Many companies can find property becomes a millstone around their neck, an expert has warned.
Louise Baxter, director of the Cambridge office of corporate recovery practice Begbies Traynor, told a gathering of professionals held at the firm’s premises that it was vital to get the property equation right She said: “All too often companies are caught in the property trap. “Perhaps they go for prestige premises they really can’t afford or opt for a pricey location they don’t need to be in.
“We in corporate recovery often find ourselves picking up the pieces from such poor decision-making. Companies need to be as professional about their property needs as they are about the rest of their business.” Guest speaker Emma Morton, Associate Director of international property consultants, Savills, said property was normally the second largest cost to any business, yet often over looked. Rationalisation could be key to business success.
Companies, she cautioned, needed to adopt a ‘forensic approach’ to their property, clearly establishing the facts.
Ms Morton identified the inherent risks in holding property but stressed that by establishing and understanding the facts, property could then be more properly viewed as an opportunity to the business. Managing property risk through a well formulated approach would enable businesses to achieve operational and occupational flexibility, boost profitability and underpin their longer term business strategy.
Businesses also need to recognise the impact property decisions would have on their accounts. “The business plan should always drive the occupational property decisions, not the other way round,” said Ms Morton. “A property audit allows a property strategy to be developed that enhances and supports the business.”
Begbies Traynor partner Peter Walker told the meeting the problem of distressed property lending was not going to be solved quickly. Only now were the banks, because of their own difficulties, getting to grips with the matter. “It is going to be a long drawn-out process,” he stated.
Louise, a member of the Insolvency Practitioners Association, R3 and the Institute of Credit Management, joined Taylor Gotham Fry (now the Southend office of Begbies Traynor) in 1993. She deals with corporate insolvency procedures including liquidations, receiverships and administrations.