Published date: 08 July 2021
Saving the NHS £800,000 by challenging a rent review and negotiating with landlords
South Plaza, Bristol City Centre
Background
Site: South Plaza (currently being rebranded as ‘360 Bristol’) is a large 8 storey office block in Central Bristol. The building is occupied by a variety of NHS organisations, with a total occupational footprint of 56,000 sqft across 5 of the 8 floors available.
Customers: Bristol, North Somerset and South Gloucestershire CCG; South, Central and West CSU; and NHS England & Improvement (amongst others).
NHSPS representatives: The transaction was managed by Mark Evans (Senior Lease Events Manager), with input from Andrew Windsor (Principal Property Manager) and Colin Stribling (Senior Property Manager).
“The NHSPS Lease Events team’s focus is to realise best value for the NHS, delivering cost efficiencies and improving occupancies. We’re delighted to have achieved such a large saving at South Plaza, demonstrating the power of proactive asset management for the NHS estate.”
Mark Evans, Senior Lease Event Manager, NHSPS
Challenge
The previous Landlord of South Plaza triggered the 2018 rent review at £1.058 million per annum, which NHSPS felt was significantly over the market rate for the location. We wanted to ensure NHS funds were being used effectively, providing cost-efficient workspaces for our occupiers.
This was particularly the case at the time of review, as the building was tired and in need of refurbishment.
Solution
NHSPS engaged a local agent (Alder King) to provide a market rent valuation. By quoting comparable evidence within similar tertiary locations within city, the report arrived at a market rent which was significantly less than the quoted rent on the trigger notice.
NHSPS and Alder King engaged in negotiations with our landlord at the time. Negotiations gradually slowed and we eventually learned that the property was to be sold.
Result
Using the impetus of a change of ownership, we issued a Calderbank Letter to our new landlord, and this ‘closed the gap’ significantly.
Through timely and proactive negotiations, we agreed at a global rent of £766,250pa. This achieved a saving of £291,750pa, which amounted to over £800,000 of savings to the system as a whole when backdated to the review date.
This is even more of an achievement now that we know of plans for the new landlord to rebrand the building and undertake an extensive refit to improve the space. This will deliver a modern and fit for purpose working environment for our NHS occupiers, supporting smarter working objectives, whilst still achieving good financial value for the NHS.
