Optimising cost reduction, delivering the best future estate - Provision of Property Services to the Government Property Unit Mini-Competition ...

 
Provision of Property Services to the Government Property Unit

Mini-Competition Response
12 August 2011

 Optimising cost
reduction, delivering
the best future estate
London & Bristol Property Vehicle Pilot 10 January 2011

     Mr P Mayes
     Government Property Unit
     Department for Business, Innovation & Skills
     1 Victoria Street
     London
     SW1H 0ET.

     by e-mail: Paul.Mayes@ogc.gsi.gov.uk

                                                                                                London, 12th August 2011

     Dear Paul,

     Provision of Property Services to the Government Property Unit

     Thank you for your brief. I am pleased to say that we can offer in response a service which plays to
     some of our particular strengths.

     We have assembled dedicated regional account teams to give you the advice and market presence you
     need to help transform the government estate. We are using senior skilled professionals to identify,
     create, and seize early and sustainable savings and value opportunities, and to give you the strategic
     insight required to deliver the right future estate for efficient government operations.

     You need best in class advice in each region. We provide this via full service offices including those
     in each of your priority cities. Because these are run along national service lines, not by geography,
     best practice, skilled resource, and market information are shared between them, to your advantage in
     both sharper advice and implementation.

     We capture in our team the insights form our current instructions with you, and offer fifteen specific
     efficiencies which will help us quickly mobilise and give you rapid, effective and consistent advice.
     Our culture is built on teamwork and collaboration which we are convinced delivers you the best
     results, and will be essential on a multidisciplinary task such as this.

     This proposal shows that we have the market strength to be appointed in each of your five regions,
     and the strategic capacity to serve you efficiently and effectively throughout.

     I hope this document provides all the information you require; please do not hesitate to contact me in
     the first instance for any additional details.

     Yours sincerely,

     Paul Spencer

     Jones Lang LaSalle
     paul.spencer@eu.jll.com

                                                    Office agency team of the year 2011   Investment agency team of the year 2011

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London & Bristol Property Vehicle Pilot 10 January 2011

     Contents
     Executive Summary.......................................................................................................................................................... 4

     Section A: Qualities and resources
     1        Question 1: our understanding of the brief....................................................................................................... 6
     1.1      (i) support the GPU in the categorisation of the Regional Estates as CORE or SURPLUS .................................. 6
     1.2      (ii) space utilisation and planning assessments to show current and achievable capacity for all CORE
     holdings and how this could be delivered. .......................................................................................................................... 7
     1.3      (iii) advice on options for accelerated lease exits for all SURPLUS holdings, and feasible scenarios for
     estate rationalisation moves and chains of moves.............................................................................................................. 7
     1.4      (iv) agency advice on mitigating the cost of, or disposing of, surplus property including mitigation of
     dilapidations liabilities;......................................................................................................................................................... 8
     1.5      (v) town planning advice on major refurbishments, listing issues, disposal potential, and re‐development
     opportunities; ...................................................................................................................................................................... 8
     1.6      (vi) valuation and appraisal advice as necessary including site specific development opportunities;.................... 9
     1.7      (vii) support for the GPU in producing a robust plan and Business Case for consolidating the estate; ................. 9
     1.8      (viii) supporting implementation via agency roles for acquisition/disposal, refurbishment, or other inputs
     as necessary..................................................................................................................................................................... 10
     1.9      (ix) other property advice as specified from time to time by GPU........................................................................ 10
     2        Know-How and Credentials .............................................................................................................................. 11
     2.1      Credentials and know how region by region........................................................................................................ 13
     3        Project Timeline................................................................................................................................................. 34

     Section B – Personnel
     4       Personnel ........................................................................................................................................................... 37
     4.1     Structure.............................................................................................................................................................. 37
     4.2     Project Team ....................................................................................................................................................... 37
     4.3     Regional Project Teams ...................................................................................................................................... 40
     5       Main Points of Contact...................................................................................................................................... 58
     6       Organogram ....................................................................................................................................................... 59
     6.1     Team Structure.................................................................................................................................................... 60
     6.2     Team Levels of Seniority ..................................................................................................................................... 61
     7       Allocation of Tasks............................................................................................................................................ 62

     Section C – Charging
     8       Hourly Charging Rates...................................................................................................................................... 64
     8.1     Expenses and VAT.............................................................................................................................................. 64
     8.2     Fee Rate Schedule.............................................................................................................................................. 64
     8.3     Capital Sales and Acquisitions – Agency Fees ................................................................................................... 64
     8.4     Leasing – Agency Fees ....................................................................................................................................... 65
     8.5     Site Specific Studies............................................................................................................................................ 65
     8.6     Pricing for projects............................................................................................................................................... 65
     8.7     Accounting arrangements.................................................................................................................................... 65
     9       Additional Volume Based Percentage Discounts........................................................................................... 66
     10      Pricing by outputs / project requirements ...................................................................................................... 67

     Appendix A: Conflicts of Interest

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London & Bristol Property Vehicle Pilot 10 January 2011

                                                          “… a very fine service, everything I ever wanted has been provided”
                                                                                              Deutsche Bank – John McGiver

                 “... a massive thanks for the refurb. It has transformed the place - not just physically, but helped lift the
                       atmosphere and strengthen all the engagement and cultural work Kevin has been leading. You can
                                                                                                literally hear the difference.
                 I never thought the word "funky" would be used in the same sentence as Hattersley - but it can be now.
                     Operationally, the work was also done with minimal disruption, which at a time of huge operational
                                                                    change is also great credit to you and the contractors”
                                                                                                    British Gas – Ian Peters

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London & Bristol Property Vehicle Pilot 10 January 2011

                Executive Summary
                You require locally based, market sharp advice and action to help you transform the government estate
                in each region. The outputs you seek are accelerated and optimised cost reductions and receipts, and
                the right future estate for government business.

