease
Pamela Gray is in charge of our commercial property asset management team.
[email protected] 0131 240 6963
Page 4 | Commercial Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial
tHe Conversion of office space to residential properties has become commonplace not only in Edinburgh’s
West End and New Town but in a variety of commercial properties across Scotland.
CKD Galbraith has been involved in the sale of a number of commercial proper-ties which are suitable for conversion to residential use. In each case we must weigh up whether it is best for the client to submit a change of use planning application prior to marketing the property or leave it up to a purchaser to deal with.
Permitted development rights do not exist in Scotland for change of use from com-mercial to residential use, so a detailed planning application must be submitted. There are costs and timescales involved in this process – which may not be in line with a client’s objectives – but our experience shows the advantages of submitting an application prior to marketing a property are attractive. The benefits include:
• Offers are more likely to be made without any conditions in relation to planning. Accordingly, “clean offers” with no suspen-sive conditions may be submitted, which would be attractive to the seller.
• Deals can be concluded in a timely man-ner as they are not reliant on a pending
decision from the local planning authority.
• The market is wid-ened to those who can obtain residential mortgage funding.
• Consequently, there may be more competi-tion and demand for the property.
Conversely, where an application has not been submitted prior to marketing, we have encountered the follow-ing issues.
• As offers are received subject to plan-ning, the timescale of concluding the deal is outwith the client’s control due to delays in receiving a decision from the planning authority.
• Parties have been put off making an offer or deals have fallen through due to the funding position. Owner-occupier devel-opers who are only able to obtain funding through a residential mortgage can be put off making an offer due to the uncer-tainty of obtaining change of use planning consent.
Of course, there are cases where success-ful sales have been concluded without a
Deciding when to submit a change of use applicationLiz Cunningham highlights the benefits of applying for a change of use before selling a property.
Robert Patrick reviews the impact of recent legislation in England and the potential effect of replicating it in Scotland.
sinCe may 2013, a temporary change to permitted develop-ment rights legislation in Eng-land and Wales has allowed the conversion of offices to
residential use without requiring a full planning application.
The legislative change is in place until May 2016 and was intended to ease the process of converting offices to help increase housing stock and boost the
economy. To secure a change of use, land-lords need only seek prior approval, which can only be withheld due to concerns over traffic, contamination or flood risk.
The change has proved unpopular with many local planning authorities, fearing a loss of control over town centres. Some areas were exempted from the legislation by the government, including parts of Islington and Westminster, along with an area of Manchester city centre.
Local authorities who were not exempted have sought to use local planning orders – known as Article 4 directions – to remove permitted development rights for residen-tial conversions. Oxford City Council, for example, is currently consulting on intro-ducing an Article 4 direction to remove residential conversion rights for ‘key protected employment sites’, citing fears of ‘significant harm to local amenity and the
proper planning of the area’. In some cases this led local government on a collision course with Westminster who saw the use of these directions as an attempt to under-mine national legislation.
As planning legislation is a devolved matter, in Scotland we still need to submit a full change of use application where resi-dential use is sought for an existing office.
So, would there be any advantage in allowing these conversions to take place as permitted development in Scotland? For landlords, such a change would make the process easier and likewise for purchas-ers buying offices for conversion. However, as seen in England, the legislation would likely cause friction between local and national governments.
PermitteD DeveloPment riGHts
What next for scotland?
l Dunolly Outdoor Centre, sold in February 2015. Planning policies were supportive of a change of use.
When it comes to maximising land values, Calum Innes finds that patience is a virtue.
lanD is an asset that gives rise to opportunity, albeit one that depends on location, changing demand and per-mission being granted for an
alternative use.
In recent years we have seen interest in remote, exposed hilltops from windfarm-ers rather than those looking to graze sheep. While land on the outskirts of conurbations has always had the potential to find demand from developers looking to meet our ever-growing need for hous-ing, experience shows that a measured, diligent and patient approach is needed to achieve success.
Several decades ago one of our clients bought a small farm, Torbreck Farm, on the outskirts of Inverness for wintering sheep, which spent the majority of their year wandering the windy hilltops (which are now generating electricity!) Although the land served this purpose well, the world moved on and it was considered that the site might provide scope for housing.
