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ISSUE 8 SEPTEMBER 2017 FGBUR NETT.CO.UK

INSIDE THIS ISSUE Towards Economic Renaissance Drive Thru and Drive To The Silver Fin Building Taking Care of the Workplace

Welcome to our new look Property Matters, subtle changes but definitely still full of articles expressing our opinions and illustrating our expertise and range of skills across commercial property. Despite the economic challenges there is never any shortage of material for our regular bulletin. There can be no better illustration of what we have been up to than to share deals and case studies, our sector and geographic reach is wide ranging.

We are introducing guest contributors going forward and we are setting the bar very high from the outset by securing a piece from Jennifer Craw, Chief Executive of Opportunity North East, the private sector’s response to the economic challenges in the region. We are certain you will enjoy her contribution. If FG Burnett can assist you on commercial Property Matters then please do not hesitate to contact us.


ISSUE 8 SEPTEMBER 2017

Welcome The publication of this issue of Property Matters coincides with the biennial SPE Offshore Europe Conference and Exhibition, Europe’s leading E&P event. Although very much a technology led conference, delegates visiting Aberdeen for the event may well diarise a review of local property assets. Indeed, a number of our energy sector clients are already scheduled to see us during “Oil Week” to discuss their commercial property requirements, whether they are looking to upsize, relocate or renew an existing lease. Other investment decisions may be to remain in situ and invest in the upgrading of existing facilities rather than relocate. 2017 has seen a number of new entrants in the market seeking office space. Siccar Point Energy successfully acquired OMV (UK) at the end of last year following the acquisition of an interest in the Mariner oil field some months before. They have taken 7,700 sq.ft at H2, Hill of Rubislaw. Chrysaor recently acquired £2.46 Billion of Shell’s assets and are currently under offer at The Capitol, taking c. 48,000 sq.ft of office space. Other new entrants include Anasuria Operating Company (AOC) and Ping Petroleum who have active requirements in the market place – all of these hopefully signal a change

“A NUMBER OF OUR ENERGY SECTOR CLIENTS ARE ALREADY SCHEDULED TO SEE US DURING “OIL WEEK” TO DISCUSS THEIR COMMERCIAL PROPERTY REQUIREMENTS, WHETHER THEY ARE LOOKING TO UPSIZE, RELOCATE OR RENEW AN EXISTING LEASE.” RICHARD NOBLE

in the tide and the market is starting to head in a more positive direction. When you see INEOS making significant North Sea investments, and Israel’s Delek Group acquiring Ithaca Energy, you see the optimism for the future of the North Sea. BP’s very public commitment to the sector is a wonderful vote of confidence. The Conference, whilst based at AECC – Bridge of Don, always ensures that hotels, bars and restaurants throughout the city benefit from increased trade, a spin off these businesses will welcome given current economic challenges. I hope all delegates have a successful, productive conference and enjoy what Aberdeen City Centre has to offer along the way. Richard Noble, Managing Director richard.noble@fgburnett.co.uk

MARIE CURIE FG Burnett is delighted to support Marie Curie as its corporate nominated charity for 2017. The company’s main fundraising event this year in support of the charity is the inaugural “FG Burnett Charity Pétanque Tournament” at Aberdeen Grammar School FP Club. The FP Club’s Pétanque Association kindly offered to assist on the day and impart their knowledge of the game of pétanque to the various teams taking part. The monies raised from this event will contribute significantly towards achieving the fundraising goal set at the beginning of the year. Other fundraising activities to date have included a ‘Charity Bake Sale & Afternoon Tea’ at our office earlier in the summer and members of the FG Burnett team volunteering at various Marie Curie events in the local area. Marie Curie nurses provide day and night in-home care and support for people living with terminal illness and provide emotional support to family members at an incredibly difficult time. In addition to inhome care, Marie Curie also provide specialist round-the-clock care via their hospice network. www.mariecurie.org.uk

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skills, thinking and doing, all of which present challenges and opportunities. Industry and the public sector are developing a shared ambition for the region’s future, with the Regional Economic Strategy and the subsequent Aberdeen City Region Deal setting clear targets for collaboration, action and investment.

