In November I had the pleasure of joining the day and a half “Alternative” Real Estate & Property Technology Summit – though in reality it was anything but alternative in the context of representation. There was excellent attendance from representatives across the managing agent and client side technology, operations and strategy roles.

A big part of the value of an event like this is being able to hold “watercooler” conversations both with others in similar roles around the challenges we are facing (often under Chatham House rules) or with those external to the real estate industry who are bringing their expertise to bear.

With insight from outside the sector as well, such as the impact of tech trends in legal and how they might translate to the property sector and Andrew Baum’s, (Professor at Oxford University), thoughts on Proptech 3.0 and the post-digital landscape, there was plenty of food for thought. Clearly tech may currently be eating the breakfast of those agents in the transactional markets (rating, sales, leasing etc) but it will shortly be moving on to lunch.

There were, nevertheless, two highlights, the first being a panel on the role of data in real estate, facilitated by Dan Hughes and comprising John Abbott, the Director of Digital at the Land Registry, Jonathan Avery, Head of Platform Technology & Change at Legal & General Investment Management and Jack Sibley, the Innovation & Technology Strategist at TH Real Estate. They provided an excellent insight into their own plans for the future and a glimpse of the roadmap for those businesses that played to the adage that “we overestimate the impact of technology in the short term and underestimate the impact in the long term”. (Amara’s Law). There is no question that some businesses have seized the opportunities that technology presents them with and others are still working out what to do with those opportunities. My suspicion is that while the ability to compete with scale on a David vs. Goliath basis has never been easier due to Software as a Service (SaaS) levelling the playing field, finding the skilled people to deliver these solutions now appears to be the true source of any competitive advantage.

Additionally the lesson that many finally appeared to be learning was that they, as a business, are more comfortable with short term “failures” while they search for those right solutions as they realise significant longer term gains, and indeed, the future of their businesses are at stake. Not exactly throwing caution to the wind, and certainly not the “move fast and break things” approach favoured by silicon valley tech businesses, but at least the historically conservative real estate sectors version of it, though it is fair to say that “move relatively quickly and try not to break too much” is somewhat less catchy.

The second and for me more interesting takeaway, albeit entirely expected, was that of Tim Oldman, the Founder & CEO of the Leesman Index. He brought it all back to people. Which, let’s face it, is what it is all about ultimately. What does any tech, or proptech do when done right? It enables people to work (and play) “better”, more efficiently, more effectively and more productively, genuinely adding that most human of values, creativity, to solutions.

Tim’s presentation focused on the basic needs of people and how these need to be delivered before all the shiny new technological toys have any real added value. Things like a desk (yes, even in this day and age), decent (natural) light, the correct temperature and that apparently cliched basic need, tea and coffee. Only once you get those and other fundamentals right can you begin to think about the ‘nice to haves’, rather than the ‘must haves’. Translate that into occupier needs and you have a significant part of your model right there.

On that basis you could do far, far worse than spend some time, if you haven’t already, digesting the insights provided by the Leesman review on human centered workplace design.

As per some of my earlier posts, by all means use technology to its fullest possible extent, but start with the problem, not the solution, and view it through the lens of people first. Your clients are people too.

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Sustainability is known as a business sector laden with ever growing lists of jargon and acronyms, well, it’s time add another.  TCFD is the latest must know acronym used to describe the Taskforce for Climate-Related Financial Disclosures.

But what is it?  If that’s the first question that sprung to your mind then don’t worry, you are not alone.  A survey conducted by HSBC in 2017 found that only 8% of big companies and 10% of investors were familiar with the term.

What is TCFD?

The TCFD has its roots in a speech given by Mark Carney in 2015 where he discussed the “…tragedy of the horizon…” in relation to the potential risk posed by climate change to global financial stability.

These risks fall into three broad categories:

  • Physical Risks, relating to the direct impacts of extreme weather events on business as usual;
  • Transitional Risks, relating to the aspects of business most likely to be impacted by the move to a low carbon economy.  Includes the concept of stranded assets for example, remaining fossil fuel reserves        unable to be burned wiping value off the holding entity; and,
  • Liability Risks, relating to action taken against companies who continued to profit from polluting activities despite being fully aware of their impact on the climate.

The Financial Stability Board (FSB) launched the TCFD in 2016 seeking to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors.

Download the full article.

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The Local Data Company’s (LDC) Retail and Leisure Trends Summit took place on the 4th June at the stunning BDO LLP London offices, with guest speakers talking about their experience in the retail market, innovations and the future of retail. There were some great industry-leading speakers debating how the industry needs to disrupt and innovate in order to survive and flourish.

The topic is all the more in the spotlight since news of House of Fraser’s CVA plans and proposal to close 59 stores was announced. Although this has been on the cards for some time, the scale of the proposed closures with the possible loss of 6,000 jobs, has sent further shock waves through the troubled retail sector.

M J Mapp’s Head of Retail, John Michell, has his own thoughts on the matter:
“The retail market is constantly changing and evolving as it tries to react to consumer needs, reducing margins and the impact of ecommerce. It’s hard enough predicting what will happen next week let alone how the market will change over the medium to long term! One thing seems certain at the moment. Retailers who are complacent are doomed.

The recent demise of Toys R Us and Maplin tells us that retailers must proactively devise ways to enhance customer experience through great customer service and product innovation. There has been a good deal in the press about the effect of the ‘B’ word on the market, particularly the struggling F&B sector. Uncertainty around what Brexit will actually mean as we approach 2019, in terms of restricting availability of staff and damping down demand, has already taken its toll on operators like Byron. We will inevitably see more casualties over the coming months.