Promotion of land is often achieved by granting an option to a developer and relying on them to pursue the opportu-nity. In this case, the client wanted to retain control of the project, instructing CKD Galbraith to manage the process to maintain flexibility and fully explore the market to achieve maximum value.
Assisted by a team of consultants with whom we’ve worked on a number of projects, we diligently presented the land to the planning authority as an opportu-nity for a significant residential expansion of the city of Inverness and with sound and robust support were ultimately suc-cessful in the site being allocated in the adopted development plan.
We then spent a number of years resolv-ing a variety of issues to ensure the land was capable of development in prepara-tion for marketing:
• Development Agreement with adjoining landowners to allow our client to recoup value from infrastructure that may be of benefit to others
• Delivering off-site road improvements required by the Local Authority
• Ensuring availability of utility services and all necessary agreements to facilitate
• Designing a surface water drainage solution
• Resolving ecological issues relating to trees and protected species
• Negotiation of all matters in relation to planning gain/Section75 obligations.
The journey to establish Torbreck Farm as a residential development site was time consuming and at times hugely frustrat-ing with the intervention of a recession adding further disincentive and uncer-tainty. However, with prudent manage-
ment the land was finally granted detailed planning permission for an initial phase of development of around 200 units as part of a wider approved masterplan for more than 800 houses and a new primary school.
In early 2015, following marketing and subsequent negotiations with the preferred bidder, a deal was concluded with house builder Barratt who are now on site deliv-ering the initial phase of development.
With astute management the client has achieved a significant increase in land value, demonstrating that land is an asset that may provide an opportunity for profit, though it is likely to take
some time.
Calum Innes is based in Perth and provides commercial and
planning consultancy services.
[email protected] 01738 456 075
With astute management the Client has aChieved a signifiCant inCrease in land value.
“
www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial | Commercial Matters Summer 2015 | Page 5
A more significant concern would be the effect such a change could have on the availability of office space in town centres.
The smaller offices, generally better suited to residential conversions, are the size most in demand by small businesses and startups. Ceding control of these offices could result in a shortage of office space, preventing small businesses from occupying town centre premises.
This in turn would harm both the vitality of town centres and wider economic growth prospects.
The current process therefore remains a sensible compromise, allowing planning authorities to assess the merits of indi-vidual change of use applications, weigh-ing up the benefits of additional housing stock versus the loss of office space. Conversions are not usually opposed, but
a free-for-all resulting in office shortages is possibly avoided.
change of use as the buyer has been a cash purchaser or they wish to continue using the property for a commercial purpose.
Ultimately, it is essential to consider how the highest price for a property can be achieved by considering all the potential uses and planning policies and from our experience, the benefits of submitting a
change of use application prior to sale speak for themselves.
land: the asset of opportunity
Elizabeth Cunningham assists with agency, valua-
tion and planning and is based in Perth.
[email protected] 01738 448 142
Robert Patrick is a chartered planner at CKD Galbraith’s
Perth office.
[email protected] 01738 456 078
valuation unDerPins nearly every financial decision we make in commercial property. Whether we are looking to
invest or sell a property, manage an asset, secure a loan against property ownership, calculate our taxes or include a property in the balance sheet, a valuation will be required.
Valuation is the practical exercise of arriving at the value of an asset at any single point in time. There are various methods of valuation, depending on the type of asset and the purpose of the valuation, but one of the most commonly used for commercial property is the investment method, based on evidence and analysis of comparable transactions.
In theory, anyone with market knowledge can provide a valuation because it is simply an opinion. In practice, however, property and market analysis requires considerable skill, experience and judgement, with subjective assessments commonly being made on the prospects of rental growth, the future marketability of the property and the security of the income currently received and its prospects in the future.
Valuers also require a fundamental knowledge of the lease and the implications that any one of the lease terms can have on a valuation of a property, including repair, alienation and rent review.
In addition, valuations will always rely on a considerable number of assumptions, any one of which could have a direct impact on a valuation. It is important that these assumptions are identified
and agreed at the outset otherwise the resultant valuation is of no use.
Over the past seven years, the uncertainty in the wider economic climate and the resulting volatility in the property market have clearly shown that quality, independent, transparent valuation advice is critical.