TOWARDS ECONOMIC RENAISSANCE Significant effort, resource and investment is going into broadening and strengthening the economy of North East Scotland to deliver an economic renaissance and ensure the long-term prosperity of our communities and people. The renaissance vision shaping the regional economic development agenda is based on maximum recovery of UKCS oil and gas reserves while Aberdeen becomes globally recognised as a hub for innovation and technology development with a strong supply chain anchored here for the long term. Alongside this, growth in our food, drink, agriculture and fishing; tourism; life sciences; and digital sectors will deliver a more balanced and resilient economic base. The resulting inclusive economic growth and investment in quality of place secures the future wellbeing of the city, region and its people. Success in delivering this vision will create an economy that is different from the one we know today and which will have new requirements spanning commercial and industrial property, access to finance and professional services through to workforce skills and infrastructure. Our experience in preceding decades has been of boom and bust cycles, largely driven by oil and gas. Our future will be different in terms of industry diversification, resilience,

Developments including The Oil & Gas Technology Centre (OGTC) – backed with £180m of funding through the Aberdeen City Region Deal – the Aberdeen Harbour expansion, the new exhibition centre and investment in Aberdeen International Airport demonstrate an alignment of ambition and purpose. ONE was formed at the end of 2015 to identify, develop and deliver transformational projects and programmes that will grow our key industry sectors and secure or create jobs in the medium to long term. Our operating model is to do this at pace, with impact and to use our resources in a catalytic way to secure additional private and public investment in delivering the regional economic renaissance. We have £29 million over five years from the Wood Foundation for programmes and projects that will have a transformational impact on the region’s business base. Chaired by Sir Ian Wood, ONE brings together the expertise of leading businesspeople from our major industries and strategic partners – including Scottish Enterprise, Aberdeen City and Aberdeenshire Councils, the city’s two universities and the region’s college – in its main and sector-specific boards. Their collective experience and knowledge of the business landscape shapes ONE’s work. ONE’s investment of up to £3.5 million in 2017/18, will secure more than £3.2 million of match funding from partners, to deliver activity including a food and drink business growth programme, work with agriculture supply chains on efficiency and adding value, market diversification with the oil and gas supply chain, and direct funding support to VisitAberdeenshire to grow leisure visitor numbers and tourism revenues. ONE is also leading on the development of two innovation projects within the Aberdeen City Region Deal – the AgriFood & Nutrition Hub for Innovation and

the Bio-Therapeutics Hub for Innovation. These will catalyse growth within their respective sectors. ONE’s approach of identifying opportunities to accelerate long term economic growth in our key sectors and providing resources, developing partnerships and securing funding is already making a difference. Cooperation between the private and public sectors is increasing and momentum is building around action. This year should be one of significant progress for the region’s economy. Economic development requires a long-term commitment – there are no quick fixes – and we are in the early stage of transition. We are building upon strong foundations, notwithstanding the difficulties of recent years. It is therefore essential that we all continue to engage with and evolve the renaissance vision and understand the requirements of our future economy, to ensure that we enable growth in our industries and create a regional ecosystem that retains economic activity and attracts new investment. We must fight harder for investment than ever before. For those working in the property sector now is the time to be considering what the future requirements of a growing food and drink production sector look like in the region or how we can ensure that life sciences spin-outs grow here rather than relocate to other parts of the UK. We must be an attractive and costeffective location for doing business and as a place to live, especially in relation to anchoring a significant oil and gas supply chain here beyond the production life of the North Sea. We have an exciting opportunity to shape a prosperous future for the city and region, in which we can all play a part. In an enterprising and adaptable region like this, that is a real opportunity to pursue. Jennifer Craw, Chief Executive of Opportunity North East (ONE), the private sector led and funded economic development body for Aberdeen and Aberdeenshire.

