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by GK Strategy 28th July, 2017
3 min read

Planning for your Profits

One of the most costly, bureaucratic and lengthy processes a portfolio business can face is the management of commercial properties. The ability to grow – particularly in the restaurant business, healthcare sector and any number of retail businesses – relies on being able to quickly purchase new sites or consolidate existing ones. Commercial real estate is quite literally the foundation of the portfolio business you may have invested in. Prime real estate is of course also an important asset – often the most valuable – on a balance sheet. Yet the ability to buy more branches, consolidate or redevelop headquarters and distribution plants – can be severely hampered by the UK’s rigid planning process and a lack of preparation on the management’s behalf.

GK’s Intelligent Planning have seen many portfolio businesses watch their bottom lines suffer when surgeries or branches were forced to close for lengthy periods whilst redevelopment took place, as local authorities and planning officers constantly scrutinised and put brakes on the project. It is so critical that any business, even before it thinks of redeveloping, selling office space or purchasing new premises, communicates clearly with local authorities – including ward councillors, planning committees and Council Leaders. So many times we see the only channel of communication between a business is with planning officers, and by this point it is often too late. Disputes often take place with the officers, at which point the politicians who are unaware of the facts of the situation, may back their planning teams. Disputes with councils can damage reputation and demolish any hopes of further expansion in the local area, so this risk must be managed by investors.

Officers hold significant power over which planning arguments their political bosses see and their recommendations are rarely overturned. It is therefore vital to educate the politicians (as the final decision makers) early on in the process, so if they see officers being biased (and it happens), they are fully aware and can challenge, overturn and even ask for the planning officers to review their recommendations. This not only saves disputes with the council, but can substantially help save costs. The price of appealing planning decisions can skyrocket quickly. Councils will often tell you to fill out a “pre-application” form and meet with officers – at a cost of a minimum of £1000. There is no need for this if constructive engagement with the local councillors and Council leadership is sought, focusing on the positive messages of your development plans, and provides them with the counterpoints needed to fend off NIMBYs in their wards. The next time you think about investing in a portfolio business with ambitious plans for more space, or is keen to sell off old assets, check whether this political engagement has been undertaken – you will not regret it.

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