In order to establish the credibility, skills and professionalism of its members, the RICS has introduced an independent regulatory scheme, which continually monitors its members who conduct valuations. The Valuer Registration Scheme ensures that such registered
valuers abide by the RICS valuation standards and that they are experts in their fields, delivering credible and high quality reports, which are open and transparent. In essence, it is a quality assurance scheme, underpinning the quality of valuations and reporting provided by its members.
As owners, occupiers, developers of and lenders against property, you rely on and make important decisions based on a valuer’s judgment and expertise, quality standards and ethics. So the next time you need a valuation, make sure you instruct a valuer that you can trust will provide
valuation, valuation, valuationRichard Higgins and Harry Stott report on how valuations form the backbone of commercial property work and why selecting a professional to break down the issues is key.
Page 6 | Commercial Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial
l Pollphail Village, an abandoned purpose-built oil-workers’ village on the Cowal Penisula, Argyll, presented a unique valuation challenge.
you with quality advice on which you can truly rely.
CKD Galbraith has 47 registered valuers with in-depth market knowledge covering the whole of Scotland. Over the last year, we have carried out around 400 valuations and valued a total of approximately £500,000,000 of property assets.
As well as the “run of the mill” valuations of commercial properties for secured lending purposes and the valuation of land and residential properties for probate purposes, we also carry out agricultural valuations each year for the Agricultural Mortgage Company (AMC).
Our breadth of knowledge and experience also means we are willing to consider more unusual valuations where other companies may decline instructions. That’s why we have been involved in valuations for whisky distilleries, mineral water supplies, a wildlife park, a former prison of war camp and even an abandoned village. We often find that if you stand back and fully consider the issues, understand the facts and circumstances, there is a means to provide a valuation with sound reasoning and justification.
One such unique valuation was of Pollphail Village, Portavadie on the West Coast of Scotland where we were instructed on behalf of an administrator to carry out a valuation of an abandoned purpose-built oil-workers’ village on the Cowal Penisula, Argyll. The village had originally been built in the 1970s to provide accommodation for oil rig construction workers for a nearby dry dock, but due to changes in construction methods in the industry, the village was never occupied. Over the years the site
fell into disrepair and was asset stripped. By the time we inspected the site all the buildings were derelict.
It was important to understand the issues with this particular valuation: the site had a lapsed planning consent, significant demolition and site clearance costs and other potential environmental issues such as contamination issues and the presence of bats. As part of the process we requested quotes for demolition and site clearance to assist in our appraisal and liaised with the local planning authority. We provided our valuation to our client and were subsequently instructed to sell the property, which attracted UK and inter national media interest.
Another seemingly quirky property we valued was Cultybraggan, a former Second World War POW camp near Comrie, Perthshire. We were instructed to value all the elements of the camp, which extended to 50 acres with a range of properties on site, including Nissen
huts, industrial buildings, allotments, a former nuclear bunker and agricultural land. Other issues associated with the valuation included cultural and heritage designations as there were a number of listed buildings on site due to the historical background to the property. There were also some let properties and all the leases had to be assessed, together with some planning consents.
While the property as a whole was unusual, once we broke down its component parts, and with the necessary due diligence, it became relatively straightforward to accumulate a value for the subjects by gathering comparable evidence. We were also able to call on CKD Galbraith’s agricultural sales department to provide comparable evidence for the property’s agricultural element.
These diverse instructions at first glance can appear daunting and difficult, but with our expertise we knew that once we gained an understanding of what is involved there is often a clear and pragmatic solution.
if you stand baCk and fully Consider the issues, understand the faCts and CirCumstanCes, there is a means to provide a valuation With sound reasoning and justifiCation.
“
www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial | Commercial Matters Summer 2015 | Page 7
Richard Higgins is in charge of our commercial investment and agency division.
Harry Stott is a commercial and development specialist at CKD Galbraith’s Perth and Edinburgh offices.
[email protected] 0131 240 6966
[email protected] 465 065
Page 8 | Commercial Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial
most moDern leases of commercial premises are drawn on a FRI (full repairing and insuring) basis. This means the
tenant relieves the landlord of all liability for repairing and insuring the property.
