Property in business - a waste of space?
| Type | Report |
|---|---|
| Author(s) | Bootle,R. , Kalyan,S. |
| Publication year | 2002 |
| URL (web address) | jmacdonnell@rics.org.uk |
| Notes | ID: BOOTLE2002; A recent study commissioned by the RICS corporate occupiers group reporting a macro economoic analysis of the UK commercial and industrial property which reaches the headline conclusion that UK business may be throwing away up to £18 billion a year through inefficiency in their use of property. How valid is the conclusion? Thet start with National Blue Book statistics from 2000, valuing all UK property at £2000bn of which £1500bn is residential. Taking education, utilities leisure medical and government out of the remaining £500bn they arrive at approximately £400bn of assets, of which 80% is commercial property. One has to assume these are the best statistics available. In terms of overall balance sheets property held accounts for only some 3% of total business assets. At current prices the assets are calculated to contribute £78.3bn to UK GDP, 47.3 of it as imputed rent of owner occupiers and 23 as rental income. Internal operational spend on Facilities Management which, outside london, can be 50% of occupancy costs is not included in the above figure. Estimating it on the basis of area the authors arise at an addiotional 13 to 14bn (1.5% of GDP) with a further 11 billion on construction of commercial property taking the total GDP contibution of the sector above 100bn. The authors go on to examine ways of reducing this cost, suggesting benchmarking and density changes (without dwelling in practice on the difficultis of either). Their key claim is based on the latest Gerald Eves survey (the statistical validity of which has not been tested) that leasholders achieve higher average densities of occupation because, it is argued, they are more aware of costs. Again the point could be debated. Are more inefficiently occupied 'head office' buildings held as freehold perhaps. They use the overall numbers to argue that savings of £7 to 9.5bn per years are available to owneroccupiers on these grounds. The feasibility of disposal of notional surplus space is again not examined. Drawing on the same source for occupation densities related to new ways of working another £8bn p.a is claimed to be available from space reductions. There is an admittal that the figure does not allow for the initiasl costs of a change (or the increased IT costs in some NWOW). Finally a further 31.3bn per annum is estimated as a 10% reduction over existing FM spends. There are questions about the generaliasations, questions which reinforce the need for research. There are also questions about the feasibility of some of the approachs in practice. That said and given the level of analysis the report does a commendable job in highlighting the scale of the opportunity, even at the level of cost. |
| Start page | 1 |
| End page | 92 |
| Availability | £50 to members else £100 |
| Relevance to practice | High |
| Ease of application | Not addressed |
| Stage of application | Occupancy decision |
| Evidence base | As good as is available |
| Readability | High |
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