Looking further into the future, we cannot ignore the growth of automation in retail. We will see checkout-less stores (Amazon has already opened one), facial recognition and more and more AI embedded solutions. B2C engagement will be much smarter as retailers use technology to market their products better, based on customer preferences and purchase history.”

For more information and discussion, read the LDC’s Retail and Leisure Trends Report 2017/18.

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Does the Property Management Sector need to reinvent itself? M J Mapp discusses…

Property Week published an article in their magazine on 1st March 2018 entitled The Property Management Industry Needs Reinventing, written by Bill Hughes, Head of Investment Management at Legal & General, which tied together a number of key findings from a series of research papers published by the BCO in 2002, 2015, and 2017.

The article proposes that the relationship between the owner and occupier of a building has been much maligned and that against the backdrop of a rising recognition of ‘space as a service’ through the success of WeWork, amongst others, there is a realisation that more must be done to move property from a bricks and mortar business to one more akin to the hospitality industry.

Indeed, if a Venn diagram were drawn of the intersection of client, occupier and managing agent requirements, the resulting overlapping space (historically in any case) would have been vanishingly small.

The reality is that for a significant proportion of the market, the management fees set by the industry via tenders and outsourcing has on the whole resulted in property managers only being able to focus on the basics in the value chain from client to occupier, leading to underinvestment in systems and skills.

And to a certain extent, owners could afford to take this approach. In the dual win of outsourcing risk while mitigating costs, they maintained long lease terms with upwards-only rent reviews, notwithstanding sector specific wrinkles and the occasional economic shock.

In an ideal world, the aims and objectives of the property owner, manager, and occupier would be fully aligned, enabling the property to be run in a way that adds value to all. In the real world there are distinct barriers to achieving this. The overarching objective shared by all is to achieve a well-performing building, although performance means different things to different people.

However, recent events have overtaken owners, who are scrambling to board the latest bandwagons, in co-working or ‘space as a service’ and wellness. These movements have created a groundswell of occupiers who both expect and then demand excellence in customer service. When coupled with CSR, sustainability and increasingly data-led FM requirements, this has indeed shone a light on an industry skills gap—albeit one created by the industry itself. There is a perverse irony in the fact that property and facilities management have been deskilled as a means of reducing cost, while the expectations of the services those roles must deliver have being raised. The rate of change we are witnessing within the industry will only widen this skills gap unless owners and occupiers accept that management fees and service charges will need to increase if this trend is to be reversed.

There needs to be an open understanding that occupiers have been dealt a poor hand by the industry. The degree of change required means that a wider and deeper conversation about how to change the culture of an industry is needed. Buildings are about place, place shapes behaviour and behaviour, over time, is culture.

So where are we now? A place where lower fees can be and are directly linked to reduced service levels at exactly the point in the cycle where what is needed is increased service levels.

Property Managers with a significant focus on the sector and who are prepared to innovate and invest have an excellent opportunity to benefit over the next five years, a period over which we will no doubt see more change than over the last twenty. Owners also have an opportunity to take their brand back in house, to protect it from any potential fallout due to their lack of investment in the preceding years, but this approach is rife with difficulties, not least because it diverts attention from core activities. Those skill sets still need to be found and developed and the margins are low. Disruptors are possible but for the same factors and with significant barriers to entry, it is hard to see a swarm.

Owners should select property managers who share their values and ethos and use them to build value on the understanding that we are all in it together, and importantly and genuinely want the same thing—happy occupiers.

This is where M J Mapp stand; innovation and collaboration with best in sector, recruiting and retaining the very best people in the industry (they do exist!) building an ecosystem that is capable of delivering sorely needed change, that is both flexible enough to cope with the diverse challenges of occupiers and clients alike and scalable enough to meet the differing requirements of a diverse client and occupier base.

We have made huge strides in the last 12 months. The next 12 will provide game-changing levels of integration with client and occupier portals, automation and a fully integrated CAFM solution, all of which will provide unparalleled levels of engagement and transparency, enabling the delivery of a personal service not previously available in the market. It is an exciting time to be in the industry.

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What is ‘resilience’ and why is it important to the real estate sector?

There’s an increasing need to adapt a number of practices in the real estate sector to mitigate risk from social and environmental shocks and stressors to reduce, for example, financial losses, reputational damage and the risk of legal action

GRESB (Global Real Estate Sustainability Benchmark) helps real estate investors assess the sustainability performance of commercial real estate portfolios around the globe. M J Mapp has been actively involved in preparing the submissions made to GRESB by seven of our largest clients over the past five years. In support of this, representatives from M J Mapp continue to attend a range of events hosted by, or in collaboration with GRESB, to ensure our knowledge of the benchmark and our ability meet the changing requirements is up to date. Its latest conference in London focused on the theme of resilience within real estate assets.

GRESB defines resilience as ‘the capacity of companies and funds to survive and thrive in the face of social and environmental shocks and stressors.’ While sustainability and resilience share many similar aspects, the former is focused on balance within and continuation of business operations, while the latter concerns their ability to recover well after an adverse event or incident. Sustainability aims to change business practice to mitigate the worst effects of, for example, climate change. Resilience acknowledges that these effects are already being seen and real estate assets need to be able to bounce back following e.g. an extreme weather event.

GRESB has added a resilience module to their annual survey in order to meet a growing investor demand for information on resilience and to increase the access to information about the different strategies employed within the real estate sector. Investors seek stable returns, often over medium and long terms, and the failure to demonstrate resilience will increasingly mean that money will be diverted to what they might consider to be ‘better bets’.