www.opportunitynortheast.com FGBUR NETT.CO.UK

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ISSUE 8 SEPTEMBER 2017

DRIVE THRU AND DRIVE TO Let’s start with a little history. The world’s first drive thru was Red’s Giant Hamburger, opened in 1947 on Route 66, Springfield, Missouri. The first drive thru chain was Jack in the Box in California in 1951. McDonald’s did not open their first US drive thru until 1975 with their first UK one in 1986 in Manchester. FG Burnett are involved in several drive thru developments in Aberdeen, Edinburgh and Stirling, as the retail and leisure market continues to look at KFC, Haudagain Retail Park

innovative and convenient concepts for customers. In the UK, the market has been dominated historically by McDonald’s, KFC and Burger King however the drive thru is now one of the most active sectors in the market as operators target commuters and those who are on the road for a longer time. Costa and Starbucks are now expanding quickly and all operators are looking at a combination of roadside sites and sites on major retail and leisure parks - they are also looking at “drive to” concepts which do not have a drive thru operation. The Canadian coffee giant, Tim Horton’s, has entered the UK and Scottish markets and Greggs have opened their first drive thru in Manchester. Amazon are trialling their first drive thru grocery store in Seattle and it is inevitable that the drive thru concept will continue to expand into other areas. In Aberdeen, Costa are under construction on Wellington Road and at Bridge of Don, and Starbucks have opened beside Ikea and are under construction on the A96 at Blackburn. There are several other developments

“THE DRIVE THRU IS NOW ONE OF THE MOST ACTIVE SECTORS IN THE MARKET AS OPERATORS TARGET COMMUTERS AND THOSE WHO ARE ON THE ROAD FOR A LONGER TIME.” DAVE MACLEOD

being considered across the city and suburbs as the original big three compete with new entrants for the best sites. For developers and investors, this is an attractive marketplace - global brands offering long leases and strong covenants. For consumers, it is going to provide even more choice and more convenience as retailers work hard for that pound in our pocket. By Dave MacLeod david.macleod@fgburnett.co.uk

Starbucks, Blackburn A96 FG Burnett acted for the developer, South Fornet Estates Ltd.

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THE SILVER FIN BUILDING

It’s taken 6 years, multi-million pounds and a significant amount of confidence in the Aberdeen market, but finally The Silver Fin Building is ready to open its doors to tenants. Extending to 130,000 sq.ft The Silver Fin Building is the newest addition to the Aberdeen skyline, providing 9 floors of exceptional open plan office accommodation, commanding unparalleled views of the city and boasting market leading energy efficiency. The Silver Fin Building benefits from an EPC rating of A and a BREEAM rating of very good, ensuring that occupational costs for energy consumption are kept to a minimum. Initial analysis estimates utility consumption at under £1.00/ sq.ft based on average consumption. The Silver Fin Building has been designed with quality at its core. Traditional Scottish Granite forms the imposing Union Street façade behind which is the unique ‘Business Lounge’ providing informal meeting and waiting space, with uniformed reception staff and trained baristas providing coffee and refreshments. The Business Lounge has had the London factor with Jo White Design being instrumental in bringing this unique facility to life which is sure to offer a huge benefit to tenants and their guests alike. Floor plates in the Silver Fin building range from approx 13,300 sq.ft to 17,500 sq.ft albeit each of the floors can be

subdivided to form suites from 3,150 upwards. There is a suite of 7,365 sq.ft immediately available on the 2nd floor, adjacent to Orega Business Centres who have committed to 26,000 sq.ft on Levels 1 & 2. The presence of a business centre in the building will offer smaller companies the flexible lease arrangements they often require whilst offering larger occupiers in the building the ability to take ad-hoc swing space and make use of meeting facilities within the building when the need arises. Quality shower and locker facilities are located in the basement car park with passenger lifts providing access to the upper floors, thus offering occupiers the ability to cycle to work and feel refreshed when arriving at their desk. Jonathan Nesbitt, Director of FG Burnett comments “It is fantastic to see the doors open at The Silver Fin Building. Having been involved with this project since conception there has been a tremendous amount of work put in to ensuring that The Silver Fin Building has become a reality and the initial concept to provide the exemplar office development in the city has now been delivered. The views are exceptional from the upper floors and the Business Lounge is an added feature never before seen in a city centre office building. No stone has been left unturned from the design team in ensuring that the building delivered on the brief and despite market conditions, British Airways Pension Trustees and Titan Investors

