Exercising a break clause to save £16 million over a 5 year period

Site: 5 story office building located in the London Borough of Lambeth

Customers: North East London Commissioning Support Unit (NEL CSU) and Guy’s and St Thomas’s NHS Foundation
Trust (GSTT)

NHSPS representatives: Zoe Thomson (National Office Programme – Project Lead), Amanda Challis (Property Management), Anne Cawley and Paula Modeste (Facilities Management), Andrew Gillies (Construction Management)

In light of more hybrid ways of working post pandemic, there had been a significant reduction in the utIlisation of Lower Marsh by NEL CSU and GSTT. Following a strategic review by NHSPS’ National Office Programme which focused on the occupiers ongoing requirements for the building, a decision was made to exercise the break at Lower Marsh.

However, the onerous Vacant Possession (VP) Break conditions proved challenging to meet and required various NHS functions / external contractors to work together to ensure the break was successfully served.

To overcome the onerous break conditions, sub lease negotiations took place with the occupiers of Lower Marsh to vary their current sub-lease expiry date (via a deed of surrender) to allow for the necessary VP works programme to be undertaken.

The early termination date was determined by our Property Management team using advice provided by NHSPS’ Construction team / external contractors. They inspected Lower Marsh to determine the scope of VP works required and subsequent timeframe in which the works needed to be undertaken in order for the conditions to be met.

By successfully varying the occupiers sub-lease expiry date, the occupiers vacated the building in advance of the programme of works with the support of NHSPS’ FM team who helped co-ordinated the move.

In doing this, the VP works commenced on time and were successfully completed in advance of the break date.

On the break date, the landlord accepted the keys and the NHS relinquished their interest in an underutilised office building, generating system savings of circa £16m over a 5 year period.

GSST were very pleased with the overall result as this created a substantial level of savings for the NHS and relinquished their interest in an underutilised office building that they no longer had a requirement for.

NEL CSU were pleased to relinquish their interest early in the building as they were due to disperse as an organisation in July 2022.