There are several recognised long-term trends which threaten the achievement of sustainability including climate change, demographic shifts, rising urbanisation, and digital transformation. Some of these trends are already realising extreme periods of heat or cold, more frequent flooding, stronger storms, power outages, higher energy prices, threats to cyber security, and changing consumer behaviour. These directly test the resilience of real estate assets and investors will become increasingly sensitive to their impacts as they understand that returns will be directly affected.

A resilient real estate company is one that has the ability to identify the risks and opportunities, mitigate, prepare or adapt to disruptive change, and further to respond quickly and effectively to learn and improve.

How might the real estate sector become more resilient?

At an asset level measures to improve resilience might include:
– Improvements to onsite drainage;
– Permeable surfaces that reduce stress of drainage;
– Artificial and/or natural defences;
– Water attenuation via green roofs/walls;
– Use of natural/mixed mode ventilation;
– Investment in the local community; and,
– On-site electricity generation and battery storage.

Much of the list above, when taken at face value, applies readily to new developments but the principles will be applied to a range of existing assets through training and education, upskilling or role creation and the utilisation of resilience rating systems such as those suggested by the Taskforce on Climate-related Financial Disclosures (TCFD).
Increasingly, we can expect to see the avoidance of developments in vulnerable areas as lenders cease to make funding available (and insurers refuse to cover the risk) and an increased focus on design and material use focused on improving resilience. Market forces such as these may also affect the value of standing assets and property owners and managers should ensure they are aware of the characteristics of their portfolios and what can be done to mitigate their inherent risks.


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Amended F-gas regulations pave the way for potential fines of up to £200,000 for organisations that cause, or knowingly permit, unlawful discharge to air.

Fluorinated gases – also known as F-gases – are man-made substances that once released can remain in the atmosphere for hundreds of years, contributing to climate change by adding to the greenhouse effect.

F-gases are commonly found in commercial buildings, within air- conditioning systems where they are used as refrigerants, or in fire- fighting equipment where they are used as propellants.

In a recent public consultation, the Department for the Environment, Food and Rural Affairs (DEFRA) requested industry feedback on a proposal to introduce penalties for organisations found to have infringed the Fluorinated Greenhouse Gases Regulations 2009.

The measures were considered in response to growing concerns that the current penalty system was not adequate to ensure compliance.

Following the consultation, DEFRA laid before Parliament the Fluorinated Greenhouse Gases (Amendment) Regulations 2018 which came into force on the 27th of February 2018, with enforcement beginning on the 1st of April.

New civil penalties will be applied to a number of F-gas contraventions, with the maximum penalty of £200,000 being imposed for intentional release of refrigerant into the atmosphere and failure to comply with enforcement notices.

To ensure compliance, organisations that operate equipment that contain F-gases (e.g. air-conditioning units) must:
-Check the type and amount of F-gas contained in the equipment;
-Use trained engineers to carry out work on the equipment;
-Ensure that equipment which contains F-gas is labelled if additional F-gas is added;
-Check for leaks at specific intervals if the equipment contains F-gas above certain thresholds;
-Install leak-detection equipment on units that contain F-gas equivalent to more than 500 tonnes of CO2e; and,
-Keep records for any equipment that has to be checked for leaks for five years, making them available to Government officials on request.

M J Mapp ensure all properties under management are checked on a regular basis to ensure all compliance obligations are being met and our property management activities in this area are externally verified to the ISO 14001 standard.

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With the abolishing of the CRC after the 2018/2019 compliance year, emissions reporting will change, now extending to all ‘large’ companies or to those who exceed a specific energy consumption threshold. Find out the ‘if, how and to what extent’ these will affect your business.

Streamlined Energy and Carbon Reporting – BEIS Consultation

With CRC, ESOS, mandatory greenhouse gas reporting, climate change agreements, and the European Union Emissions Trading Scheme, there are a lot of existing schemes for the real estate sector to consider when reporting their carbon impacts.

In order to simplify the reporting landscape and drive business energy efficiency, the Government announced that CRC would be abolished after the 2018/19 compliance year and would consult on a simplified energy and carbon reporting framework to reduce the burden of reporting to multiple schemes.

What this new regime might look like is currently out for consultation. The three main areas that the Government are now seeking views on are:

  • – Who should report?
    – What should be reported?
    – How should information be reported?

Who should report?
Reporting will remain mandatory for all UK quoted real estate companies but will also become mandatory for either all ‘large’ UK companies, or for all companies who exceed a specific energy consumption threshold.

‘Large’ companies may be defined in line with the Companies Act 2006, or as defined by ESOS; while an energy threshold would most likely mirror the current CRC threshold of companies who use more than 6 GWh of qualifying electricity each year. The Government has indicated that the Companies Act definition is their preferred choice. This definition would capture companies which meet two or more of the following criteria within a financial year:

  • – 250+ employees
    – Annual turnover greater than £36m
    – Annual balance sheet total greater than £18m

The consultation is also seeking views on whether Limited Liability Partnerships, which are not subject to the companies act and thus do not have to report, should be made to report too.

What should be reported?
UK quoted companies will be expected to continue annual reporting of Scope 1 and 2 GHG emissions and an intensity metric. Scope 1 emissions are those from activities owned or controlled by your organisation, these could include direct emissions from owned or controlled boilers, furnaces, and vehicles. Scope 2 emissions refer to indirect emissions released into the atmosphere as a result of your organisation’s activities but which occur at sources you do not own or control and are associated with your consumption of purchased electricity, heat, steam and cooling.

Also proposed is an additional requirement for quoted companies to report on total global energy use. The Government does not see this addition as a significant burden as this information must be collated anyway in order to calculate emissions. Scope 3 reporting would remain voluntary and include those emissions that are a consequence of your actions but occur at sources which you do not own or control, examples include business travel in vehicles not owned or controlled by the company and outsourced waste disposal.