By Jonathan Nesbitt jonathan.nesbitt@fgburnett.co.uk

are to be commended for having the belief that quality will always attract occupiers. This has been vindicated by the letting to Orega prior to Practical Completion and the level of interest currently being shown in the building.” Sean Mackenzie, Director of Titan Investors said “As specialist regional office developers, we saw a gap in the Aberdeen market for a London quality development in Aberdeen city centre. The design of the building has morphed through various designs over the years but the Silver Fin Building now provides in our view, ‘best in class’ and the building really has to be viewed to understand the benefits of working in the office environment created in The Silver Fin Building. It has been long established that the quality of the working environment has direct benefits on productivity in the workplace and combined with market leading energy efficiency, The Silver Fin Building provides the perfect solution for occupiers needs.” Flexibility is the key to the landlord’s leasing strategy, and British Airways Pension Trustees, will work with tenants to arrive at a lease structure which meets each tenant’s individual occupational strategy. To arrange a viewing or to understand how your requirements can be satisfied in The Silver Fin Building, please contact Jonathan Nesbitt on 01224 597531 or Graeme Nisbet on 01224 597532.

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ISSUE 8 SEPTEMBER 2017

TAKING CARE OF THE WORKPLACE

In the prevailing economic climate, occupiers are looking to ensure that they keep their property related costs under close control and constant scrutiny. By partnering with FG Burnett’s Property Management team to provide these services it allows them to secure both a cost effective and managed solution for the day to day running of their premises. By drawing on the pool of experience in the management of the wide range of properties in our portfolio together with the team’s technical knowledge, we can assist clients in the day to day operation of their own premises. That means that the provision of crucial property related services can be delegated to someone with the appropriate expertise and means the occupier is free to concentrate on their core business. At the top of any list for occupiers is being able to ensure that they meet all the statutory health and safety requirements for their buildings. In a climate with ever increasing regulatory burden it is vital to keep abreast of the latest requirements and stipulations to ensure that the workplace remains a safe working environment. As well as access to a wide range of specialist

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contractors, FG Burnett can arrange for auditors to undertake both fire risk assessments and general health and safety risk assessments to ensure that occupiers meet all current legislation and ensure that any hazards are identified and dealt with immediately. FG Burnett utilise a web-based health and safety management system which allows us to keep track of the wide range of statutory health and safety requirements, also serving as a “one click” access to important records such as fire risk assessments, asbestos surveys and so on. Through FG Burnett’s work with contractors across the managed portfolio we are able to provide a full range of hard and soft services, and these contractors understand the importance of delivering value for money and delivering results which means that matters are attended to promptly and efficiently. The Property Management team will specify and tender the services for the occupier then appoint contractors and ensure that they deliver their services to the required standard and fitting in with the routine daily activities at the property. With the Property Management department’s accounts team we can

also offer a full financial service to clients. By agreeing a budget and funding in advance, we can arrange to pay contractors for the provision of services. Furthermore and if it would assist, this can include payment of rent to a landlord together with any other occupational costs such as business rates. The accounts team are able to give year end reconciled figures and also summary of inputs and outputs for VAT purposes. Finally the occupier has the assurances that not only do they have the expertise of the Property Management team dealing with the day to day property matters but they would have access to a wider range of professional advice offered by F G Burnett. This could include valuations, help with rent reviews, advice on any dilapidations, and so on. If you would like to learn more about the Premises Management services that we can offer then please contact either Christopher Yannaghas on 01224 597510, Simon Smith on 01224 597508, or Bryan Robson on 01224 597513. By Christopher Yannagahas christopher.yannaghas@fgburnett.co.uk


VALUATION CERTAINTY IN UNCERTAIN MARKETS We all have to accept that, in life, things change and thus we require to adapt to these changes in order to survive and prosper. We are also very well aware of the impact that the significant reduction in the world oil price has had on the Aberdeen economy and the dynamics of its property markets. As property professionals, we are required to respond to these significant changes and this is particularly so with regard to the valuation of real estate. As has been well recorded, the effects of our “new normal” world oil price of c.$50 a barrel has resulted over the past two years in a scaling back of operations in the energy industry both globally and locally and consequently, a significant number of redundancies, a reduction in work operations and a halt to many new developments. The consequential effect of these actions has been a contraction in the local economy and, as by-products, a dampening of demand and an increase in the supply of property. The valuation of real estate has long been regarded as a function of land economics as rents and sale prices are primarily driven by the interaction of the level of demand for property relative to the supply available at any given time. Accordingly, when there are major shifts in the demand and/ or supply factors, then this will have a consequential effect on real estate values. For the most part of this century and up until late-2014, the world oil price has been at a sufficiently high level which encouraged investment in the energy sector globally and within the local Aberdeen economy. This investment, allied to companies generating high levels of profitability, has fuelled demand for property and led to record amounts of new development in Aberdeen. Real estate values are dictated by the relationship between supply and demand and in times of prosperity it is difficult for supply factors to react quickly. Accordingly, in Aberdeen up until mid-2014, we experienced growth in real

