St. Nicholas Building, Newcastle

Our Property Management team has successfully reduced the service charge at St. Nicholas Building in Newcastle city centre by almost 50%.  Read on to find out how we did it…

Naylors’ Property Management team was appointed to manage St Nicholas Building in February 2015.  At the time the service charge on the office building was running at £800,000 per annum which equated to over £12.30 per sqft. 

Naylors’ remit was to substantially reduce the expenditure, which was probably among the highest charges in the city.  The initial target set by the client was to reduce the expenditure by a third with a view to making further savings going forward.

The service charge year on the property runs from 1 April, so only a limited period of time was available to set the budget for the new service charge year.

Following an initial visit to the property it was quickly established that not only was the service charge very high, but the tenants were generally unhappy with the quality of service being offered by the previous landlord.

It was therefore decided that the first course of action was to undertake a detailed consultation with all the tenants to understand their issues and concerns, we then used this as a basis for reviewing the current services.  This consultation was headed by Angus White (Head of Property Management) and Nickie Ridley (Property Manager).  The areas of concern on the quality of the service were quickly established.

The Facilities Management team, headed by Stuart Logan, simultaneously started to gather technical and contract information on the service contracts and procedures in place on the building, including all of the statutory compliance information. 

It was established that the fundamental problem was that the building had been managed remotely. There was little control in place on the quality of the service being provided and the service contracts in place were frequently placed with larger national providers, who then sub contracted down to other companies with each company making a 10 % mark up on the prices.  We also found that in most cases contracts were being over specified in terms of product and materials.

As a result of these findings the decision was taken to completely overhaul the entire budget and the following actions were undertaken…

·            The FM team spent a considerable amount of time in getting to understand the building and  the services in place  

·            All of the existing contracts in place were reviewed

·            New specifications for contracts were drawn up taking on board discussions with the tenants

·            The new specs were issued to locally-based contractors

·            A revised service charge budget was drawn up and in accordance with the RICS Service Charge Code, issued to all of the tenants for consultation and discussion

·            We then undertook a series of meetings with the tenants to review and explain the budget and the plans for the building going forward

As a result of this process the service charge budget for the period 1 April 15 to 31 March 16 was agreed at £445,000 representing £6.85 per sqft including utility costs.  This represented a significant saving of 45% on the expenditure for the period to 31 March 2015.

The new contracts were put in place and regularly monitored and reviewed over the 12 month period.  We also provided the tenants with a half year report in October 2015 to show progress against budget for the first six months and forecast expenditure to year end.

Having recently completed the reconciliation of the expenditure actually incurred we came in under the budget we set.

The new budget set for the period commencing 1 April 2016 has been reduced further to £420,000, now representing under £6.50 per sqft.

In the 18 month period since taking over the management of the building we have been able to almost halve the service charge budget and as a result of this the building is very competitively placed in terms of occupancy cost in the city centre.

Our Office Agency team has also just agreed lettings on nearly 20,000 sqft of vacant space in the building.

For further information on how we can help you with your Property Management needs contact Angus White on 0191 211 1551 or email: anguswhite@naylors.co.uk