It is proposed that unquoted companies will have to report on their energy use and emissions from electricity, gas and energy used for transport only, as well as an intensity metric. The Government is seeking views on whether specific sector intensity metrics should be mandated and whether the Government should propose best practice guidance or to leave the matter to sectors and to existing best practice and guidance. Additional reporting requirements that have been discussed include formal linkages to ESOS by having to disclose audit recommendations and actions taken.

How should information be reported?
Companies will be required to report within their annual reports. It is also proposed that the energy and carbon elements of the annual reporting will be submitted electronically as the Government proposes to collate and perform centralised reporting of the data to increase its usefulness. Whilst the consultation seeks views on guidance that could ease the reporting burden, it does not address data collection and quality.

Additionally, recommendations are being sought on complementary policies which could work alongside reporting to drive cost effective energy efficiency improvements, reduce bills, reduce emissions and improve transparency for investors.

M J Mapp are contributing to consultation responses being drafted by industry groups we are connected to such as the BCO, BBP, and Revo.

For further information about how M J Mapp can support you in meeting your compliance obligations, please contact: Carl Brooks • • 020 7908 5500

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It’s always interesting looking back at the end of a year on the predictions for 2017 and seeing how accurate they were.  For sustainability, which tends to take views over decades, a 12 month horizon might seem pretty easy…although 2017 hasn’t exactly been a normal year!

Predictions of a rising interest in sustainability amongst business has proved to be true, although the issue has been on the up and up for several years now so that’s a relatively safe one.  M J Mapp has seen more clients seeking our help in providing data and advice and guidance on how it might be used.  GRESB continues to drive this interest with more clients responding to the benchmark than ever before in 2017.

Globally, instances of divestment in fossil fuel interests have grown, as we lurch into action to keep our global temperature rise to below 2 degrees, this may accelerate now with announcements just before Christmas that the Government will drop the “best returns” rules around fiduciary responsibility.  Pension schemes will now be allowed to mirror members’ ethical concerns and address environmental problems through their investment decisions.So what about 2018?  Ignoring the pundits for a while and focussing on what we know of the property sector there are 5 key areas of interest for 2018;

  1. MEES is right around the corner…are your properties going to be worthless come April?
  2. The car revolution….is there an opportunity to install charging points for electric vehicles at your properties?
  3. Buildings and the spaces within them can make us all more productive…if they are designed with people in mind. Can yours be improved?
  4. Re-Made in China? Not anymore…but at what price?
  5. Carbon reporting is dead, long live carbon reporting!

If that’s piqued your interest…read on!


April 2018 seemed a long way off when the concept of a minimum standard for energy performance in buildings first joined the regulatory discourse back in 2011.  Many were certain that the idea’s time would never come and even since the enacting legislation was passed in 2015 many conversations debate the extent to which the Regulations will be enforced.

As Agents we can only advise on the content of the legislation and highlight the associated risks and opportunities it presents to our clients.  The position will be reviewed throughout the year as precedents are set on sales and lettings of substandard buildings or building units.

We must ensure we are reviewing our clients’ portfolios and highlighting the potential value at risk either through an inability to market, or potential reduction in value.  There is an opportunity to engage both the Sustainability and Building Consultancy teams where EPCs rated F or G exist to identify ways of improving the building rating.

It must also be remembered that, from 2023, the Regulations apply to ALL commercial property which will affect how we relate to and engage with occupiers at the buildings we manage.

2) EVs

Electric vehicles had, until 2010, struggled to find a place in the mainstream market and even since then have struggled to dent the traditional petrol/diesel monopoly due to expensive upfront costs, and limited range and charging infrastructure.  However, battery prices continue to plummet (down 50% since 2014) and the mileage range continues to increase making them an ever more attractive proposition for consumers.

The smart money is suggesting that, even as soon as 2019, price parity will be achieved making new vehicle purchasing decisions heavily weighted in favour of electric, far sooner than Government targets for both England and Scotland.

While the technology is almost where it needs to be the infrastructure for charging away from the home isn’t.  At present there are 13,000 charging points nationally, the Government (based on their targets) suggest 3.2 million will be required by 2050, though given the speed of change in the industry this looks likely to be required far sooner.

As managers of commercial property there is an opportunity to add value through the phased implementation of charging hubs at our clients’ buildings.  Occupiers may start to demand vehicle charging in private car parks at office buildings and business parks, while at retail property the ability to plug in while shopping will drive footfall, and increase both dwell time and customer loyalty.

We will be organising a specific session on this subject in the new year but this needs to be on your radar.

3) Productivity

2017 was the year we learned that UK productivity is over 15% lower than the rest of the G7, 9% lower than Italy, 26% lower than Germany.  Despite huge changes to the way we work we have only become 2% more productive since 2007.  The Government has recognised that if the UK is to compete on a global scale this must change and recently published its industrial strategy aimed at doing just that.

While office and retail property may not seem central to oiling the cogs of the industry our move toward a services based economy means the role is bigger than you think.  This has led to research undertaken by the BCO and Revo into the effects of our work environment on our productivity.  More broadly this is linked to Health & Wellbeing agenda, or “Sustainability 2.0: This Time It’s Personal”.

The BCO recently published a paper which suggested that improvements to office environments could increase productivity by 2-3%, but that the VALUE of that increase could be a gain as much as 30% in central London and 75% elsewhere.  Occupier organisations are likely to be taking a real interest in this which may alter their approach to fit out, or indeed space selection where they are served by central plant and equipment.  In multi-let sites the occupier experience starts at the front door so MJM has a key role to play in ensuring occupiers arrive at their desks with a spring in their step and a smile on their face.