There are generally two options: a standalone lease where the entire building is let to a tenant, or an airspace lease where there are multiple occupants. In the latter case the landlord will retain the
repairing obligation and recover costs from all the tenants, usually through a service charge.
Before taking a lease, tenants normally instruct professional advisors to survey the current repair of the property and note any “patent defects”. If the defect is obvious to a professional surveyor there will be no remedy from the landlord if the tenant then finds themselves liable for the cost of a repair. But what protection is there if the fault is a “latent defect” – a
hidden fault that only becomes apparent with time?
Examples could be glazing which has suffered nickel sulphide inclusion, defective tanking allowing basements to let in water, inadequate wind posts or wall tiles, causing movement and damage to walls or inadequate foundations, causing subsidence to the building.
If a tenant has signed a lease with the wording: “The tenant accepts the premises at the commencement of the lease in proper tenantable condition,” then the tenant is responsible for the cost of any future repairs.
In a new-build property one potential
fri: how to avoid the elephant trapsPam Over sets out the issues raised by full repairing and insuring leases from the tenant’s perspective.
www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial | Commercial Matters Summer 2015 | Page 9
solution is for the tenant to have a collateral warranty from the original contractor and/or design team.
A collateral warranty gives the tenant a right of action against the warranty provider in respect of any breach of the building contract terms in relation to the contractor or in terms of the appointment documentation in relation to the consultants. Unfortunately, this may not be sufficient if the defect is discovered outwith the limitation period or if the contractor has become insolvent.
A belt-and-braces approach is to specifically exclude any responsibility for latent and inherent defects. This is the advised approach for new-build properties as it makes sure the risk of uncertain issues remains with the landlord. It also ensures that in multi–let properties the landlord cannot seek to remedy the defect and recover the cost through the service charge.
To avoid the elephant trap, remember:
• When entering into a lease a tenant should be careful to instruct the necessary surveys.
• If a fault or defect is obvious but not noted in the surveys the tenant will not have recovery against the landlord.
• If the fault is latent the tenant must have excluded liability for latent and inherent defects from the repairing clauses otherwise they may be liable for the potentially substantial costs to remedy the situation.
• A collateral warranty gives the tenant a degree of protection but will have a limited lifespan and depends on the provider remaining solvent.
the cost of the a/C time bombmartin Cassels explains the implications of the recent ban on r22 gas in air conditioning units – including who foots the bill for the upgrades.
Pam Over is based in Edinburgh and leads CKD Galbraith’s commercial team.
[email protected] 0131 240 6965
in January 2015, it became illegal to use hydrochlorofluorocarbons (HCFCs), including the ozone-depleting refrigerant gas R22. The outright ban of this refrigerant,
commonly used in air conditioning systems pre-dating 2004, will have a major effect on air-conditioning costs.
Since 2010 it has only been possible to use recycled R22 to recharge or main-tain equipment and from January 2015, systems are not to be topped up with any R22 at all.
There are two options to consider for the future. Either the systems are replaced with new A/C equipment or a modern refrigerant is used to replace the R22. The second option often involves replacing system parts or pipes and can lead to leaks, so the costs and practicalities may ultimately mean that installing a new A/C system is the only viable option.
A third, unsustainable, option involves continuing to run the equipment, but as it cannot be repaired or maintained it will soon need to be replaced.
The key question for landlords and tenants is: who pays for these options?
In a multi-let building, the service charge provisions determine if the landlord can recover costs of dealing with the prob-lem from tenants. It will be important to ascertain whether the provisions allow for the costs of repair, improvement and/or replacement of any A/C system to be charged to the tenants.
In addition, it is not always clear what actually constitutes repair, improvement or replacement. For example, is the A/C equipment in disrepair if it is still able to function, although not in the most energy-efficient way?
For current tenants occupying buildings on Full Repairing and Insuring (FRI) terms, it is now impossible to maintain any system containing R22 – the equip-ment has to be replaced. If the system is not working or R22 has not been replaced,
this is a relevant part of a dilapidations claim at lease expiry.
The explosion in use of VRF (Variable Refrigerant Flow) air conditioning systems – electric heating and cooling – raises some interesting issues for landlords and tenants.