estate values year-on-year as the level of demand for property considerably exceeded supply. Equally, the high levels of demand resulted in a greater number of open market transactional evidence upon which property valuers could rely on to form real estate valuations. While there are five main methods of real estate valuation utilised in the UK, by far the most common is the comparable method which works on there being comparable open market transactional evidence which can be analysed in order to value the property subject to the valuation. While real estate valuation has never been an easy exercise, it is more straightforward where market conditions are good as property valuers are able to analyse large numbers of open market lettings and sales of comparable properties. The effect is that a high degree of valuation certainty and accuracy results: indeed, academic research indicates that property valuers in the UK regularly produce highly accurate valuations within relatively narrow tolerances. However, when market conditions suddenly deteriorate and there is a dearth of open market evidence it is the skill, expertise and experience of the property valuer that comes to the fore. It can be appreciated that since early-2015 property market conditions in Aberdeen have swung through a 180˚ course whereby demand for most property types has weakened and supply has increased – as a result of new developments and vacant accommodation coming on to the market. Thus, it can be appreciated that when demand falls and supply increases, market dynamics change markedly and that open market values reduce as a consequence. However, the big question is while that scenario is understood in principal, what is exactly the reduction in value - particularly when comparable open market transactional evidence has suddenly disappeared? As before, it is still incumbent on the property valuer to assimilate and analyse such transactional evidence that is available and to try and make sense of that evidence – experience has shown that when market conditions are good, then there is greater consistency with regard to rents and sale prices but where market conditions are poor, there is a much higher degree of

“A CHALLENGE THAT FG BURNETT RELISHES AND HAS THE NECESSARY SKILLS, EXPERIENCE, EXPERTISE AND PERSONNEL WITH WHICH TO DEAL.” DEREK RICHARDSON

inconsistency. Thus, it is the property valuer’s professional duty to correctly analyse whatever information is available. In addition, I consider that in the circumstances that we currently experience in Aberdeen and its environs, the depth and width of experience and expertise that can be relied on in providing sound professional advice is paramount. Valuations are never undertaken in isolation and it is important in times of uncertainty that valuers rely on the expertise and experience of their peers in other departments, particularly in agency, investment, and building consultancy in order to provide clients with the correct information for them to make prudent and informed business decisions. Equally, where real estate valuations are reported to lenders then these lenders can take great comfort from the knowledge that not only has the relevant valuation been very carefully considered but it has been prepared by very experienced property professionals on whom the lenders can rely. In conclusion, it would appear that these uncertain times within which we now live in Aberdeen will continue in the short to medium term and thus the determination of correct and accurate valuations of interests in real estate will continue to be a challenge – but a challenge that FG Burnett relishes and has the necessary skills, experience, expertise and personnel with which to deal. By Derek Richardson derek.richardson @fgburnett.co.uk

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ISSUE 8 SEPTEMBER 2017

INDUSTRIAL PROPERTY TRANSACTIONS HINT TOWARDS CONTINUING RECOVERY The Industrial team at FG Burnett has recently been involved with several headline deals which suggest there is still activity in the energy sector. Most notably, the former Total headquarters facility at Crawpeel Road, Altens has been acquired by Titan Investors for redevelopment following Total’s relocation to new headquarters in Westhill. Titan, the company behind The Silver Fin office building on Union Street, Aberdeen acquired the 20-acre site for redevelopment in a multi-million pound deal. Titan has shown faith with the Industrial team at FG Burnett by appointing them joint letting agents on the scheme. Recent press coverage has mentioned the likes of online retail giant Amazon as being amongst the potential tenants for the site. In addition, acting on behalf of long standing client TAM International North Sea, FG Burnett has acquired a detached office and workshop building at Abbotswell Road, Tullos. The building which extends to c. 13,000 sq.ft is situated adjacent to TAM’s other facilities and enhances their workshop capacity.