Expect more work on assessing and improving internal environmental quality, increasing biophilia, more concierge service offerings etc.  We have been investigating this a little during 2017 with a trial of the Demand Logic system at one of the properties we manage for Schroders, 55 Bishopsgate, which is aimed at improving internal environmental quality, reducing energy consumption, and utilising contractor time more efficiently.  Case study to follow!

4) Re-Made in China?

For many years now the UK, among many other nations, has utilised China as a market for its recyclate with approximately 3m tonnes of cardboard and 350k tonnes of plastics being sent for re-processing each year.

However the Chinese have had enough of “yang laji” or “foreign garbage” and have imposed strict criteria on the quality of waste they are prepared to accept.  Contamination limits have been set at just 0.5% from March 2018 and failure to meet this criteria may result in it being sent straight back.

Why is this an issue?  Efforts will need to be made to ensure the 0.5% limit is not exceeded, or that new markets whether at home or abroad are found for the waste material.  Either option will almost certainly lead to increased collection prices, and possibly declining recycling rates if incineration is seen as the most practicable option.

M J Mapp will continue to work closely with our waste services providers to ensure the best practicable environmental option is used for the management of waste produced at our clients’ properties.

5) Carbon Reporting

The announcement in 2016 that the CRC scheme was being scrapped was met with little sadness from industry who found the scheme to be onerous above all else.  In defence of the scheme it was very effective at making property owners take notice of the supplies they were responsible for and properly accounting for them, and brought the issue of carbon to the FD, once a year at least!

Many PropCos were able to reduce their exposure to the full extent of the scheme due to the various ownership structures employed to maximise the returns to their investors.  On this basis the proposed move away from CRC to an increase to the Climate Change Levy applied to energy bills might have been a way of ensuring the founding principle of the Order that the Polluter Pays was realised.

However, the Government announced that the new scheme would be revenue neutral to the Exchequer.  This means that, with more companies being captured through the uplift to the CCL, existing CRC participants will end up paying less than they were which was already too low to really push energy efficiency.

Further, the onerous aspect (the reporting) will be retained, and possibly extended, albeit with a view to aggregating the requirements of the various reporting regimes your clients may be subjected to.  The Government is consulting now on the form the new requirements will take, a summary paper will be published by the team shortly but we are expecting the outcome to increase the reporting burden on our clients both in terms of what we need to report, on the extent of the reporting.

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Carrying forward the thinking from a previous article on the future of real estate technology, what is the actual impact of a well-coordinated digitisation of a business? I.e. one that gets the people, processes and technologies pointed in the desired strategic direction.

(It shouldn’t be forgotten that any digital strategy should only form part of the overall strategy for the business – it is not a stand-alone solution).

The goal of digitisation is often simply a degree of automation leading to “efficiencies”, where the word efficiencies is scarcely hidden code for staffing cuts. Many consider that efficiency is the same or at least similar to productivity and the two concepts are often used interchangeably in conversation or when developing business solutions.

However, I see efficiency as about doing “the same with less” while productivity is about “doing more with the same”, a point well made here by the HBR:

Indeed, there is nothing wrong with efficiency on its own, but crucially it does not really move the needle forward. That is, when in a growth phase an organisation inevitably has to continually reapply its existing approach to any incoming staff. An efficiency model almost certainly signals redundancies as an outcome and carries a variety of associated risks as a result. Unless the business is rationalizing, why would it deliberately set itself up not to grow?

Additionally, with the perceived or actual lack of talent available in the market, why would an organization want to lose good people, where it has them? (If you don’t already have good people you need to take a long hard look at your existing model).

Productivity is the answer to this conundrum. A productive organization is already set up to be able to absorb incoming work to a far higher degree and apply its approach as a matter of course. It builds capacity into its network and allows for greater flexibility of process, by helping to remove what the HBR terms organizational drag and allowing for discretionary effort.

Thus productivity is actually about enabling people to grow at a personal and professional level by delivering systems that remove the pain points created by repetitive tasks and allowing them to focus on the creative and problem solving issues. And bear in mind that it is not technology that is necessarily your differentiator, it is your people’s adoption and use of that technology that sets you apart.

Then, as before, productive technology is about enabling and augmenting people, not replacing them. Work out what tools they need to deliver and provide it to them.

Placing this back into a property management context, this allows us to add genuine value for the benefit of the business, customers (i.e. tenants) and clients alike.  And that can only be a good thing.

For further information please contact Robert Stark –


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I read with interest the new white paper by KPMG & Real Tech on the “Future of Real Estate Technology”. (Here:  KPMG White paper  with thanks to James Dearsley).

While I found it somewhat shorter than I had hoped for, it nevertheless summarised a number of trends which I have been observing within the industry. Putting aside the numbers for a moment, which have been well covered elsewhere and no doubt are the cause of Pavlovian salivation in the next round of PropTech hopefuls, the point I maintain remains the most interesting and perhaps most relevant, is the cultural shift required to support these changes.

Clearly, some significant property management organisations have already recognised the direction that the technological wind is blowing in and are in many cases investing heavily in solutions by building, strengthening and utilising relationships with start-ups.

Creating the right internal environment, with a vision for the long term and a top-down approach, does allow both parties (the corporate and the start-up), to benefit from various synergies. It enables the start-up to scale quickly, through insight and introductions to potential clients in the existing marketplace, while the corporates gain not only new ideas but opportunities for investment, recruitment and strategy.

However, I am yet to be convinced that this gets to the heart of the matter. Despite recognisable benefits, the commercial real estate industry is at a crossroads in its utilisation of technology. To take the right path will mean investment in strategy, process, people and technology in order to have a coordinated response that avoids the potential turmoil that a lack of correctly allocated resources would bring.