                Our response serves you via our full range of national service lines, delivered through our office network
                located in each of your priority cities. We use dedicated regional account teams skilled in all the
                disciplines you need but able to lever best practice from elsewhere in the firm as required.

                We show in responding to question 1 that we understand your requirements. Our input must identify
                opportunities, help make change happen, inform analysis and decisions, and help secure approvals.
                Rolling out the London and Bristol pilots, on which we have advised you, is not the only task, we must
                also support delivery of other projects to consolidate the wider government estate.

                Your ideal team combines the best advisors from each region. We set out in our response to question 2
                the evidence that we meet this criterion region by region. We are bidding to be appointed in all five
                regions. If appointed to multiple regions will use a central team to ensure consistency and avoid
                multiplying regional account management functions.

                To optimise savings in this SR period you need quick mobilisation and rapid impact in changing the
                estate. We describe specific efficiencies we can provide to accelerate change, levering benefit from our
                previous roles helping lead the regional network, and advising on the Bristol and London pilots.

                We know from these roles the importance of sensitive management of departmental relationships, and
                of confidential and secure data.

                Your timescale for the initial tasks on the priority cities is tight, but by working closely with you and the
                occupying departments we are comfortable we can meet it. Our previous experience will help us make
                an accelerated start. But we also rely on successfully growing new working relationships based on trust
                and openness, which we believe our existing roles have shown we can achieve.

                Our dedicated regional account teams provide a single point of contact and the market knowledge you
                need. Because we are organised by national service lines, not geography, we can readily bring in
                specialist expertise (for example in complex asset disposals) when required. We are using senior
                professionals with the market knowledge and commercial experience to quickly get to the answer with
                both practical and strategic advice.

                Our pricing structure offers discounts from the standard HCA rates, further discounts for quantum in
                each region, and for those regions outside London & the South East.

                Our response is arranged to address your questions in number order. An annex comments on conflicts,
                where we see no unmanageable issues.

                We have enjoyed working closely with you on both the GPU Regional Delivery Network, and in London
                and Bristol. We would be delighted to have this opportunity to continue to help you to deliver real change
                in the government estate.

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London & Bristol Property Vehicle Pilot 10 January 2011

                Section A: Qualities and resources

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London & Bristol Property Vehicle Pilot 10 January 2011

     1          Question 1: our understanding of the brief
                Question 1 - Demonstrate an understanding of what it is that BIS requires, separately addressing
                each of the outputs / project requirements in section 5.

                We separately address each of the project requirements from 1.1 below. More generally we understand
                the following:

                • Government is seeking to reduce property costs by £5bn pa by 2021, c.£1bn of which is to come
                  from the central civil estate. Active intervention is needed to radically transform the way space is
                  occupied, owned and managed, whilst aggressively consolidating the estate.
                • Pace is essential to deliver savings in this SR period, so early wins are needed. But this is also a
                  strategic opportunity to deliver the right future estate for government; one which is sustainable in
                  every sense, and which supports and enables more efficient ways of working.
                • Whilst National Property Controls drive departmental behaviour, you work in a non- mandated
                  environment . A co-ordinated approach is needed which gives the strategic direction to help
                  departments to share space in an agreed core estate, and efficiently exit from the surplus, exiting
                  early where a business case can be made to do so.
                • The London and Bristol property pathfinders demonstrated ways of doing this. GPU is now rolling
                  out to the regions this more strategic approach to the management of the estate, with a particular
                  focus on the major metropolitan areas.
                • The pathfinders are focussed on the central civil office estate, where you need to confirm the right
                  core estate, migration plan, and exit strategies, with attendant exit and entry costs (e.g.
                  refurbishment and dilapidations) and risk (e.g. to value or timing of receipts).
                • But savings are sought across the whole estate including defence and health for example. Each
                  estate requires practical, commercial, and deliverable strategies and specific projects to be identified,
                  assessed, approved and implemented.
                • You must also work hard to show departmental “winners” and “losers”, ERG and HMT that any
                  solutions identified optimise Exchequer benefit, and are fundable at acceptable levels of cost and
                  risk which we are to help you quantify. Assessing risk around exit from offices in flat regional city
                  markets, or around disposal of sites with development potential is critical, and challenging when the
                  scale of your own programme risks flooding the market.
                You therefore need market sharp advice supported by best in class implementation which generates and
                seizes market opportunities . You need this in the priority cities but also where other opportunities arise
                or are identified. Your advisers must tread sensitively around your relationships with the occupying
                departments and be live to sensitivities including security and commercial confidentiality.

                We are confident we can meet these requirements. You wish to select the “A team” of advisers in each
                region. We firmly believe we have the credentials to be part of that team in all five regions. We set out
                below the evidence to support our claim.

     1.1        (i) support the GPU in the categorisation of the Regional Estates as CORE or SURPLUS
                Strategies are emerging for each of the major metropolitan areas, including initial identification of the
                core and non-core estate. Guiding principles help, together with the traffic light system we evolved
                (location, cost, fitness for purpose, tenure) which the network is using. Core is generally freehold or

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London & Bristol Property Vehicle Pilot 10 January 2011

                longer leasehold, long term committed PFIs, larger more flexible and cheaper more sustainable
                buildings. But the need to maintain some presence in key locations requires compromises because of
                the character of the existing estate (acquisitions being allowed only exceptionally at present). Moves are
                expensive and to be kept to a minimum avoiding double shifts to “swing” space.

