Urban resurrection

Our inner cities may no longer ring to the busy sounds of industry as manufacturing has taken flight elsewhere. Old factories have been transformed into chic havens for the well-heeled urbanite. We all know somebody who has bought the ubiquitous loft apartment, but this popular conception is only part of a wider picture.

Not all unloved buildings will get valuable residential planning consent. Indeed location alone can render such financially attractive uses impracticable.

The nature of demand for space in inner city locations has also changed in response to the trend towards smaller business size with 99.8% of the UK’s 3.75 million businesses employing less than 250 people. Furthermore, Sole Traders make up 62.3% of businesses.  That’s a lot of small-scale occupiers looking for space!

Many of these new businesses are in the service sector complemented by designers and specialist manufacturers and a burgeoning knowledge based industrial sector.

In Birmingham, traditionally the heart of UK manufacturing, 9000 sq ft of new high specification commercial space on two-three floors is being created in the old Coffin Works on Fleet Street in the Jewellery Quarter. When Newman Brothers closed in 1999 after 117 years of operation, the picture was grave.

Advantage West Midlands Special Projects Manager Tim Prince sees the property from a more positive perspective. He recalls, “ The premises were like a snapshot of the best in 19th Century manufacturing. The factory was a treasure trove of high quality coffin furniture including crucifixes, ornate handles and intricately detailed shrouds. But this will create a superb location for enterprise to grow.”

The estimated £2 million scheme had a number of false starts until the Development Agency Advantage West Midlands stepped in.

In the North East, it is not only the demise of major manufacturing that has produced opportunities for small businesses to flourish in smaller flexible business units. This redundant education site to the east of Newcastle City Centre at Ouseburn School exemplifies projects that have arisen to meet this market demand. Here scene of past scholarly torture is now the home of 50 business incubator units offering fully serviced facilities.

While the Public Sector has taken the plunge; there are good reasons why the private sector should look at the conversion of its redundant space.

Research by the RICS Foundation and English Heritage based on figures over a ten year period, shows that looking at Rental Value, investments in Listed Office Buildings return 9.7% as opposed to 9.4% for non-listed premises.

It is however a competitive environment and schemes, need to produce space of the highest quality to maximise returns. In the past there has been a tendency towards bringing low cost proposals onto the market, but today’s sophisticated enterprises demand higher standards.

Refurbishment schemes may reveal financial shortfalls and need gap funding. Rules on the private sector getting public sector help in this area of funding have tightened, but all is not lost. Owners or their Facilities Managers can now seek assistance from the various Regional Development Agencies or their Strategic Partners at a local level.

With an increasing awareness of building life cycles; the problems of adapting to new demands on space; the need for higher standards of accommodation and the pressure on the bottom line, the role of Facilities Managers in bringing forward properties for this market is growing.

In a recent interview, Mike McNamara a partner at Ernst &Young Real Estate observed:

“The role of the facilities manager is emerging as crucial in ensuring buildings, systems and people work and interact efficiently and effectively. The worlds of property and facilities should be successfully meshed”

This opinion is reflected in attitudes increasingly adopted by Companies seeking to apply performance criteria to all aspects of their business.  With a recent RICS survey showing that £17.7 billion a year is wasted through inefficient property use, it is something that should grab the attention of any self-respecting Manager.

These new conditions are above all else a chance to add to the bottom line by innovating to meet the challenges of surplus or life expired property. Admittedly, surplus property can be a source of quick capital, but why should somebody else get the future goodies when the asset can continue to enrich the whole business?

The projects in Birmingham and the Northeast display the approach taken by the public sector. Developer David Keay from the West Midlands who has undertaken several successful refurbishments of redundant Listed and Historic Buildings, comments on the private sectors view of this type of investment.

“We have been producing high quality accommodation within historic buildings for a number of years. The sector was a bit of a Cinderella, but we have seen good rental growth and a positive change of attitude amongst the public agencies, who now see us as an essential part of the market.”

The revitalisation of the Coffin Works will benefit many new businesses, but maybe a similar approach could also resurrect your Company’s profits.