What I believe may be missing from many plans is an appreciation that the human resource and belief systems required to support the shiny new toys being rolled out are fundamentally different to those currently in place in most real estate environments. This is where I suspect the incumbents start to get nervous and where the challengers (or perhaps, to utilise the phrase du jour, disruptors), have their real opportunities.

Turning around the smaller, more fleet of foot and nimbler businesses, rather than the super-tankers, is, in theory, a far easier proposition. Can the large organisations break free of the perceived cultural and historical influences of strategic drift that typically slow development and affect transformational change, in time?

To start with the end goal, what we are really looking at is the dawning realisation in many real estate businesses that B2B services need to match the levels of service we already receive in the B2C market and that technology can help support their teams in delivering that.

To paraphrase the KPMG paper, real estate may not be about location any more, but it is not really about “technology, technology, technology” either. It is about people, people, people – it always was. Technology is a means to that end.

For further information please contact Robert Stark –


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On 23 February 2017 the Government published new guidance on how to comply with the Energy Efficiency Regulations 2015

This legislation states what commercial buildings should do to meet the minimum energy efficiency standards (MEES) outlined in the Energy Act 2011.

This guidance will hopefully serve to end the ‘will it, won’t it’ happen discussions that have been commonplace in the industry over the past six years and provides greater clarity over the key obligations for owners of commercial property. With just over a year to go until the Regulations come into force we anticipate increased activity among property owners to prepare themselves for compliance.

The key points in the guidance are as follows:

  1. The Regulations will, as anticipated, be targeting F & G rated buildings/building units being marketed for sale or lease from April 2018;
  2. Enforcement will be managed by local weights and measures authorities with penalties of up to £50,000 for breaches corrected within three months, and up to £150,000 for breaches over three months. All breaches will be public record for a minimum of 12 months;
  3. If there is only a building level EPC available this may be used for demised areas of the building; however, if there are EPCs covering demised space as well as a building level EPC the certificate for the demised space must be used;
  4. Listed building status is NOT an automatic exemption. If there is already an EPC registered for a listed property, it’s obligated. For other listed properties exemption is granted on proof that modifications will alter the character or appearance of the property;
  5. Leases >99 years, or <6 months are exempt unless, in the latter case, the tenant has been in occupation for more than 12 months already;
  6. The Regulations will apply to ongoing tenancies from 2023 where the EPC remains valid (i.e. if the EPC expires during a tenancy there is no need to renew until the next lease/sale event);
  7. For F and G rated buildings all improvements that pay back within seven years must be implemented. Exemptions will only be granted on provision of three separate quotes covering capital + installation demonstrating payback beyond seven years;
  8. Exemptions will also be granted for F and G rated buildings who can demonstrate all practicable energy efficiency measures have been implemented. This exemption lasts for five years at which time evidence must be re-submitted that no further improvements can be made;
  9. Buildings might also be exempt if a report from a RICS registered surveyor confirms that the implementation of energy efficiency measures will reduce the value of a property by more than 5%;

In simple terms all energy efficiency measures must be implemented at F and G rated buildings that pay back within seven years. E rated and unrated buildings are both risks as building regulations tighten and the E rating becomes harder to achieve.

For more information about how M J Mapp can support you in meeting your compliance obligations, please get in touch with us through your existing contact, or by calling 020 7908 5500 or emailing

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Rumours of the death of shopping centres as retail migrates online have proved exaggerated

John Michell, Head of Retail, contributed to the full article in the January edition of ‘Shopping Centre’ magazine. See right for a downloadable copy.

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What is ESOS?

ESOS is an energy audit scheme with mandatory participation for qualifying businesses classified as being ‘large enterprises’.

The criteria for qualification are that the enterprise has:

1. at least 250 employees, or

2. a turnover of at least €50m AND a balance sheet of at least €43m on 31 December 2014.

An overseas based corporate group with a UK undertaking that meets the above criteria will be required to comply with the scheme.

In the UK ESOS targets the highest parent organisation but allows for disaggregation.

It is likely that many Real Estate entities will be required to comply with the scheme.

What do participants need to do?

Participants in the scheme must:

1. Notify the scheme administrator of their participation;
2. Measure their energy use;
3. Identify energy efficiency and energy management opportunities;
4. Evaluate these opportunities; and
5. Store information and data in an evidence pack.

Evidence of compliance can be demonstrated by the production of:

1. Certification to ISO 50001
2. A current Display Energy Certificates and associated recommendations
3. A completed Green Deal Assessment (although there is currently no non-domestic scheme available)
4. An ESOS compliant energy assessment conducted by a qualified in-house or external assessor

There is no obligation for participants to implement any of the identified opportunities for energy saving, and no requirement for further disclosure of audit findings, in company reports for example.

100% of energy consumption must be measured by usage or spend but only 90%, by usage, needs to be audited. As transport emissions are included in the scheme this may allow for these emissions, which may be difficult to quantify, to be excluded. Unconsumed supply may also be excluded where a reasonable methodology for its estimation can be applied.

When does it need to be done by?

ESOS operates on a 4 year cycle. For the first cycle, notification of participation and compliance must be made to the Environment Agency by the 5 December 2015. Energy audits conducted by participants from 6 December 2011 to 5 December 2015 are admissible as evidence of compliance.

What are the penalties for non-compliance?

Civil penalties apply for non-compliance with ESOS requirements ranging from £5,000 to £90,000 depending on the offence. The Environment Agency is committed to a collaborative approach to compliance and will use discretion in applying any penalties.

How can M J Mapp help?

ESOS requires additional resource to ensure compliance, however, there are clear opportunities to be realised from identifying energy efficiency and energy management improvements, not just from buildings but from transport use for company business.