                We will

                • Use our market knowledge of occupier and investor demand, landlord situations and aspirations,
                  adjoining development or other potential to highlight possible opportunities to adjust the core by, for
                  example, creating and seizing scope for early exits or re-gearing with landlords;
                • Advise on keeping a mix of space suitable for different functions in the core, and with different
                  locations;
                • Help you balance strategy around keeping cheap suboptimal space which is difficult to market but
                  may also be difficult to occupy efficiently and have a limited sustainability performance;
                • Help GPU regional staff assess and interpret the data. We will re-apply the useful “terrier” we
                  devised for London and Bristol which automatically populates from EPIMS but also allows for agents
                  views to be shared.

     1.2        (ii) space utilisation and planning assessments to show current and achievable capacity for all
                CORE holdings and how this could be delivered.
                You need to know the capacity of the core estate in order to show the extent to which the estate can be
                consolidated into it by sharing occupations, and making accelerated exits from the non- core.

                We will

                • Assess realistic capacity taking into account factors such as floor-plate configuration and loading,
                  M&E and HVAC capacity, means of escape in case of fire, toilet and other staff facility provision,
                  access and entry arrangements.
                • This will entail site visits and collaboration with occupying departments to access their building
                  knowledge, working with you to make the approaches.
                • Scope will be adjusted as appropriate to give the degree of comfort required. Experience from
                  London and Bristol was that a rapid high level assessment was needed to cover the whole core, with
                  more detail on key buildings as needed.
                • Senior staff input will be used to give rapid advice with confidence.

     1.3        (iii) advice on options for accelerated lease exits for all SURPLUS holdings, and feasible
                scenarios for estate rationalisation moves and chains of moves.
                Simply exiting space when leases expire as required by NPC’s does not deliver the pace or quantum of
                savings needed to reach your targets. Some buildings need to be left before lease expiry and the
                residual liability aggressively reduced through re-letting, assignment, surrender, or a leasehold liability
                package. You need to know, the risks, values, costs and timing involved, and how they can be fitted
                together into an implementation plan.

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London & Bristol Property Vehicle Pilot 10 January 2011

                We will

                • Identify where and how landlord or portfolio deals could be achieved and at what price;
                • Advise on lease restructuring, collaborative re-marketing with landlords, surrender potential, scope
                  for leasehold liability packages;
                • Provide market based assessment of re-letting values, estimated marketing voids and incentives,
                  refurbishment or other works needed to improve marketability and their costs;
                • Advise on local market capacity to absorb space and ways of phasing release;
                • Work with you to plan timed series of moves which can be used to fill the core estate from the non-
                  core, developing and testing with you alternative “straw man” scenarios as necessary.

     1.4        (iv) agency advice on mitigating the cost of, or disposing of, surplus property including
                mitigation of dilapidations liabilities;
                We will advise on the following, provide value and cost assumptions as necessary and recommend
                adjustments to core / non core as appropriate:

                • how to optimise market potential of surplus space by optimising lease lengths, engaging in
                  refurbishment works;
                • letting strategy e.g. in whole or in part, and the works needed to implement our recommendation;
                • market capacity and optimum timing of release to avoid risk of flooding the market;
                • mitigation of empty rates;
                • scope for temporary or community uses and the risks involved;
                • dilapidations strategy e.g. when to conclude them, estimate liability and negotiating tactics and
                  strategy;
                • early wins e.g. where we are aware of existing demand for which government space is suitable.

     1.5        (v) town planning advice on major refurbishments, listing issues, disposal potential, and
                re‐development opportunities;
                We will advise and adjust as necessary where exit or other assumptions are affected by planning risk,
                recommending (and implementing if required) the optimum planning strategy. Advice will cover

                • Context- relevant local and national planning policy, the strategic direction of the local authority,
                  recent relevant decisions;
                • Initial views on likely acceptable uses;
                • Strategy- the right approach to achieve planning certainty, how much to invest prior to exit;
                • Estimated costs- including not just application fees but supporting evidence as necessary;
                • Any additional advice required such as design, heritage, rights to light, traffic and environmental
                  impact;
                • Time- required for planning certainty to be secured and how other actions can be programmed in
                  parallel or in sequence;

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London & Bristol Property Vehicle Pilot 10 January 2011

                • Risk – a realistic assessment of the risk of failing to achieve the treatment required, and strategies or
                  alternative approaches for mitigation;
                • Value- the extent of the benefit to be achieved by securing the desired planning treatment.

     1.6        (vi) valuation and appraisal advice as necessary including site specific development
                opportunities;
                You need to know how to optimise value on disposal for long leasehold and freehold assets particularly
                where these have development or alternative use potential (such as MOD sites identified for disposal).
                The input required will vary according to the scale and complexity of the asset in question which might
                range from a single court building to a large military complex for example. As an indicative outline we
                can provide a range of advice and implementation including:

                • The right development concept and mix of uses to optimise value;
                • Disposal strategy including joint venture and portfolio options, partnership vehicle solutions, auction
                  and private treaty disposals;
                • Approaches to planning risk and the time in the planning process at which to engage with the
                  market;
                • Valuation implications of the above, target values for disposal and phasing and structure of cash
                  receipts contractual arrangements.
                We are active across the full range of property sectors including leisure and retail, hotel, residential
                (including affordable and social housing), industrial office and other commercial uses so can provide
                quality advice on market potential for all of these.

                Our dedicated national development consulting team which is a market leader in bringing forward for
                development more complex large scale and mixed use sites for both public and private sector will work
                with the regional teams on more complex or large scale projects. .

     1.7        (vii) support for the GPU in producing a robust plan and Business Case for consolidating the
                estate;
                When seeking ERG and HMT approvals, and demonstrating fundable solutions to departments you
                need to be able to assert with confidence that the implementation plan for consolidating the estate is
                practicable and commercially deliverable, and based on robust up to date market input.

                We will

                • Ensure our outputs are matched to the inputs you need for financial modelling and business cases;
                • Input to sensitivity analysis reflecting our appreciation of market risk;
                • Help you frame deliverable series of moves, testing which performs best and why;
                • Give advice on structures and roles for engaging private sector partners and implement as
                  necessary.