Former Total headquarters facility at Crawpeel Road, Altens

And within their wide sphere of clients, the Industrial team has also been active for institutional investors acting as they have not only for the Industrial Property Investment Fund with regard to a letting of a 10,000 sq.ft industrial unit at Blackness Trading Estate, Blackness Road, Altens to Wood Group Industrial Services Limited, but also for CBRE Global Investors with regard to the letting of a 6,000 sq.ft unit at Wellington Trade Park, Wellington Road to Quartzelec Ltd. Head of Agency at FG Burnett and Industrial team leader, Graeme Watt commented “there is no doubt there remains an excess of supply over demand and we have a challenging

Wellington Trade Park, Wellington Road

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“THERE IS NO DOUBT THERE REMAINS AN EXCESS OF SUPPLY OVER DEMAND AND WE HAVE A CHALLENGING MARKET BUT THESE DEALS CONFIRM THAT THERE IS DEMAND.” GRAEME WATT

market but these deals confirm that there is demand, not to mention a degree of confidence, out there and industrial space really is required. All of these transactions are in response to either an actual or perceived need for new facilities. It goes without saying that the market has to work hard to encourage commitment and that net returns to Landlords are not what they once were, but continuing take up can only be taken as a positive sign.” By Graeme Watt graeme.watt@fgburnett.co.uk


BUILDING CONSULTANCY CASE STUDIES

By Jim Johnstone jim.johnstone@fgburnett.co.uk

Barratt Commercial Ltd

Siccar Point Energy Ltd

Chrysaor

Sector: Office

Sector: Office

Sector: Office

Size:

Size:

800 sq.m.

Size:

Specification:

Project Manager and Principal Designer

Specification: Project Monitoring

Cost:

£225,000

Cost:

SBCC Minor Works with Contractor Design

Contract: Management Building Contract

4,400 sq.m

Specification: Concrete Remedial Works Cost:

£170,000

Contract: SBCC Minor Works

Contract:

The FG Burnett Building Consultancy team was initially instructed to investigate concrete spalling issues at Salvesen Tower, Aberdeen – a multi tenanted high rise office building that has been managed by FG Burnett for many years. It had been noted that isolated small sections of the concrete panels had been cracking and falling from the building, posing a health and safety risk in addition to having an adverse effect on both the aesthetic appeal of the building and the asset value. Following on from our investigations and input from structural engineers and concrete specialists, it was found that the exposed coastal location had contributed towards high carbonation and chloride levels within the external concrete wall panels. FG Burnett specified, tendered and are project managing a scheme of remedial works that included breaking out all defective panel areas (including all historic patches), repairing panels and applying specialist protective coatings to provide a 15 year guarantee. Work is progressing on site on a 16 week contract with a projected completion date of September 2017.

FG Burnett became involved with the property in late 2016, offering advice to Siccar Point Energy who were looking to relocate from their existing base within serviced offices following their acquisition of a number of Assets in the North Sea. Following negotiation of the deal by our Agency colleagues, FG Burnett’s Building Consultancy team were introduced to project manage the works. Given the timescales involved, this meant that a very quick turnaround was required in terms of the architectural details. The client, FG Burnett and the architect all worked in an efficient and co-operative manner to ensure there was enough detail produced to enable FG Burnett to produce a Specification of Works and then proceed to negotiate with an agreed contractor to deliver the project. With FG Burnett’s market knowledge, the negotiation process ran smoothly and following a benchmarking exercise with other relevant tenders received locally, the client accepted the tender as competitive within the current marketplace.