In many cases M J Mapp, through our property management activities, are collating the necessary data at the property and fund levels, and obtaining admissible reports for evidence packs required by other statutory regimes (TM44, for example). As part of our approach to property management we also conduct periodic energy audits to identify efficiency improvements for further discussion.

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A landmark decision was made last week in the Court of Appeal changing the law of how rent should be paid when a company goes into Administration

In 2008 a High Court decision declared that rent must be paid as an administration expense, as prior to this the Administrators could decide if they wanted to pay rent or not. Under this 2008 decision it emerged that rent was only payable if rent was actually due for payment while the company in Administration was using the property. Companies in Administration found that they could trade from a property rent free for up to three months simply by entering Administration the day after the quarter day when the rent was due. This resulted in landlords receiving no rent until the next quarter day.

Companies in Administration who used the property on the quarter day were liable to pay the full quarters rent as an expense of the Administration, even if they ceased using the property the following day. The position was unfair for both landlords and tenants.

GAME Group went into Administration on 26 March 2012 – one day after the March quarter day. They traded from a number of stores and did not pay any rent for the March to June quarter. Several landlords asked the Court of Appeal to overturn the previous High Court decision and the landlords wanted to replace the existing law with a more common sense approach by getting the Administrator to pay rent each day the company in Administration used the property.

The Court of Appeal has now decided that companies in Administration will have to pay rent for the days they are in occupation. Pay as you go!

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The 3rd Edition of the RICS Service Charge Code is scheduled to be published in February 2014

The code is not yet in a completed form and has been subject to much comment by M J Mapp and a number of the larger managing agents who have had and retain a number of concerns.

We do expect there to be some further changes, largely because the consensus view is that the revised version places significant additional obligations on owners and very few on occupiers.

Whilst The Code is very much an extension of previous versions and remains a non mandatory document we thought it would be useful to highlight a few key areas in advance of its publication.

  • Recoverability under short term leases and sinking funds

The Code recognises that leases are now much shorter and the problems this can cause when considering the need for significant repairs or replacement. The Code will place a greater emphasis on the use of sinking funds as a way of spreading costs.

As drafted The Code goes as far as suggesting, as an example, that an occupier with a lease of 5 years or less may only be considered to have a transitory interest and should not be asked to pay in full for the replacement of a boiler whose life expectancy would be considered far longer.

Although sinking funds have been considered unfashionable and difficult to administer for some time, it is clearly something that should be considered carefully when drafting any new leases, as recoverability under shorter leases for major plant replacement may become more difficult.

  • Procurement

The Code confirms that a managing agent may use a procurement specialist (in practice this is almost always an in house specialist) to procure services and to help deliver greater value for money. The Code further recognises the work, processes and costs involved and makes clear that the cost of procurement is now a recognised and appropriate service charge cost. Various occupier-focused bodies have added their approval to this approach.

This change will result in procurement being a separately stated cost within service charge budgets, as opposed to being wrapped up within overall contract sums. We sense that the overall net cost should remain largely the same and are pleased to see a move to ever greater levels of transparency in this area.

  • Carbon Reduction Commitment Energy Efficiency Scheme

The Code recognises the dilemma surrounding who should pay for CRC charges and states that a fair and reasonable approach should be taken to the apportionment. It goes on to state that owners should be able to recover the full cost of providing bona fide services to occupiers and occupiers should be in no worse position than if they had occupied on a full repairing and insuring lease, although with the emphasis that the “polluter should pay”.

In addition there are a number of other more minor (and good) amendments around the standardisation of coding and certification and earlier suggestions that audits should be significantly more extensive are no longer being voiced.

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Environmental metrics go mainstream

The Companies Act 2006 (Strategic and Directors Reports) Regulations 2013 came into force on 1st October 2013 obligating quoted* companies who are UK incorporated. Requirements must be met for, and included as part of, annual reports and accounts ending on or after 30th September 2013.

New regulations are:

  • Report their scope 1 and 2 greenhouse gas (GHG) emissions** represented as tCO2e that are under the company’s control in their directors’ report; and,
  • Consider environmental risks and opportunities ensuring that environmental issues are factored into long-term business decision making.

These requirements must be met for, and included as part of, annual reports and accounts ending on or after 30th September 2013. The current regulations only apply to around 1,100 listed companies but there are plans in place to look at extending them in 2016 to all large companies. This could significantly increase the impact of the regulations and affect as many as 24,000 businesses.

There is no prescribed methodology to follow to ensure compliance but to ensure transparency it is essential to use an established methodology such as the GHG Protocol or ISO14064. It must be ensured that reporting covers emissions from all activities for which the company is responsible for globally and that data for all relevant GHGs are included. The first reporting year requires data for the preceding 12 months only but subsequent reports must include previous years’ data.

In order to ensure readiness for compliance, organisations are encouraged to identify whether they will be required to comply. Once agreed their reporting boundary needs to be established, this is likely to be the same as the boundary used for financial reporting but this should be checked. It must not be assumed that the same data used in other compliance schemes such as the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is sufficient to ensure compliance with GHG reporting. The latter requires additional information (if applicable) relating, for example to losses of refrigerant and propellant gases (HFCs and PFCs) and combustion of fuel in owned vehicles, equipment or machinery.

It is intended that, through compliance, businesses take a more active approach to carbon management and reduction as the Government looks to progress toward the national targets set out in the Climate Change Act. It is hoped that, through compliance, businesses begin to see the economic benefits of managing and reducing carbon emissions, and understand the risk that exists around failure to effectively manage environmental performance.