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London & Bristol Property Vehicle Pilot 10 January 2011

     1.8        (viii) supporting implementation via agency roles for acquisition/disposal, refurbishment, or
                other inputs as necessary
                We will lever our market leading agency position to help you exit liabilities and assets with optimum
                benefit and in the time frame you require including:

                • Advice on optimum disposal routes, timing, marketing strategy;
                • Leasehold disposal- assignment, sub- let;
                • Freehold sales;
                • Portfolio transactions- including leasehold liability packages;
                • Landlord deals- surrenders, lease re-gears, using our close knowledge of landlord aspirations and
                  situations;
                • Preparing assets for market by advising on and helping deliver any works required;
                • Marketing, negotiating and concluding transactions where required.

     1.9        (ix) other property advice as specified from time to time by GPU.
                Jones Lang La Salle can provide a full range of market facing advice and implementation services as
                you require. In particular we have:

                • A specialist health estate team;
                • Dedicated development and complex asset disposal team well placed to advice on MOD sites
                  targeted for disposal;
                • Dedicated team structuring private –public partnerships;
                • Market research regularly updated on key regional office markets;
                •    Workspace transformation advice;
                • Sustainability advisory team.

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London & Bristol Property Vehicle Pilot 10 January 2011

     2          Know-How and Credentials
                Question 2 - Demonstrate relevant know-how and credentials in the locations specified in 5(b)
                for the outputs / project requirements and confidence that they can be satisfied, including any
                advice and/or comments on how best to ensure efficiency in delivery of these.

                You need best in class market facing advice in each region, and we have the market presence, service
                quality, and skilled personnel to deliver this.

                We set out below our response region by region. First we set out some specific efficiencies which our
                approach offers.

                • Geographic coverage: Our regional account teams are located where you are. We have full
                  service offices in every one of your priority locations, as well as others with a large civil estate such
                  as Exeter, Plymouth, and Southampton. The approach used in the five central London postcodes
                  may be rolled out across London where we have specialist teams in each of the key markets-
                  Canary Wharf, City, West End and Western Corridor.

                Office Agency Experts in your
                Key Metropolitan Areas

                                                                    Glasgow              Edinburgh

                                                                                    Newcastle

                                                                                                  Leeds
                                                                          Liverpool           Manchester

                   Manchester    Chris Mulcahy
                                                                                                     Nottingham
                   Liverpool     Chris Prescott                                  Birmingham                       Norwich
                   Leeds         Jeff Pearey
                   Newcastle     Jonathan Sykes                                      Bristol West London London – Canary Wharf
                                                                              Cardiff       Bath         London – City
                   Birmingham    Jonathan Fear / Jonathan Carmalt                                        London – Heathrow
                                                                                   Southampton           London – West End
                   Bristol       Ian Wills / Jeremy Richards
                                                                                     Exeter
                   London        Jonathan Evans / Chris Hiatt
                                                                    Plymouth

                • Resources: We are organised on national service lines not by geography. This means each regional
                  account team has access to best practice and expertise from across the country to sharpen their
                  advice. It also means extra capacity is available when workload peaks.
                • Expertise: We have a national centre of expertise, for example in complex asset disposals highly
                  relevant to the defence estate, and a specialist health estate team. These are used to working
                  closely with regional teams hence combine unrivalled local market knowledge with best practice. .

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London & Bristol Property Vehicle Pilot 10 January 2011

                • Accelerated start: All regional teams will be fully briefed by colleagues working on London and
                  Bristol and by Rachael Howard and Paul Spencer who have been helping run the regional network.
                  This will help make a rapid start and fully capture the lessons from this recent involvement.
                • Project management: For specific projects which emerge from this framework we will agree with
                  you a PID, project plan, budget and team to ensure the task is efficiently dealt with and monitored.
                • Continuous improvement: Both regional and central account leads will meet regularly (we suggest
                  monthly initially then to be reviewed, bi-monthly may be best) with your regional and central teams to
                  review performance and progress, gather feedback, plan improvements and monitor their
                  implementation.
                • Data: We will discuss and agree with you at the outset how best we can use and access the data
                  you are working on. We designed the dashboard and data set being used by the network and will
                  brief our regional teams on how to get best use from it immediately on appointment.
                • Joint working: We propose to work closely alongside you including in your offices where
                  appropriate. The pace will be high, close engagement will be needed, and we want to be fully
                  integrated into your teams providing “real time” advice rather than periodic reports.
                • Security: We will engage with you at the outset to secure any security clearances necessary to
                  facilitate working alongside you in your offices and to ease access to buildings for inspection.
                • Departmental engagement: Your relationships to departments are key to success in the non
                  mandated environment and we will ensure that all contact with departments fits with your
                  departmental engagement strategy, that you are aware of it in advance and approve, and that you
                  are kept fully informed of the dialogue that takes place.
                • Capacity building: Our work with you to date has shown our commitment to build GPU’s capacity
                  with significant improvements to EPIMS, devising the regional terrier approach, shaping the regional
                  network, data set, and tools and techniques used for analysis. We aim to continue such capacity
                  building in the current appointment.
                • Knowledge of the estate and issues involved: Having been actively engaged in the creation of
                  both regional strategies and the regional network for more than 18 months we have a good working
                  knowledge of many of the key buildings in the estate, and of the issues around sharing space, lack of
                  a corporate landlord, challenge in funding up- front investment or double occupational costs.
                • Communications: We will make full use of technology to aid knowledge transfer between us and
                  you, and across the our own team if appointed on more than one region, including a secure client
                  extranet if your security will allow it which will transform sharing data across both teams.
                • Straw man / scenario planning: There is considerable uncertainty around the best options to
                  pursue to optimise savings but techniques which develop a straw man for further testing are the most
                  efficient and we are skilled n these.
                • Outputs matched to your inputs: we will ensure we provide material which matches what you need
                  for financial modelling or business cases reducing the need for adaption or editing.

