Government property, Kirstie and Phil style?

01 February 2013

Ok, so Ms Allsopp and Mr Spencer haven’t quite been called in yet, but almost.

On Friday (26th January), the Government launched its "find me some government space" initiative, complete with  a homebuyer style website, allowing prospective purchasers to search for properties by location, in the same way you'd search for your own home.

So what's available? I had a little play on the site this morning, and it turns out - anything.

From the rather grand Admiralty Arch in central London, to less obvious "opportunities", such as a mortuary in Folkestone. In the case of the latter, this is being sold off as a potential housing development. The prospectus declares the site to be a "former Victorian hospital, including a disused mortuary, chapel and hall and tennis court with associated land". One suspects the tennis court may need some TLC.

The idea behind the initiative, as you would expect, is to help save the Government money, and hopefully encourage new opportunities, jobs and growth in local economies as new life is brought into empty, unused properties. Of course this can only be a good thing.

With my work hat on however, I am one of the resident RPC outsourcing lawyers. Helping customers, both public and private sector, maintain or rationalise their property portfolios is one of the area's my clients focus on.

In recent negotiations whilst supporting FM contractors, we've seen a real push by customers for the inclusion of "divestment" provisions – which basically say that, even if the customer sells off some of its estate which is within the original portfolio, then the FM contractor will continue to deliver the FM services to that property for the remainder of the contract term, despite the fact that it has been sold off to a third party.   This could certainly be a consideration under this new initiative, with buildings such as magistrates' courts and hospital spaces being pushed for sale.

On-going service delivery to former public space could of course be a valuable selling point to prospective purchasers, but from a FM contractor perspective, there are obvious risks to consider. For example, who will be obliged to pay the FM contractor for the services, once the property is divested? Will a new contract be entered into? Will it differ from the original terms, and if so, how? What effect will the divestment have on the original contract terms – can any commitments re savings still be met, on a reduced portfolio?

It's all manageable of course, with some forethought (and a decent change control mechanism), but the reality is here. The Government's property estate is going to shrink even further. With a mortuary penned as a potential housing development, and Wakefield's former fire control centre down as a potentially good "disaster recovery and training facility" or, perhaps, just an office, FM contractors should also be ready to embrace pretty imaginative changes in use.

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