M J Mapp can assist obligated clients by compiling data required by the Regulations in the preferred format. Most data is held in a central database dedicated to improving transparency and availability of environmental metrics. The system is flexible and data collection can be tailored to individual client needs. At this stage there are no plans for financial penalties or taxes as with CRC, however, if GHG emissions relate to central plant used by occupiers in multi-let premises M J Mapp can attribute data to each area to enable any costs relating to these emissions to be passed on if required, should leases allow.

Further details of the requirements of these regulations can be obtained from M J Mapp, or from the government guidance note that can be found here***.

* Whose equity share capital is listed on the main market of the London Stock Exchange; in a European Economic Area; or on either the New York Stock Exchange or NASDAQ.

** As defined by the GHG Protocol, scope 1 emissions are all direct GHG emissions owned or controlled by the company including combustion of fuel, machinery or manufacturing processes. Scope 2 emissions are indirect GHG emissions from consumption of purchased electricity, heat or steam.


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Commercial Rent Arrears Recovery (‘CRAR’) is planned to be implemented in April 2014

Commercial Rent Arrears Recovery – A new statutory process that will enable commercial landlords to recover “pure” rent arrears is set to come into force from April 2014, following the publication of new  regulations in August 2013. The current common law right to distrain for arrears of rent will be abolished and replaced with CRAR.

Currently, Landlords or certified bailiffs (acting on behalf of the Landlord) can enter commercial premises occupied by a defaulting tenant without giving any notice. They have the power to distrain and sell goods/assets up to the value of arrears for all sums reserved under the lease as a rent; thereby removing the need for court proceedings.

The common law right to distrain for arrears of rent is planned to be abolished and replaced with CRAR. CRAR will enable commercial landlords to recover “pure” rent arrears by serving a “notice of enforcement” on the tenant before they can instruct enforcement agents. A seven day notice period will apply, and CRAR can only be used to recover principal rent including interest and VAT payable under the terms of the lease. The sums which can be recovered must be greater or equal to seven days rent. CRAR cannot be used to recover service charges, insurance or other sums due, neither can it be applied to premises which are part commercial / part residential.

CRAR will also impact on subtenants and Section 6 Notices. CRAR will require sub-tenants to be given 14 days notice before a Section 6 Notice takes effect.

What could this mean for property owners?

  • Increase in number of tenants absconding without making payment.
  • Delay in recovery of rent arrears, and other sums due under the lease.
  • Increase in professional fees / court costs incurred by owners to recover arrears, perhaps making it costs prohibitive to pursue debts.
  • Disputes arising between parties as to whether CRAR has been followed correctly, notices served in correct form etc.
  • Cash flow difficulties.
  • Hardening of lending criteria.

Action to be considered by owners / managing agents

  • Adopt a proactive approach to credit control / query resolution.
  • Agree a clear credit control policy and standardised process with advisors to minimise costs.
  • Increased rent deposit requirements on lettings, especially in “bull” market conditions.
  • Earlier consideration towards service of Section 6 Notices, perhaps even serving these as a protective measure the day after the quarter day, albeit this would incur additional costs and potential confusion between owner, tenant and sub-tenant.
  • Increased security requirements within alienation provisions (although will need to balance this with potential impact on rent review).
  • Under finance arrangements, negotiate more time between rent payment dates and debts interest payment dates.

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Scotland steals a march on waste recycling

New Years Day 2014 marks the date on which the requirements of the Waste (Scotland) Regulations 2012 come into force. The Regulations are designed to deliver Scotland’s Zero Waste Plan, launched in 2010, which targets a national recycling rate of at least 70% to be delivered by 2025.

Despite an increasingly prescriptive statutory framework, and financial penalties through rising landfill taxes, as a nation we are still only achieving around 50% recycling from commercial premises.

This, in Scotland at least, is all about to change.

The Regulations make a number of key demands of waste producers which can be summarised as follows:

1. Businesses must present metal, glass, plastics, paper, and cardboard for separate collection

2. Businesses which produce over 50kg of food waste per week must present this for separate collection*

3. Businesses which produce over 5kg of food waste per week must present this for separate collection from 2016*

4. The use of macerators to dispose of food waste in the sewer system will be banned (for commercial premises) from 1st January 2016*

5. A ban on any metal, plastic, glass, paper, and card collected separately for recycling from going to incineration or landfill from 2014

6. A ban on biodegradable municipal waste going to landfill by the end of 2020

While there are implications for waste collection and processing further downstream in terms of infrastructure, capability, and cost there are more immediate implications from a property management perspective. The Regulations obligate managing agents to provide appropriate segregation facilities at all Scottish properties and to work with the waste producers and the occupiers, to ensure they are aware of their obligations. Compliance, for food waste particularly, will require the most engagement as individual catering outlets may not produce 50kg in isolation a shopping centre, for example, with multiple catering units almost certainly would. This engagement will need to be conducted between the occupier, the waste services provider and the managing agent who, as nominated waste managers, are ultimately liable to ensure compliance.

SEPA (Scottish Environmental Protection Agency) are committed to adopting a partnership approach to work with businesses to achieve compliance but will look to tackle high impact and persistent offenders.

As a business M J Mapp are well placed to react to these requirements through our own teams and our relationships with our waste services providers, our clients and our occupiers. A core business objective has been to work with our waste services providers to maximise recycling rates and strive to achieve zero waste to landfill at all properties we manage. To the end of August 2013 we worked with our properties to achieve a 77% recycling rate and a 94% diversion from landfill overall. However, any potential for non-compliance must be flagged at as early a stage as possible to ensure an appropriate level of engagement can take place before the end of 2013 to bring any non-compliant properties in Scotland into line with the new Regulations.

*Excludes businesses located in rural areas as classified by the Zero Waste Scotland website

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