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London & Bristol Property Vehicle Pilot 10 January 2011

                The advantages of appointing Jones Lang LaSalle to all the regions
                ƒ Consistency of approach, assumptions, tools and systems, presentation
                ƒ Reduces the number of firms with whom departments must engage
                ƒ Reduces the management load for GPU
                ƒ Offers GPU a single lever to pull for quality control and any service delivery issues
                ƒ All regions benefit equally from lessons we have learned to date managing the network on secondment
                   and working on London and Bristol;
                ƒ Choice of advisers is still available if alternates are appointed in each region;
                ƒ We would be happy to discuss with you any co-ordination role you would like us to take so that other
                   advisers also adopt consistent approaches;
                ƒ Market information e.g. landlord situations and aspirations, and occupier demand will flow freely
                   across the regions rather than risk being blocked between competing practices.

     2.1        Credentials and know how region by region
                Before looking at each region we make the following points about our previous work with GPU, and also
                about our ability to do the capacity study which we know is an immediate and critical task, which is also
                relatively time intensive since it involves site visits to the core buildings and close departmental
                engagement.

                The capacity studies and other cost inputs required throughout the appointment will be provided by
                regional staff who are part of our 200 strong Project & Development Services business. Per year this
                team advises on

                • Building Surveys - over 25 million sq ft
                • Construction projects under management - over £6billion
                • In the region of 1,000 dilapidations instructions, - over £50 million value
                Having run the studies for the London and Bristol pilots we have a clear appreciation of how to complete
                these quickly at the right level of scope and with appropriate interaction with the occupying departments.

                Our experience of setting up and leading the Regional Delivery Network at GPU
                Paul Spencer, together with Rachael Howard, have helped the Government Property Unit to set up its Regional
                Delivery Network. Through this work they have detailed knowledge of:
                • The Estates in each of the regions.
                • The data available (from e-PIMS and benchmarking) and how to use it.
                • How the Data Dashboard for use by the Regional Teams has been designed, and how this fits with the way of
                    working of each of the Teams.
                • The evaluation criteria to initially sift the portfolio of property in a place, using the traffic light system which was
                    developed by Paul and Rachael through their work in 2010 on the Civil Service in the English Regions (CSER)
                    estates programme.
                • How Government operates and how GPU engages with Departments at national, regional and local level.

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London & Bristol Property Vehicle Pilot 10 January 2011

                Our experience of the GPU pilots in London and Bristol estates
                Our experience of the GPU pilots in London and Bristol estates, allows us to build on the lessons we have learnt.
                Through this work we understand:
                • The objectives of the GPU.
                • The challenges in the process with departments.
                • How we can add value and bring market solutions to accelerate disposals.
                • The integrated linked department moves are more challenging than simple chains.
                • We developed a terrier review process and high-level capacity planning tools.

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London & Bristol Property Vehicle Pilot 10 January 2011

     2.1.1      North West
                In the North West Jones Lang La Salle has over 150 professional staff in Manchester and an active
                Office Agency presence in Liverpool with both offices covering all the professional disciplines needed to
                service this instruction.

                Our market presence
                • Central Manchester : 71 transactions in 2010, 51% market share
                • South Manchester : 67 transactions in 2010, 25% market share
                • Warrington : 30 transactions in 2010, 36% market share
                • For the first half of 2011 our market share has been over 70%.
                • Advising North West Development Agency and Liverpool Vision on the 450,000 sq ft office led
                  expansion of the Commercial District of Pall Mall

                Our quality service
                • EGi North West Deals Winner 2008, 2009, 2010, 2011
                • EGi Most Active National Agents in Lancashire and Cumbria 2008, 2009, 2010
                • Co-Star Most Active Agents by Acquisition 2008, 2009
                Currently the Manchester office has 2,000,000 sq ft of space being marketed and 450,000 sq ft of
                acquisition work ongoing.

     2.1.1.1 Evidence of our relevant expertise

                Market Advice, Exit Assumptions, Dilapidations
                Network Rail, Manchester
                As part of a strategic office review and consolidation, advice was provided on existing office accommodation in
                Manchester versus a potential new consolidated office in a single location. We identified Square One at Manchester
                Piccadilly adjacent to Piccadilly Railway Station as a preferred option. The ultimate result was full relocation of
                numerous offices to a single 130,000 sq ft office fully refurbished to an agreed specification and linked to the Piccadilly
                Station platform.

                Insolvency Service Relocation, Manchester
                We provided a high level feasibility study to advise on potential relocation within Manchester City Centre including
                advice on costs of relocation and comparing this to remaining within the existing multi-site portfolio. Advice was
                provided in relation to estimating the cost a new fit out, estimate of existing dilapidations claim and relocation. The
                result was relocation from two main offices into a single floor office in a more modern building on attractive terms.

                Berryman Lace Mawer
                Berrymans required a property solution for their expanding base in Manchester city centre. An initial feasibility study
                was undertaken and after undertaking initial exercises, a preferred option was identified that involved acquisition of the
                building immediately next door (owned by their existing landlord). Work included agreeing the acquisition and
                specification of this new space which required a full refurbishment including new M&E, regear of their existing lease to
                be coterminous with the new lease and negotiation of refurbishment of the common parts of the existing building which
                was undertaken by the landlord. Coordination of fit-out, space plans and coordinating the procurement team through

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                             15
London & Bristol Property Vehicle Pilot 10 January 2011

                this process which also monitored the landlord’s work to the buildings also formed part of the role. The result was a
                single new office in much improved accommodation on conterminous re-geared and new leases which provided the
                ideal property solution. The total of the office accommodation taken was 45,000 sq ft.