In the past, many properties used tradi-tional gas fired boilers and radiators and little or no cooling. VRF has a limited life span, usually 15-20 years, but our Building Surveying team’s recent experience has shown that some inferior quality systems need major repair or complete replace-ment in as little as 10-12 years – well within normal institutional lease terms.
The cost implications for landlords or
tenants can be immense so the simple message is that pre-planning is essential, either before lease expiry as a landlord or in proper due diligence before entering a new lease as a tenant.
Of course there are energy efficiency issues to consider and the demands of modern day occupancy, but it begs the question whether the old gas boiler rumbling in the basement for 50 years is
perhaps not such a bad thing after all!
Martin Cassels is in charge of CKD Galbraith’s building
surveying team.
[email protected] 0131 240 6992
a belt-and-braCes approaCh is to speCifiCally exClude any responsibility for latent and inherent defeCts. this is the advised approaCh for neW-build properties.
“
Page 10 | Commercial Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial
David Clarke recommends a simple strategy for private investors.
for tHe year ending December 2014, the IPD Annual Property Index, showed a near record break-
ing total return of 17.8% with an income return of 5.2% and capital growth of 12.0%. When compared to the other main asset classes, property has shown signifi-cant outperformance in recent years:
asset Class annualised total returns 1 yr 3 yr 5 yr 10 yr All Property 17.8 10.5 10.9 6.2 Property Equities 24.3 23.7 12.3 2.4 Equities 0.5 9.5 7.7 6.8 Bonds 11.8 3.5 7.1 6.3
It is likely that future performance will be more driven by income returns with fore-casts predicting modest capital growth in 2015/16 and annualised total returns in the region of 5-6% over the next five years.
If building a small portfolio of up to £10m our view would be to start with about £4m of assets with longer term secure income as the core. Then adding higher yielding assets with some value-add opportuni-
ties. With the bulk of returns due to derive from income over the next few years we feel this is where investors should focus while not overlooking capital returns.
High Street retail offers well let, longer income. A shop in central Edinburgh or Glasgow may offer 10 years income to a national multiple with a strong covenant. The security offered is reflected in a lower income return of 5-6%. Smaller towns will offer higher returns, reflecting the less prime nature of the pitches.
With core income secured, an investor could look to increase the overall portfo-lio income return. Multi-let industrial or trade-counter assets offer higher returns with shorter leases and a range of tenant covenants. Being multi-let derisks the shorter leases and allows for asset man-agement to add value and create rental growth. With industrial offering yields from 6.5% to 10% plus, assets can be found to fit with most portfolio strategies.
Offices can offer good returns, but the cyclical nature of their performance can create risk. The key is the timing of the purchase and an exit at the right time in the cycle in both the market and capital expenditure profile of the building.
This would lead to a portfolio of about £10m split roughly 40/60 between retail
and industrial assets yielding around 6.5-7.5% for an investor before manage-ment costs are deducted. With value-add opportunities an annual ungeared total return of 10% plus in a normal year could be achievable.
To improve returns, investors could look to add gearing to portfolios. This will
boost income returns, but we would be cautious about leveraging too highly at present.
CKD Galbraith build individual portfolios with values in excess of £20m. As well as continuing to give strategic advice on these we have current requirements on behalf of other investors for various assets of up to £5m in lot size as seed assets for new portfolios.
Sotheby’s relocates to Thistle Street, EdinburghCKD Galbraith worked with international auctioneers Sotheby’s to secure a relocation within Edinburgh to improve the quality and efficiency of their Scottish office space. We worked with them to surrender their lease at Howe Street, which had just under a year to run.
Marketing agent Katie Gibson sourced a range of alternative options to better suit their future requirements, which included a central location.
She worked closely with the Sotheby’s team to view six possibilities and draw up a shortlist of three to negotiate best terms as well as working with them to secure the right deal, ensuring considerable savings in surrender and lease negotiation, including dilapidations.
The company moved into part of the ground floor of a three-storey refurbished townhouse at 21-23 Thistle House, Thistle Street, Edinburgh EH2 1DF, at the end of March.
The office space includes meeting room, kitchen area and – importantly – ground floor brand prominence on Thistle Street.
