Core Services

• strategic vision
• strategic property analysis
• property-related business and accomodation modelling
• relocation management
• relocation review
• property audits
• exit strategies
• space reduction

The Midas Touch

Leader

Welcome to the Spring 2007 edition of 'The Midas Touch', the quarterly newsletter of Midas Corporate Consulting, the market-leading business property consultancy.

We are in the process of forwarding our business development plans for 2007/8. Our goal is to make a significant and lasting positive impact to the way that organisations consider and use property both in the UK and worldwide.

We have reviewed our mission statement and our range of services to ensure that we increase our clients' performance by providing high-value services to allow for the strategic use of property, its delivery, management and disposal. Key to this will be access to information and resources to provide sustainable, quality working environments that best serve the needs of our clients´ and their stakeholders.

With these objectives in mind, this issue covers two new services that Midas is launching. We are now able to provide online hosting services to provide clients with fast and easily accessible information that will aid their business planning and decision making. By expanding our web-based services alongside the telephone-based consultancy support that we provide as a type of "help desk", we can now offer our clients increased control by providing document access, calendar and email via a secure web-enabled system.

We have also launched a new property health check for our clients, the Property Diagnostic, a useful check-list for any property manager considering strategic property planning and how it may affect their organisation.

This quarter we learn from the enthusiastic gold-seekers of the 19th century and consider how gold mining is similar to the role played by the property consultant. Midas is committed to seeking out solid golden nuggets that will improve business returns for its advice to its clients and takes some positive inspiration from the past.

Finally, please feel free to contact Midas with your suggestions, comments or questions. And, if you like what you read here, then please let us know of any colleagues or business associates whom you think would find our newsletter valuable.

Best regards,

Andrew Pegg
Managing Director

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News

The latest Budget is likely to have negative impacts for some commercial property owners. In his Budget of 21 March, Chancellor Gordon Brown announced the Government´s intention to modernise empty property relief from business rates in a bid to enhance the supply of commercial property, reduce rents and improve access for firms.

The reforms will reduce the duration of the existing empty property relief from business rates to three months for all properties and six months for industrial and warehouse properties.

Currently industrial and warehouse property receives 100% rates relief on vacant property, whereas remaining occupiers receive three months full rates relief and then pay 50% of the full occupied charges. These changes are due to take effect with effect from 1st April 2008.

Complete exemptions from rates will be given on empty property owned by charities.

The Royal Institution for Chartered Surveyors (RICS) estimates that the revenue generated by the removal of empty property rate relief could equate to more than £1bn per annum and predicts this decision will have negative impacts on commercial property. The retail sector alone has an aggregate rateable value of £38bn. Current estimates show 7% of this stock as vacant, which would suggest an aggregate rateable value for vacant retail property of more than £2.5bn.

Midas advises businesses to look at capital allowances that may be available. Whilst many millions go unclaimed each year, unused allowances can be claimed. This could be of particular interest on M&A or consolidation or when taking a long lease on a building or affecting a sale and lease back. Proper tax advice forms an integral part of any property strategy.

Published alongside the Budget was the final report by Sir Michael Lyons which looks at the future role, function and funding of local government - Place-shaping: a shared ambition for the future of local government.

The Lyons Inquiry Review places importance on the role and function of local government in the 'place-shaping process' and urges good communication between central and local government. Of relevance for commercial occupiers, the Inquiry calls on the Government to retain the national structure currently regulating business rates but recommends a review for long-term reforms including localisation.

The aim behind this recommendation is to foster a positive relationship between local authorities and businesses. The report also calls for reforms of the tax relief system for empty property and previously developed land relief to promote better use of available space.

Midas believes that managing empty space within buildings could yield savings on business rates. The reduction in rates relief for industrial property will increase the burden on companies trying to reduce surplus property costs whilst they dispose of surplus space and may lead some businesses and landlords reverting to making property un-lettable so it can be taken out of rating. However, this could be counter-productive in the long term without an effective exit strategy.

Midas has launched its Property Diagnostic® for its clients to help them make strategic property decisions.

The bespoke tool has been developed for companies and organisations so that property managers can identify the key property-related issues to consider affecting their organisations, in areas such as business planning, property management, compliances, property costs, tenure and relationships.

For more information, please contact Midas.

Midas has been invited to outline a business research project for the Cass Business School. The project will allow chosen candidates for the scheme to develop their insight into business strategy.

This year's project is entitled 'Evolving working practices that will improve business competitiveness'. The project's main objective is to assess the impact for occupiers of future ways of working on the demand for commercial property which are having widespread but undocumented impacts on businesses whatever their size.

Candidates will also have the opportunity to learn about the wider economic impacts of future ways of working, and study costs and benefits in a typical occupier organisation.

On 3 May 2007, elections are due to take place in Scotland, Northern Ireland and Wales. Mindful of this, Scottish Communities Minister, Rhona Brankin, launched the Scottish Property Federation (SPF) at the end of February, as part of her campaign to promote property as a means to Scottish success.

The property and construction sectors account for 14 percent of Scottish GDP, and over 200 property professionals and MSPs attended the launch of the SPF at Edinburgh Castle. One of the key objectives of interest to developers was outlined by Brankin as "the development of physical infrastructure, townscapes and facilities". She urged developers to show their discontent with last December's Planning Act (Scotland), which brought a shake-up for the industry.

The Mayor of London, Ken Livingstone, plans to open up his London Development Agency's massive land bank to foreign developers in a bid to break a planning deadlock in the capital. This move follows concerns over the trend for developers to delay building homes on large sites to maximize sales profits.

City Hall figures reveal there are around 85,000 homes in the planning pipeline in London that are not being built. The Mayor believes the incentive to delay building would be removed by keeping the land in public ownership. This deadlock on land development is considered a direct result of increasingly high land costs.