4,800 sq.m.

c. £2m

FG Burnett’s Building Consultancy Department became involved with the property in Spring 2017, initially undertaking a due diligence exercise on the premises to provide comfort to the client in terms of the quality and specification of the space on offer and to ensure that, as the End of Defect Inspection was fast approaching, residual defects in the building were addressed prior to accepting a lease over four and a half floors of the building. Following completion of the report, the client was satisfied and wished to proceed. Following final negotiation of the deal by our Agency colleagues, FG Burnett’s Building Consultancy team were introduced to act as Project Monitor of the works with the original Developer being engaged to implement a fast track fitout program for completion in Q3 2017. The client, FG Burnett and the architect all worked collaboratively to ensure the floor layouts were produced in early course to allow the M&E design to proceed and the Quantity Surveyor to produce Bills of Quantities for the various work packages. Following tender return these were reviewed in conjunction with the Developer and following minor clarifications the contract awarded. The contractor is currently in the midst of the 15 week program and at present on track to achieved Practical Completion as expected.

The contractor produced and agreed to an ambitious fit-out timescale of 8 weeks from start to completion and through a concerted and collaborative approach from all parties achieved Practical Completion as expected. FGBUR NETT.CO.UK

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THREE STARS FROM THE ACADEMY

L-R Rose Fyfe, Wendy Brown and Jean Johnston At the heart of all Property Management instructions are the vital accenting functions and Wendy Brown, Jean Johnston and Rose Fyfe are the three management accountants who support the Department in the function of its daily duties. By chance, these three ladies are all alumni from Northfield Academy.

over the term of the instruction, and also a dedicated person whom the client can speak to with any queries. The three accountants have some 42 years’ experience between them working at FG Burnett. In this time they have been able to build up excellent working relationships with clients, together with experience in dealing with a fantastic range of issues that comes with working for a diverse and busy portfolio of properties. The three property management accountants are responsible for all the financial aspects of an instruction. Specialised property management software enables them to run multiple sales and purchase ledgers for each individual building. Because FG Burnett is a RICS Regulated firm there are important duties to undertake with regards to client money including monthly reconciliations of client bank accounts, together with keeping abreast of all the relevant Codes of Practice and Regulations that the RICS publish.

FG Burnett is unique to a surveying firm in having accounts staff based alongside the surveying team here in Aberdeen. It means that we are able to allocate a Property Management Accountant to each instruction resulting in continuity

Property VAT is another specialised area that we can assist with. If a Landlord elects to waive the exemption to tax for VAT purposes it means that rents and service charges are subject to VAT which means the tax must be clearly

ENERGY UPDATE

Deferral is an option which allows owners to delay implementation of the improvements by producing a Display Energy Certificate (DEC). A DEC identifies and monitors the building’s annual energy use and, as it must be renewed annually, identifies positive or negative changes over the years.

12 months have passed since The Assessment of Energy Performance of Non-Domestic Buildings (Scotland) 2016 came into force requiring owners of large commercial property to improve the energy performance of their buildings. Alongside an EPC, applicable buildings must undergo an Action Plan when being marketed for sale or lease which identifies improvement works to be undertaken to make the building more efficient. Whilst 12 months is a relatively short timescale over which to monitor changes in greenhouse gas emissions, the results to date are not in line with Scottish Government’s expectations. This could be due to the low quantity of applicable buildings entering the market, however our experience suggests it is also related to deferral being preferred by owners.

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We have established this option is the most common as owners wish to focus on marketing the building without expending on improvements they are unlikely to experience the benefits of. Unfortunately, the negative effect that not undertaking the works may have in relation to loss in value or sale price is not being grasped, regardless of how clearly the message is conveyed. The Action Plan, annual requirement to renew the DEC and the eventual requirement to undertake the improvements will affect any offer received from a well-informed purchaser.