                Capacity, Exit Costs (Dilapidations, Cost of Works), Entry Costs (Refurbishment)
                HQ building at Thorpe Park and Data Centre in Wakefield
                The Leeds based Project and Development Services team recently undertook a comprehensive space planning
                exercise of an HQ building at Thorpe Park and Data Centre in Wakefield on behalf of Northern Foods Plc. This
                exercise included a review of their working practices and re-design of the working environment, and we were
                subsequently instructed to specify, tender and manage the works on site.

                Projects in Leeds & Knowsley
                The team has an extensive track record of dealing with dilapidations for both investor and occupational clients,
                predominantly in the office and industrial sector. Recent successes acting on behalf of tenants include reducing a
                landlord's claim on a Leeds city office from £520,000 to £150,000 and successfully negotiating a reduction of £330,000
                on a £830,00 claim on an office in Knowsley.

                Development Development: Appraisal, Planning
                Bickershaw Colliery (North West)
                Bickershaw South is a former Colliery Site which was transferred to the Northwest Development Agency from English
                Partnerships (now Homes and Communities Agency) following the formation of the Regional Development Agencies in
                1999. The site gained funding approval through the National Coalfields Programme in 1994 for future mixed use
                development. An outline planning application for the site’s mixed use regeneration was approved in 2008. We were
                appointed to provide commercial advice into the master plan for around 650 units, commenting on the optimum mix of
                units and target market. Alongside this commercial analysis a series of development appraisals were completed to
                determine the financial viability of the scheme. Following formulation of the masterplan, we were commissioned to
                manage the developer procurement process. We have provided advice to the NWDA and HCA on land valuations and
                development mix to maximise viability, steer the developer procurement process, and inform the gap funding
                necessary to successfully deliver this key regeneration project. The developer procurement process is currently ‘on
                hold’ pending stabilisation of market conditions.

                Liverpool Magistrates Court
                We were appointed by Terrace Hill to provide planning advice and support pursuant to an Invitation to Submit Final
                Tender (IFST) by Her Majesty’s Court Service (“the Authority”). The Authority sought a developer to design, build
                and/or remodel/refurbish and finance a new magistrates’ court in Liverpool, on a site to be provided by the developer.
                A number of considerations were taken into account from the outset, including; improved permeability / linkage
                between the civic / administrative / retail quarters and the waterfront, ease of access by public transport and onwards
                by foot / cycle, easy and logical to find (adjacent to existing QEII Crown Court building), regeneration of a prominent
                city centre site, Major contribution to Liverpool’s waterfront regeneration, stimulant to increased footfall, incidental
                expenditure and investment in the surrounding area, most efficient re-use of a previously developed and under-used
                site in the city centre, location to minimise the need for visitors to travel by car, suitably prominent site and striking
                architecture befitting a public building of status. The project was however cancelled as part of the Comprehensive
                Spending Review.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                            16
London & Bristol Property Vehicle Pilot 10 January 2011

                Blackley Mere
                We were instructed to prepare a comprehensive planning application for a development that will transform this large
                derelict and under-utilised previously developed site for a high quality residential development. Part of the site is
                occupied by industrial buildings and hard-standings referred to as the Bowker Bank Industrial Estate. The remainder
                of the site is occupied by woodland, dense scrub and the raised reservoirs associated with the site’s former uses.
                Proposals for the redevelopment of the site for housing (160 units), leisure (enhanced facilities for angling club), open
                space, landscaping and enabling works. This is a challenging site with numerous environmental concerns relating to
                the site’s former industrial use, proximity to the River Irk, the reservoirs and open space. A public Inquiry was held in
                2010, but was subsequently dismissed by the inspector; A revised scheme is currently being prepared and should be
                submitted during the course of 2011.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                           17
London & Bristol Property Vehicle Pilot 10 January 2011

     2.1.2      Yorkshire & North East
                Jones Lang LaSalle Yorkshire and North East has a total of 100 staff across the region.

                Our market presence
                • Leeds : 35% market share of all leasing transactions in the last twelve months
                • Newcastle : 74 office leasing transactions totalling 500,000 sq ft, 30% market share

                Our quality service
                Over the past five years we have been ranked in the top five agents and have recently achieved the
                following:

                • Yorkshire Office Agents of the Year 2010
                • Yorkshire Property Awards 2009
                • Property Dealer of the Year, Yorkshire Business Insider 2008 Agent of the Year
                Recent mandates in this area include Mapeley, Royal Bank of Scotland, West Yorkshire Police and
                HBOS.

                Many instructions involve a multi-disciplinary approach involving lease advice, project management,
                development services and valuation.

                We act on some of the largest and most prestigious commercial schemes in Yorkshire and the North
                East including:

                • No 1 Leeds : 122,000 sq ft
                • 21 Queen Street : 38,000 sq ft
                • West Riding House : 45,000 sq ft
                as well as significant leasing instructions in Wellington Place and Thorpe Park.

                • In the North East we advise:
                • Quorum Business Park
                • Baltic Place : 120,000 sq ft
                • East Quays : 38,000 sq ft

     2.1.2.1 Evidence of our expertise

                Market Advice, Exit Assumptions, Dilapidations
                Strategic Property Review, Leeds
                As part of a strategic property review, Jones Lang LaSalle advised HBOS Plc on its property strategy for Leeds and
                Halifax. Our Office Agency team advised on the existing office accommodation occupied by HBOS Plc in Leeds
                against the potential to relocate to a new site within the city centre and occupy a smaller footrprint. A short list of
                options was provided and discussions with Landlords entered into. Our advisory mandate was extended to include a
                review of Call Centre locations in the North East, by providing tailored market advice on the likely disposal potential of

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                            18
London & Bristol Property Vehicle Pilot 10 January 2011

                existing occupations.

