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Facilities Management Journal February 2017

FM CLINIC FEBRUARY 2017 19 FMJ.CO.UK good location that can add value to their brand, while attracting and retaining the best talent. Due to the significant increase, which is believed in some cases to be as much as circa 40 per cent, businesses will need to find ways to ensure they stay competitive. Unfortunately, I foresee SME’s suff ering the most, with large corporations having greater leverage to find ways to off set the changes, if location remains paramount. As a result of all this, businesses may therefore be looking to reduce service levels for building and maintenance up keep, possible site relocations, or reduction in internal headcount. Unfortunately, the aforementioned could have negative impacts on the economy. At a time when we are negotiating our way out of Brexit, our UK businesses should be incentivised to invest and expand and not have to find ways to retreat or cut back in order to absorb these unreasonable and extortionate penalties for success. THE DIRECTOR’S VIEW CLAIRE HUFFMAN, DIRECTOR, MORPHOSE Glen Cardinal This revaluation in Spring 2017 is set to be the biggest re-adjustment in the market in a generation, not just for FM but many UK businesses. For the next five years, rates will be based on 2015 rental values. Despite a proposed phased system of implementation over five years there will still be some very steep increases, particularly for those based in London. Even for areas of the UK where rates are due to be reduced - in a similarly drastic fashion – the benefit will not be immediately realised. Business rates regularly feature as a top three expense for many organisations, so the impact will be anything but negligible. We have already seen some smaller independent traders in London have to rationalise future plans and perhaps even cease trading because the new rates – which in some cases have jumped from £21,500 to £54,000 - are simply unmanageable. Unfortunately, many services providers in the FM sector operate on very lean margins already so this increase will likely force a number of knock-on eff ects, mostly as a matter of necessity to stay competitive. The revaluation will increase pressure on both FM and property professionals, which in turn will force reductions in the supply chain. What’s more, with many areas of London increasing exponentially in rental value over the past 10 years, businesses may consider relocation from typical central city business areas to second tier growth areas such as neighbouring Fitzrovia, Shoreditch, and newly regenerated areas of London like Kings Cross. It is also highly likely that some firms will look to off set costs by consolidating their real estate portfolio. However, the cost diff erential between London areas and further afield locations will be reduced and therefore relative value may encourage some to stay, or even move into central areas. Of course, there is also a high possibility of some moving out of the capital altogether but lack of opportunities could make this unfeasible for smaller to medium sized businesses. On the other hand, larger firms will possibly see locations such as Birmingham, Leeds or Liverpool as more attractive regional hubs where rates are predicted to fall in order to propel growth across the country. THE FACILITIES SERVICES PROVIDER'S VIEW TIM HANCOCK, CHIEF EXECUTIVE, O&G Rates are not going to determine where or when a business changes its location. In fact, the expected changes to business rates make little or no diff erence to day-to-day operations for an FM. While it is likely that we will see some adjustments by organisations operating in higher value London areas, not many will decide to leave the capital just because of the rates. Let’s look at the retail sector. When asked by the BBC last Your workforce, mobile & connected. Concept Evolution Workplace Technology & FSI GO Mobile Workforce Management from FSI Claire Huffman +44 (0)1708 251900 info@fsifm.com www.fsifm.com ADVICE & OPINION


Facilities Management Journal February 2017
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