shown on the invoice. The team assist clients with production of quarterly summaries of VAT inputs and outputs that can be included on the Landlord’s quarterly VAT returns. Once again the specialist software that Jean, Rose and Wendy use enables them to run VAT reports and summaries for clients. Finally, an important part of the role is the daily administration of service charges on multi-let or multi-occupied premises. The accounts team work closely with the property managers in setting the budget and then input the agreed figures into the computer system so that quarterly demands can be raised. The accounts team arrange for monies to be collected from tenants and for contractors to be paid once the Property Manager has approved the invoice. At the year-end they will then undertake a reconciliation of all expenditure incurred at the property against the income received, providing year-end certificates and collecting any balancing charges that may be due. If you consider that there is any matter that FG Burnett’s Property Management Accounts Team can assist with then please contact Christopher Yannaghas on 01224 597510. An update to the regulations is due in 2020 and more stringent rules are expected. The size of applicable buildings may be reduced and the triggers for application altered. Additionally, the regulations may not only be applicable to buildings brought to the market but to all buildings, even those with owner occupiers or sitting tenants. At present the deferral option can be continued indefinitely but the update will likely impose a limit on this to ensure the works are carried out within a realistic timeframe. We will provide updates when available however please do not hesitate to contact our Energy team if you wish to discuss further. Iona Foubister Iona.foubister@fgburnett.co.uk David McCurdy david.mccurdy@fgburnett.co.uk


RETAIL PROPERTY FOCUS UNIT 5, DOUGLAS BRIDGE, GALASHIELS

We are pleased to act for British Red Cross in relation to retail acquisitions throughout Scotland.

EXCELLENT WEST END OPPORTUNITY We are marketing FOR SALE the former NOVA, extensive retail premises located at 20/24 Chapel Street in the heart of Aberdeen’s West End. This availability follows hard on the heels of two other lettings, 8 Chapel Street to Tiger Lily Boutique and 15 Chapel Street which will trade as Stellar, selling quality handbags and accessories for both ladies and gents. These lettings are evidence of increased confidence in this area with the arrival of The Capitol and The Silver Fin office developments, together providing approximately 210,000 sq.ft of Grade A accommodation. Also in the vicinity, the popular eatery Foodstory are expanding and a Wine / Craft Beer Bar with live entertainment to trade as Grape & Grain is currently being fitted out on Thistle Street. A comprehensive marketing strategy for the West End will reap dividends. The unit at 20/24 Chapel Street provides 2 excellent sales floors with back up stock rooms and staff facilities across a total floor area of 5,515 sq.ft (514.2 sq.m). Asking price is offers over £550,000 and interested parties should contact Richard Noble or David Henderson.

Richard Noble richard.noble@fgburnett.co.uk 01224 597528 David Henderson david.henderson@fgburnett.co.uk 01224 597538

The most recent opening has been in Galashiels where a ground floor unit of 2,150 sq.ft at Douglas Bridge was acquired. The unit provides an excellent sales area with staff/stock facilities to the rear, benefitting from rear servicing. The unit occupies a very prominent location adjacent to Argos, Specsavers and Lloyds Chemist and close to the recently completed Galashiels Transport Interchange, the combined bus and railway station for the town regarded as the “Capital of the Borders.”

PRIME RETAIL WAREHOUSE TO LET

DOMINO’S PIZZA EXPANDS INTO MONTROSE

Recent instructions include the marketing of a prime retail warehouse unit at Unit 3, Centrepoint Retail Park, Berryden Road, Aberdeen.

New Wynd Retail Parade Montrose, owned by FG Burnett client Scottish Midland Co-operative Society (Scotmid) recently welcomed the internationally established pizza operator Domino’s. The well-known brand has taken a 20 year lease for a 1,900 sq. ft. unit in the heart of the town centre. David Henderson who acted on behalf of Scotmid commented “I am delighted to have worked with Domino’s and The MSG Group who are a leading franchisee for Domino’s to secure ideally located premises in Montrose. Having agreed such a lease length shows that Domino’s are committed to the area adding further consumer options in this sector.”

The scheme which comprises around 100,000 sq.ft of accommodation and generous free parking is in the City Centre adjacent to Toys R Us and via integrated car parks close to an 85,000 sq.ft Sainsbury’s Store, Next, Argos, Poundland , Mothercare and Currys. Unit 3 extends to 6,500 sq.ft. For further information contact Richard Noble or David Henderson.

GET IN TOUCH We hope you enjoyed the latest edition of Property Matters and would love to hear your thoughts or suggestions for future articles. At FG Burnett we are passionate about sharing our knowledge and are always keen to learn more, so if you would be interested in joining our business to business knowledge sharing CPD programme then please contact Karen Ross - karen.ross@fgburnett.co.uk

FGBUR NETT.CO.UK

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Property Matters Issue 8  
Property Matters Issue 8  
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