                Hudson House in York
                Jones Lang LaSalle advised Quintain Estates on the largest office letting in York for the last three years which
                comprised the letting of 30,760 sq ft to Instant Managed Offices. Following refurbishment by Instant the space was
                then occupied by Network Rail allowing them to relocate some of their workforce whilst refurbishment of their existing
                premises, George Stephenson House next door was carried out.

                Riverside West, Leeds
                Jones Lang LaSalle completed a new letting of 10,750 sq ft at Riverside West, Leeds on behalf of the landlord, The
                Bradbury Executive Trust. This deal involved the surrender of the headlease and a simultaneous re-grant of a new
                lease to Liverpool Victoria Insurance. Detailed and sensitive negotiations between landlord, head tenant and new
                tenant were vital to progress the deal.

                Mapeley
                Variety of surplus office disposal instructions across Yorkshire and Humberside – Jones Lang LaSalle are involved in a
                significant number of leasing mandates on behalf of Mapeley across the region including premises in central Leeds,
                Huddersfield, Harrogate and others. Mapeley continue to use the services of Jones Lang LaSalle for repeat
                instructions as a reflection of the value they place on our advice and continued letting success.

                Royal Bank of Scotland
                Jeff Pearey was previously involved in leading the Disposals Strategy across the North of the UK including Scotland –
                this involved managing a series of leasing agents on behalf of marketing the Bank’s surplus leasehold properties.
                Huge strides were made in disposing of offices throughout Yorkshire and the North East, the area where Jeff was
                predominantly responsible.

                West Yorkshire Police
                We were recently appointed by West Yorkshire Police to provide strategic advice ultimately leading to the disposal of
                surplus Police Headquarters, Brotherton House in Leeds city centre. Jones Lang LaSalle won a competitive pitch to
                secure this role which will then lead to the sale of a redundant police station in the city.

                Capacity, Exit Costs (Dilapidations, Capacity, Exit Costs (Dilapidations, Cost of Works), Entry
                Costs (Refurbishment)
                Merseyside Police Authority
                We provided advice to the Merseyside Police Authority in relation to a strategic Estate Management Plan. This
                involved close liaison with the Merseyside Police Estate Management Department and high level inspections of a
                variety of property types totalling over 1.1 million sq.ft within 54 buildings. The commission involved advising on stock
                condition, space utilisation, existing space standards and future requirements; together with desktop reviews on
                building maintenance and other running costs. Evaluations were undertaken using rankings and a rainbow ladder
                scoring matrix. The outcome of assessments were include in a strategic Estate Management Plan with short, medium
                and long term objectives which are being implemented in phases over a 15 year period. The overall exercise will drive
                out savings and deliver an estate suitable for neighbourhood policing in 21st Century.

                Tyco
                The team have also recently been included as part of a wider Jones Lang LaSalle team that have supported Tyco in
                relation to the alignment of their property requirements with the needs of their business, working closely with Agency
                and Real Estate Advisory colleagues. Following completion of an initial property search, and a short listing of potential
                alternatives, an option appraisal was undertaken including consideration of running costs, specification, energy
                efficiency, and potential exit costs. Following the selection of a preferred property building surveying advice was

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                           19
London & Bristol Property Vehicle Pilot 10 January 2011

                provided prior to acquisition, fit out and relocation. The rationalisation/consolidation also involved working closely with
                Agency colleagues on the disposal of the surplus property and the implementation of an exit strategy involving
                negotiation of dilapidations and surrenders in order to minimise liabilities.

                Development Development: Appraisal, Planning
                Tower Works, Leeds
                We were part of a design consortium led by Carlbro to prepare a development brief for the 2.8 acre Tower Works site
                in Holbeck, Leeds, which contained three listed towers. Following the acquisition of Tower Works by Yorkshire
                Forward, the Agency planned to redevelop the site as a flagship development as part of the wider vision for Holbeck
                Urban Village. We provided market advice and development consultancy to Yorkshire Forward to ensure that the final
                development brief was deliverable by the private sector. Following the issuing of the final development brief, we were
                retained to oversee the procurement of a preferred private sector development partner. This entailed reviewing and
                evaluating the commercial property market assumptions, financial viability, and overall deliverability of shortlisted
                proposals. As an outcome of the work, a final report was produced which advised Yorkshire Forward on the
                appointment, which led to Isis Developments being appointed as the preferred development partner.

                Bradford & Bingley Headquarters, Bingley
                We were appointed by Airedale Partnership to work alongside Arup and Beckwith Design Associates in the appraisal
                of a range of options for the former Bradford & Bingley headquarters building in Bingley town centre. The scoping
                study focused on the re-use/development of the site so that it can contribute to the regeneration of the town centre and
                objectives of the Airedale Corridors Masterplan and strategy. We provided a baseline review of site constraints and
                preliminary development options. The Study considered commerciality and potential sources of demand. The site was
                sold and is to be developed as a supermarket, which was the recommendation of our report.

                George Street, Bradford
                Jones Lang LaSalle was appointed by Keyland Developments to prepare, submit and negotiate a planning application
                for a mixed use scheme in the Centre of Bradford. The site measures approximately 1.21 ha. The scheme comprises
                a mixed-use development including 400 residential units; 1900 sq.m. of A1, A2, A3 and A4 uses; 5500 sq.m. of B1
                office use and a 120 bed hotel, with 350 parking spaces and public space. The application site being the former
                Yorkshire Water offices and computer centre on Leeds Road. These operations have recently been relocated.
                Resolution to Grant planning permission, subject to s.106 agreement (including a reduction of the Section 106
                provisions based on an open-book Valuation to enhance the viability of the scheme). Retrospective planning
                application for comprehensive infrastructure works has also been granted.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                             20
London & Bristol Property Vehicle Pilot 10 January 2011

     2.1.3      Midlands
                The Midlands office agency team based in Birmingham and Nottingham is the largest in the Midlands.
                There are 160 staff in the Midlands business covering all aspects of commercial and residential advice.

