Real estate is a key enabler for charities regardless of size. It provides the bricks and mortar to deliver your mission, is a representation of brand identity and one of the most important items on your balance sheet.
We live in a world where change is the new norm. Economic, political and sector specific factors are increasingly putting pressure on the bottom line – high accommodation costs, Brexit uncertainty, the battle for talent and a challenging fundraising environment are increasingly becoming drivers of change.
We are seeing our clients respond to these pressures by challenging the status quo with regards to their property holdings. Senior executives and trustees are rightly scrutinising property assets whether held for occupation or investment to ensure they are maximising the return for the mission.
There is an imperative for organisations to link their people strategy to their property strategy, in order to deliver their strategic goals. With expenditure on staff accounting for circa 90% of total operating costs, charities are looking at how they can leverage their workplace to significantly improve productivity by addressing such issues as flexibility, connectivity and wellbeing.
Outlined below are four core trends we are seeing influence the sector.
- Agile working - Is established and commonplace across the commercial and not for profit spectrum and is one that has been embraced readily by charities in order to reduce the occupational footprint. We have found the charity sector to be progressive when it comes to recognising that a flexible approach at an individual level will generate great results. An open mindset to flexibility can deliver diversity in the workplace by accommodating the needs of a broader workforce demographic.
- Leasehold vs freehold – With approximately 30% of all occupied charity property being owned, many charities are faced with a dilemma akin to “selling the family silver”. Organisational need is driving a change in mindset with a commercial rather than sentimental approach being applied to decision making around property. We suggest charities ask three questions to inform these decisions; Is the property fit for operational purposes? If not, can it be adapted to achieve this? Is there a better option in terms of releasing value, or improving operations?
- Flight to affordability – Cost of occupation in major UK cities has given rise to charities considering moves to less expensive locations. A growing trend in London, for example, sees charities in traditional hubs around with good transport connections and employees appeal such as Shoreditch and the Southbank increasingly relocating to Zone 2 and 3 locations.
- Asset rationalisation – Many of our clients are opting or actively planning to rationalise office networks into ‘hubs’ or’ super hubs’ meaning a reduced overall footprint around key locations which ultimately leads to greater efficiency and ease of management. Of key importance here is access to accurate property data recorded as a basis that facilitates benchmarking and informs decision making.
In summary, the adage ‘if you fail to plan, you’re planning to fail’ rings true. Those charities which have a clearly defined plan with measurable goals and timescales are well placed to make the right informed decisions on property.