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Thursday 21st March 2013
As the government continues to shrink its balance sheet, reducing its property portfolio remains a major plank of the wider austerity package, writes Graeme Davies.
25 March 2013
But hundreds of buildings were empty and hundreds more either underemployed, unfit for purpose, or coming towards the end of their useful life. As the government continues to shrink its balance sheet, reducing its property portfolio remains a major plank of the wider austerity package.
Amid the government's land holdings are many redundant buildings and others that, due to spending cuts, are unlikely to be used for much longer. Huge savings have already been made, rationalising the estate and introducing increasingly flexible working practices, such as hot-desking.
Under cabinet secretary Francis Maude's direction, the government claimed savings of £100 million on its estate in the year to April 2012, following a saving of £90 million in the previous financial year. After six months of the current year it said it had saved a further £168 million from exiting leases and PFI properties. In total, the government claims to have saved the taxpayer £1 billion on property costs since the coalition was elected in 2010. But what are the implications for outsourcers and FM operators who have previously built considerable businesses around managing buildings on behalf of the government?
Clearly, there is a smaller pool of government business to be shared around. As its estate shrinks, this will be felt for some companies whose FM contracts expire alongside government leases and are not renewed. There could be a boost for some companies that specialise in converting and refurbishing offices, and those that maintain empty buildings.
As the government encourages the provision of more housing, many government buildings are being turned over to developers for conversion into residential units (Fetter Lane in London, which is being converted by Taylor Wimpey, is one example.)
At the same time, there may be opportunities. Some FM specialists could benefit, such as those able to help the government make more efficient use of its estate. This can readily be achieved through the modernisation of existing buildings and assisting with developing a more flexible civil service workforce. This means reshaping and re-purposing buildings for more flexible working, as hot-desking becomes the norm in many departments. The likes of Capita already have departments specialising in public sector property rationalisation.
But, as with so many other themes in the sector at the moment, this practice seems to favour larger operators who are better able to service contracts across multiple sites and to bring the necessary specialist skills.
But for smaller operators, a chink of light has opened up in terms of government work: the incoming Single Supplier Registration platform. Once implemented, this will allow all potential government suppliers to register and view tenders and contracts in one centralised system, thus cutting down the amount of administrative work required to tender for contracts.
There is little doubt that the rationalisation process has some considerable distance to run. It will inevitably have a knock-on effect for some companies that lose out on their more traditional FM service contracts as buildings are taken out of the public sector. But for some companies, this will simply open up opportunities elsewhere.
Graeme Davies writes for Investors Chronicle
At the start of last year, the government occupied almost 14,000 buildings across the UK, with a footprint in excess of 16 million square metres - six times the size of the City of London.
But hundreds of buildings were empty and hundreds more either underemployed, unfit for purpose, or coming towards the end of their useful life. As the government continues to shrink its balance sheet, reducing its property portfolio remains a major plank of the wider austerity package.
Amid the government's land holdings are many redundant buildings and others that, due to spending cuts, are unlikely to be used for much longer. Huge savings have already been made, rationalising the estate and introducing increasingly flexible working practices, such as hot-desking.
Under cabinet secretary Francis Maude's direction, the government claimed savings of £100 million on its estate in the year to April 2012, following a saving of £90 million in the previous financial year. After six months of the current year it said it had saved a further £168 million from exiting leases and PFI properties. In total, the government claims to have saved the taxpayer £1 billion on property costs since the coalition was elected in 2010. But what are the implications for outsourcers and FM operators who have previously built considerable businesses around managing buildings on behalf of the government?
Clearly, there is a smaller pool of government business to be shared around. As its estate shrinks, this will be felt for some companies whose FM contracts expire alongside government leases and are not renewed. There could be a boost for some companies that specialise in converting and refurbishing offices, and those that maintain empty buildings.
As the government encourages the provision of more housing, many government buildings are being turned over to developers for conversion into residential units (Fetter Lane in London, which is being converted by Taylor Wimpey, is one example.)
At the same time, there may be opportunities. Some FM specialists could benefit, such as those able to help the government make more efficient use of its estate. This can readily be achieved through the modernisation of existing buildings and assisting with developing a more flexible civil service workforce. This means reshaping and re-purposing buildings for more flexible working, as hot-desking becomes the norm in many departments. The likes of Capita already have departments specialising in public sector property rationalisation.
But, as with so many other themes in the sector at the moment, this practice seems to favour larger operators who are better able to service contracts across multiple sites and to bring the necessary specialist skills.
But for smaller operators, a chink of light has opened up in terms of government work: the incoming Single Supplier Registration platform. Once implemented, this will allow all potential government suppliers to register and view tenders and contracts in one centralised system, thus cutting down the amount of administrative work required to tender for contracts.
There is little doubt that the rationalisation process has some considerable distance to run. It will inevitably have a knock-on effect for some companies that lose out on their more traditional FM service contracts as buildings are taken out of the public sector. But for some companies, this will simply open up opportunities elsewhere.
Graeme Davies writes for Investors Chronicle