In an attempt to kick-start development, Mr. Livingstone wants to entice housing associations and developers to build homes on the public land, and the project will involve the LDA and Housing Corporation. City Hall will soon be commissioning a team of consultants to check the economic viability of the project.

Midas believes that the focus on providing housing land in the capital will defer problems for the future unless adequate master planning protects employment sites. The already shortening supply of employment land in most London boroughs is causing difficulties for businesses looking to move as well as pushing up the cost of doing business in London. In the long run, more people within the capital will need work spaces.

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Meet the team

Managing Director - Andrew Pegg
Director of Business Analysis - Chido Ikeyina
Director of Strategic Consulting - Julian Capell
Team PA - Wendy Slane

To contact any of the Midas team, please click on their names above.

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Best practice

Professional Competence

Andrew Pegg has been selected for training to become a Chairman on RICS Assessment of Professional Competence (APC) panels alongside Julian Capell. The APC panel ensures the attainment of professional competence within standards set by the Royal Institution of Chartered Surveyors.

Online Hosting

Midas is moving to online hosting to provide its clients with greater access and exchange of information about their specific business property issues.

Online hosting allows service providers to provide a single resource for their clients to access and share information pertinent to their business. The new Midas online hosting system is intended primarily for clients, and the secure site will store data centrally to allow clients to access documentation. This central resource will be time-efficient and help avoid duplication. Online hosting will also enable online access when colleagues and clients are on the move.

Midas believes this expansion into online hosting will not only strengthen its virtual business capabilities but also help its clients and team focus better on fast decision-making with information on hand at anytime via the web.

For more information, please contact contact Midas.

Commercial Lease Code

Commercial landlords are being asked to pledge their support for the amended commercial lease code, and adjust their standard lease terms so they are code-compliant.

The third edition of the Commercial Lease Code was launched on 28 March 2007, and the three documents that form the Code (Landlord Code, Occupier Guide and Model Heads of Terms) can all be found in the Resources section of the Midas Website, www.midascorporateconsulting.com.

Although the Landlord Code remains voluntary, Midas would assume best practice would mean that commercial landlords should follow it wherever possible, and if they are not, they should state that they are not following the code requirement and should explain the reason why. In addition, prospective tenants should be made aware of the Code and landlords should give their agents and lawyers specific instructions to do this.

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Case Study

Seeking a cheap property service or investing in an accommodation strategy?

Midas was recently in discussions with a global financial services company based in London which has a long-term problem of expansion space whilst sub-letting space within its HQ. We advised the company to focus on addressing the underlying issue with their existing property, rather than search for new premises. This meant they needed to first identify whether there were any residual, long-term problems in the property they currently occupy.

Unlike many other consultants for whom the key aim is to find a transaction-based solution for clients, Midas looks to implement a strategic approach to property, developing long-term solutions to business concerns, focusing on business improvement not simply property procurement and its relative cost.

Midas provides strategic consultancy services for the international IT outsourcer, Fujitsu Europe, and global insurers Marsh and McLennan, identifying the long-term property needs for these businesses.

Our Value Release Model involves Midas assisting senior executives and decision-makers in organisations to identify activities where they are effective as well as the non-lucrative markets where an exit strategy will be required. We also help clients to examine alternative procurement methods, such as outsourcing in relation to their long-term strategy and attitude to risk.

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Viewpoint

Panning for gold - developing a corporate property strategy

By Andrew Pegg, Midas Managing Director

"In 1849, when the west was still young and wild, immigrants from all over the world rushed to California. Their goal was clear - to search for valuable gold dust in the hills and streams far away.

Today, property is a considered an increasingly valuable commodity from professional investors and prospectors alike seeking to make above normal returns in unusual market conditions.

There is increasing pressure from City-based advisers to seek out and extract the best value for companies with a perceived land bank. M&S and Sainsbury's are recent cases in point, looking to extract "value" through sale and lease backs which may hamstring a company's future performance down stream.

Whether the high level of interest and value will continue is debatable as many professional commercial investors are now publicly calling the market. The recent boom has been yield-driven, which is good news for transaction-orientated advisers. For corporate property specialists like me, the question is: where is the underlying property value (i.e. tenant demand and rising rents) going to come from?

I see the role of our team as being analogous with that of the prudent gold prospectors but looking at property from a perspective of business need first. We sift through the murky waters of mis or incomplete information to help inform better strategic decision-making and implementation processes. Careful prospecting is more likely to yield greater returns rather than an unconsidered approach.

At Midas we look beyond these golden promises for a company, to find the real golden ´nuggets´ - long-term improvement strategies for developing companies whose business needs and hence property demands are ever changing. I believe that prospecting, using proven evaluation techniques and efficient tools are key when trying to strike gold, and like the miners, we at Midas have the understanding, analytical approach and know-how to help our clients find the gold - what they want to achieve for their business.

Over 168 years later, Midas has its sifting pans at the ready in the rush to filter out long-term solutions for its clients, giving them a golden opportunity for the future."

Latest Midas publications

• Give and Take, Andrew Pegg interview with Eila Rana, March 2007, CFO Europe.Com
Size Really Does Matter When it Comes To Premises, Andrew Pegg, March 2007, Estates Gazette

Competition

Competition winner: The winner of last issue's competition was Mr. John Storey UK National Portfolio Manager of Unilever who has been sent his bottle of Champagne.

The correct answers were:
1. Mount Everest stands in Nepal and China (Tibet).
2. The Olympics' symbol of five interlocking rings represent the five continents from which the competing teams come.
3. Revised Part L of the Building Regulations will impact business occupiers.

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