OSCARS moves into Cairncross House
The top floor suite (1,695 sq ft) of Cairncross House, 25 Union Street, Edinburgh EH1 3LR, was successfully let to new tenant OSCARS (Out of School Scotland) by CKD Galbraith on behalf of landlord C & W Assets Ltd.
A headline rent with minimum rent-free and full repairing and insuring basis was secured. Only one ground floor suite of 743 sq ft remains available.
Big brands secured at Castle Street, EdinburghCKD Galbraith has secured a second high profile brand at 10 Castle Street, Edinburgh EH2 3AT, on behalf of a private landlord.
Watts Plc, a national building surveying company, moved in
to the 971 sq ft first floor office during January 2015 on a five-year lease at a rent of £17 sq ft.
CKD Galbraith was instructed in May 2014 to take over the marketing of the three-storey townhouse.
Previously let in its entirely to Ukio Bankas, which went into administration, the building was lying vacant until CKD Galbraith came on
board. Since then, they have let the basement to Lululemon for their Athletica Showroom and the top floor to Temporis Capital.
The ground floor is still available for let and offers excellent brand visibility on to Castle Street.
Deal rounD-uP
David Clarke provides commercial investment, agency and portfolio management services.
[email protected] 01786 434 630
How to build a small portfolio
assets Can be found to fit With most portfolio strategies.
“
www.ckdgalbraith.co.uk | Twitter: @CKDGCommercial | Commercial Matters Summer 2015 | Page 11
soCial meDia is a term we hear every day and a tool that has transformed the way we communicate. The various platforms – Facebook, Insta-
gram, Twitter, YouTube, Pinterest – have been the making of new companies and helped existing businesses expand. It’s inevitable that social media marketing has had an impact, but how has it affected commercial property?
The first social media platform we usually think of is Facebook – and with 1.39 billion active users around the world at the last count, that’s hardly surprising. Regarded as a more ‘personal’ form of communication, it’s one where our residential colleagues have had great success, but in my opinion it’s not a place where people really want to do business.
Twitter works well as a “micro website” for a company, campaign or cause. I started an account for Thistle St Lane – a beautiful mews office block we are mar-keting in Edinburgh (www.twitter.com/ThistleStLaneSW) which allowed us to interact with potential occupiers and share updates on everything from building renovations, viewings, local attractions and even sightings of David Beckham in the area!
The professional networking site LinkedIn offers a great way of bringing existing contacts online and establishing new ones. When it comes to marketing properties, we can pitch to a largely professional audi-
ence who read the information on offer but who perhaps won’t interact until the time is right for them.
The classified listing website, Gumtree, which is not really social media, has had fantastic, free results for advertising and marketing small properties. On average we have received between five and 20 phone calls per unit. Interest tends to come from start-ups, which does bring its own challenges as they may not have the financial history landlords prefer in a tenant.
But it’s these new tenants, “the iPhone generation”, who are transforming the way the world – and commercial property – works. Google Maps makes it easy for
people to “view” properties from their office. This is a time saver for potential occupiers, but it brings new challenges for agents, who must find different ways to entice people to leave their desks and cross the threshold of com-mercial properties.
People are also doing more on the move. Visits to the CKD Galbraith website are now split 50-50 between mobile devices (including tablets) and desktop
computers while traffic from social ’refer-rals’ continues to increase year on year.
Social media may not yet have funda-mentally affected commercial property, but as the “millennials” who have grown up with social media become occupiers, landlords, surveyors and commercial agents we will see further changes. CKD Galbraith is keen to adapt quickly and that’s why we focus on the “big three” social networks: Facebook, Twitter and LinkedIn to raise our company profile. The @CKDGCommercial feed on Twit-ter allows us to share our knowledge and understanding of commercial surveying and add context for clients as well as high-lighting upcoming opportunities before they appear elsewhere.
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visits to the Ckd galbraith Website are noW split 50-50 betWeen mobile deviCes (inCluding tablets) and desktop Computers While traffiC from soCial ’referrals ’ Continues to inCrease year on year.