                Our market presence
                In 2010 the team transacted:

                • 26 lettings in central Birmingham representing an 18% market share.
                • 117,332 sq ft of disposals in Nottingham representing a 44% market share.
                • Over 650,000 sq ft office disposals and acquisitions.

                Our quality service
                • Insider Agent of the Year 2010 E Mids
                • The team has one of the highest market shares in the region and consistently appears in the top four
                  of all of the CoStar rankings in their criteria including disposals, acquisitions, volume of instructions
                  and number of instructions.
                The team was responsible for the largest office prelet in the regions in 2010 and is currently marketing
                approx. 2 million sq ft of built stock in 119 instructions and has over 300,000 sq ft of Tenant Rep /
                acquisition work ongoing.

                Key recent highlights include:

                • Acquiring 27,500 sq ft expansion space in central Birmingham for a significant bank
                • Acquiring a new Midlands regional headquarter for Handelsbanken in central Birmingham
                • Concluding the 56,000 sq ft acquisition for Highways Agency in central Birmingham
                • Securing the regional office market’s largest prelet to E.ON of 105,000 sq ft
                • Securing a 60,000 sq ft letting for Mapeley of the vacant Mowbray House, HMRC Campus
                  Nottingham to Browne Jacobson LLP
                • Sale of 213,613 sq ft Loxley House, Nottingham for Capital One.

     2.1.3.1 Evidence of our expertise

                Market Advice, Exit Assumptions, Dilapidations
                Pinsent Masons, Birmingham
                Due to an impending lease event, Pinsent Masons appointed the Jones Lang LaSalle team to explore re-gear
                discussions with their current landlord and in tandem identify relocation options (c.60,000 sq ft) delivering high grade
                accommodation and increased occupational efficiencies, whilst delivering cost savings or at least a cost neutral
                position. The clients lease was successfully re-geared to deliver greater efficiencies and flexibility of occupation.

                Royal Mail, Coventry
                Working with The Royal Mail in the delivery of their national property restructuring programme, Jones Lang LaSalle
                developed and successfully executed a freehold disposal strategy for the 197,000 sq ft Coventry Mail Centre facility.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                          21
London & Bristol Property Vehicle Pilot 10 January 2011

                Taking account of planning, political and regeneration sensitivities the team achieved a sale delivering an initial capital
                receipt, and future value subject to future planning milestones. The transaction represents the largest commercial
                transaction in Coventry for a number of years.

                Pricewaterhouse Coopers
                Pricewaterhouse Coopers appointed Jones Lang LaSalle to compose and deliver a disposal strategy to mitigate
                property costs (16,304 sq ft office premises). The client was out of occupation but with six years lease exposure
                remaining. The team successfully secured sub-lettings to a number of occupiers including afirm of solicitors and a
                local college. This involved pursuing a planning change of use for a D1 consent to enable the sub-letting to be
                concluded.

                Highways Agency
                Acting behalf of the Highways Agency Jones Lang LaSalle provided advice on the exit strategy of the clients existing
                90,000 ft² premises, including enabling works to ensure the valid implementation of the lease break, and dilapidations
                negotiations. The team searched the market and identified and secured new BREEAM ‘Excellent’ offices of 50,000 sq
                ft at The Cube. This included extensive cost and cash flow comparisons being made during the search process.

                Insolvency Service, Birmingham
                The team provided strategic advice in respect of the exit strategy on the clients existing substandard 99,000 ft² office
                building, achieving a subletting of part in the interim period in order, to mitigate outgoings. The project required a
                search for new regional headquarter office premises, culminating in the acquisition of 42,000 ft² BREEAM ‘Excellent’
                Grade A offices on two floors at Cannon House. Jones Lang LaSalle also provided Project Management services to
                deliver the fit out and dealt with the Dilapidations on the client’s former premises.

                Capacity, Exit Costs (Dilapidations, Cost of Works), Entry Costs (Refurbishment)
                Major International Bank, Birmingham
                Over the past 2 years the Jones Lang LaSalle team have provided advice on a variety of strategic matters. Initially the
                short term identification of space to enter the Birmingham market, followed by securing a medium term occupational
                solution (68,000 sq ft). Having acquired the medium term solution Jones Lang LaSalle project managed the
                refurbishment and subsequent fit out of the office space. The team are currently assisting in a review of the long term
                strategy, due to an approaching lease event.

                US Corporate, Birmingham
                The Birmingham Project and Development Services team recently assisted a large US corporate review their existing
                estate (five out of town campus buildings totalling approximately 60,000sq.ft.) in line with their intention to consolidate
                into a single building in a CBD location. This study considered the potential for changes to working practices, building
                specification and running costs, location, available staff pool, access to transport, and wider business / profile
                advantages. The original search focussed on six buildings. Test fits were subsequently undertaken on three
                shortlisted sites and a recommendation made to relocate to a new 40,000 sq.ft facility in Central Birmingham.

                AVIVA, Birmingham
                The team were also recently appointed by a large pension fund to review potential options for a 50,000 sq.ft office
                tower that it owned in Central Birmingham, where the lease was coming to an end. This review looked at several
                options including a basic office refurbishment, upgrading to Grade A office accommodation and conversion to student
                office accommodation or an hotel and was undertaken in conjunction with our local Agency, Capital Market, Hotels and
                Residential teams. The study established that conversion to an hotel would create the best return A pre-let with a
                national hotel chain has been agreed and we are currently in the design and procurement stage of the project which is
                due to complete in Jan 2013.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011. All Rights Reserved                                                                             22
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