Saving costs through relocation was high on the agenda of the IPD Occupiers’ Property in Business conference, held last month at the Carlton Tower, London.
But the speech from civil service relocation adviser Sir Michael Lyons was explicit about how these could be achieved. He said that half the £30bn of savings targeted in his report for the chancellor have now been identified, and that the relevant departments were in the process of planning relocations and disposals.
The independent adviser to the government suggested that, unsurprisingly, the highest asset values, and thus the easiest savings, were to be found in central London. He also acknowledged that reaching the full £30bn of property asset disposals would be a stretch, but claimed it was achievable.
However, Lyons had bad news for regional developers hoping to attract major relocations from the capital. While there would be a significant number of those, not all the savings would come from moving people, he said. Some would come from changing the way people worked.
Focus on service delivery
“Public service delivery has all too often been blocked by property,” he said, suggesting that the Victorian model of school, library and town hall, with one service per building, has dominated too long and needed to change. Instead, he said, the government was following his advice to focus on service delivery, rather than asset acquisition. He highlighted health secretary Patricia Hewitt’s recent statement that she would be spending more money on medical care rather than hospitals as one example.
“We need peripatetic medical teams in cars or on motorbikes, delivering care at home, so there’s no need for a hospital visit at all,” said Lyons. “We need to get policemen out of police stations and make more use of technology to deliver services to people.”
And it is this change in working patterns that might pose the biggest challenge for property professionals. The corporate real estate industry must forge closer links with HR and IT departments, or face being marginalised, and must adapt its training to match.
Speakers ranging from BBC head of corporate real estate Chris Kane to Lyons reiterated the message that property should be just one part of a general workplace support function but suggested the industry was ill-equipped with the necessary skills.
Nick Axford from CB Richard Ellis asked from the floor if the RICS should change its requirements for graduate training, to move away from “cross-sections of Victorian windows” to more business-relevant skills. This year, a significant portion of CBRE’s graduate intake would not be seeking RICS accreditation, he said later.
Professor Virginia Gibson of the Reading University Business School countered by saying that it was important that graduates learned the basic skills, but that later, broader training was needed. “The property industry is not very good at investing mid-career to shift skills,” she said.
Robert Peto, chairman both of DTZ and the RICS valuation faculty, said: “It’s a dangerous concept not to teach students the basics of real estate. Spending time with HR and IT teams to broaden their knowledge is something they should be doing, but not at 18-21.”
Overall, the conference conveyed the positive message that property has achieved a higher profile at board level.
In business, the world of facilities management has subtly shifted into the more prestigious corporate real estate role. And with that change have come demands that property professionals within businesses and those that seek to do business with them raise their game, and come with a hard business agenda and a lack of property jargon on their lips.
The subtle name change for the conference host from Occupiers Property Databank to IPD Occupiers and the arrival of a new conference co-host in the form of the CBI have also marked the shift in how seriously property is being taken by company boards.
Speak the language of business
Just to drive the point home, Michael Jorroff, a senior lecturer at the Massachusetts Institute of Technology, who hosted debates after each set of speakers, timed how long it took each speaker to mention property. The longer, the better, was his theory.
Indeed, even while many speakers stressed how important it was to get property to be taken seriously at board level, it was recognised that it was the property professional’s duty to speak the language of business, not the board’s responsibility to understand the language of property.
And delegates from the operating side were more interested in external issues. Take sustainability, for example. The director-general of the CBI, Sir Digby Jones warned that the EU Energy Directive on Buildings could seriously damage the UK’s international competitiveness if it was not applied uniformly across member states. “I do not want to see, as we have in the past, that some countries stick to the law, and some don’t.”
Jones suggested there was a distinction between the “beer drinking” northern countries of Europe, which follow the rules, and the “wine drinking” southern members, which don’t.
Jones also shared the story of how one of his predecessors had planned to consolidate many trade bodies into Centre Point and had gone ahead and taken a lease before getting any others to sign up. The financial consequences of that rash property decision took years to unravel.