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CKDG Commercial@CKDGCommercial
@CKDGalbraith's Commercial team.Dealing with your office, retail & industrialneeds
Scotland, UKckdgalbraith.co.uk/commercial
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#waterballoonfight#CincoDeMayoNellie Bly#BTS1stWinPearl Thusi#WordsThatDontGetUsedEnough
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From #concept to #construction...with you every step of the way! #Projectmonitoring #Leicester #commercialproperty
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Office take up in Edinburgh for quarter 1 - 2015 shows around 200,000 sq ft of office space has been leased in this period!
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Very pleased to have secured Sotheby's Auctioneers a new office in Edinburgh City Centre. #actingforthetenant #deal #dlapiper
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What an amazing day in #Edinburgh! #lunch in the #sunshine in #princesstreet gardens! #notadayforworking
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Katie Gibson looks at how Facebook and Co are changing the way commercial property is marketed.
Thistle St Lane SW@ThistleStLaneSW
Best mews office available to rent inEdinburgh, fantastic central location1,720 sqft over 4 open plan floors,movein condition!contact @ckdgcommercial toview
The heart of Edinburgh
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Thistle St Lane SW @ThistleStLaneSW · Sep 8
Do you know it's a 6 minute walk to Waverley from my front door & 1 minute and 7 seconds to the closest bus stop! #officetolet #edinburgh
Thistle St Lane SW @ThistleStLaneSW · Aug 5
I have been very busy recently, I have had two interested parties short-list me as a building they might move into!! fingers crossed
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The closest bus stop to my front door is 1 min 7 seconds away! #hometime #bus #Edinburgh #officetolet @on_lothianbuses
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Under 2 minutes from my front door .....the #xfactor2014 audition is happening!! #Edinburgh #CENTRAL #Officetolet
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Want to make exercise part of your daily routine? I am only a 3 minute walk to Bannatynes gym! #Edinburgh @Bannatyne #excercise #officetolet 1
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My rent is £13.00 sq ft compared to 50 Frederick St which is £23.00 sq ft. Its clear to see I'm good value! #edinburgh #officetolet
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Katie Gibson is a well-established commercial agent
in the Edinburgh [email protected] 0131 240 6981
We operate from offices across scotland including edinburgh, aberdeen, Perth, stirling, inverness, elgin, Cupar, ayr, Castle Douglas, Kelso and Galashiels.
Property management
Kash bhatti 0131 240 6970 [email protected]
Jill Gayford 0131 240 6987 [email protected]
Pamela Gray 0131 240 6963 [email protected]
Pam over 0131 240 6965 [email protected]
asset management
David Clarke 01786 434 630 [email protected]
Pamela Gray 0131 240 6963 [email protected]
richard Higgins 0131 240 6966 [email protected]
Pam over 0131 240 6965 [email protected]
agency (investment, office, retail & industrial)
David Clarke 01786 434 630 [email protected]
Katie Gibson 0131 240 6981 [email protected]
richard Higgins 0131 240 6966 [email protected]
Harry stott 01738 456 [email protected]
facilities management
Kash bhatti 0131 240 6970 [email protected]
Planning
Calum innes 01738 456 075 [email protected]
andrew Jarvie 01786 434 638 [email protected]
robert Patrick 01738 456 [email protected]
Harry stott 01738 456 [email protected]
Project development & co-ordination
Calum innes 01738 456 075 [email protected]
Pam over 0131 240 6965 [email protected]
Professional & valuation
Pamela Gray 0131 240 6963 [email protected]
richard Higgins 0131 240 6966 [email protected]
Calum innes 01738 456 075 [email protected]
Harry stott 01738 456 [email protected]
building surveying
martin Cassels 0131 240 [email protected]
Peter scott aiton 0131 240 [email protected]
James taylor 01786 434 [email protected]
Craig Weir 0131 240 [email protected]
l Property managementl Asset managementl Commercial valuationl Professional servicesl Investment consultancyl Sales, lettings & acquisitionl Project co-ordinationl Building surveyingl Facilities management
in addition to our specialist services, we manage in excess of £450 million of commercial property across the uK. We deal with around 750 tenants in more than 120 properties from single units to large multi-let environments such as shopping centres.
offices across scotland | sales & lettings | farm & estate sales & acquisitions | Commercial | rural | energyforestry | Property & land management | sporting | agricultural loans | subsidy trading & advice
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www.ckdgalbraith.co.uk
