In these highly turbulent market conditions, pro-active property asset management has never been more important in terms of driving value and “sweating assets” to produce either capital or income returns.
An asset manager needs to have market awareness but also the flexibility to recognise when and where a change of strategy may be required in order to best advise their client.
Specialist property asset managers Fairhurst Estates Limited – FEL – advise and act on behalf of clients throughout the UK and have recently co-ordinated two such examples of active asset management, leading to a significant increase in the capital and income returns for their client.
FEL’s Estates Director, Nigel Blyth, explains how a new approach can work to your advantage:
“We were involved a mixed-use site standing on 1.5 acres of land on a pretty riverside location overlooking the Dee in Chester.
“As an existing warehouse building and a three-storey office building of 6,000 ft2, re-letting on conventional terms, on single floors, was less likely. But, by converting the vacant office building into a serviced office centre, we produced a suite of compact offices that could be let on very flexible terms with a simplified and transparent charging structure.
“The rent and pricing was pitched competitively to attract maximum interest and soon reached 90-95% occupancy, where they remain today; in fact, the ongoing problem is now lack of vacant space to let!”
FEL’s second phase of their asset management strategy included a number of initiatives to reduce operating costs and increase rental levels to maximise income returns. Over a period of time, the rents were increased while remaining price competitive with competing schemes in the area. Tenant turnover is now extremely low and existing loyal tenants particularly enjoy the waterside setting, competitive rental terms, clear and transparent pricing structures and a high quality building where the quality evolves through redecoration and refurbishment programmes.
Nigel continues: “A similar project saw a 14,000 ft2 warehouse unit split into a combination of office and warehouse space, incorporating raised floors, air conditioning and new decoration throughout.
“We were able to co-ordinate both the agreement of the deal and the project management of the refurbishment project. The final deal provided bespoke premises that suited the incoming tenant’s immediate and future needs, and produced a high quality office product out of redundant warehouse space that could easily be converted into serviced offices to expand the successful business centre in the future if required.
“In summary, a flexible approach and lateral thinking has produced a revised high quality product that continues to be popular with its tenants, enjoying extremely high occupancy rates. The problem and holding costs of an empty property were turned into a highly effective solution using a combination of the right advice, a flexible client and a degree of capital investment.”
Expert Opinion provided by Nigel Blyth, Estates Director at Fairhurst Estates Limited