From Rents to Revenues: Can Property Become a Service Industry? An investigation of the valuation implications of the generation of non-rental income streams by property owners.
Patrick McAllister 
A report for the Education Trust of the Royal Institution of Chartered Surveyors
The last decade has seen a fundamental shift in the ways that many occupiers and investors regard property assets.  Advisers, owners and occupiers are increasingly financially aware and innovative.  The growing trend for occupiers to outsource property support services and seek flexibility in occupation has been driven by the interrelated forces of new technology, globalization and increased competition.  In the UK, a number of major landlords have argued that these structural shifts provide an opportunity to transform the nature of their business relationships with tenants.  Previous experience of the valuation of over-rented properties, lease inducements and abnormal rent review periods has illustrated how market shifts tend to be followed by confusion surrounding and new developments in valuation methodology. This report investigates the valuation implications of landlords generating revenues from the provision of business support services.

Liquidity and Private Property Vehicles: Where Next?
Andrew Baum and Jane Fear
A report by The University of Reading and Oxford Property Consultants, commissioned and funded by Grosvenor, Invesco Real Estate Advisers and the Investment Property Forum Educational Trust
Despite a clear need for more information there is little available UK research describing the views of investors, managers and advisors concerning the market for private property vehicles, including limited partnerships, property unit trusts and other unquoted collective investment schemes. This is the first major study of its type. Commissioned and funded by Grosvenor, Invesco Real Estate Advisers and the Investment Property Forum Educational Trust, the research was undertaken by the University of Reading and Oxford Property Consultants between January and October 2001.

Who Owns the City 2001
Colin Lizieri,  Melanie Oughton and Andrew Baum
A report funded by Development Securities
In 1998, the results of the Who Owns the City study suprised many in revealing the extent of overseas ownership of office space in the City of London.  An update to that research, Who Owns the City 2001, shows that non-UK ownership in the City now stands at 38%. New investment vehicles have changed the nature of property ownership and have led to increases in both liquidity and volatility in the market. The report  provides detailed analyses of ownership and occupation in the City  and considers the implications of the changes for the future of the  London office market. 

Innovations In Property Finance in the UK Market
Colin Lizieri, Charles Ward, Stephen Lee and Scarlett Palmer
A report funded by the Corporation of London and the RICS Foundation
The last few years have seen massive growth in new property investment vehicles, in property backed securitisations and in innovative ways of procuring space. Examples include the £1.5
billion securitisation of office rents from Broadgate, Sainsbury's bond funded sale and leaseback of supermarkets, Abbey National's disposal of its entire corporate property portfolio, the special purpose vehicles used to take property companies such as Wates City of London private and the £338million Monument Securities CMBS issue.

Great claims are made about the benefits of such schemes. The research sounds a note of caution - gains may be offset by hidden costs or constaints on management. The report sets out a framework for asessing the sources of added value and for judging whether any gains are ephemeral or permanent.

Additional related material can be found in a related Departmental Working Paper “Financial Alchemy” or a Zero Sum Game? Real Estate Finance, Securitisation and the UK Property Market

The Time Series Performance Of UK Real Estate Indices
Stephen Lee, Colin Lizieri and Charles Ward
A report funded by the Real Estate Research Institute as part of an enquiry into property performance measures in the United States for the US Pensions Real Estate Association

This report forms part of a study funded by the Real Estate Research Institute examining property performance measurement.  Data on the performance of property held by institutional investors  is compared to the public real estate market (in the form of  property company shares) and to other investment assets. In  addition, the behaviour of the “industry benchmark” real estate  performance measure – the Investment Property Databank indices  – will be compared to the indices published by other providers.  Using annual, quarterly and monthly series basic time series  statistics are described and the inter-relationships between  variables discussed. Analysis looks for leading and lagging  relationships, evidence of price discovery and the impact of  smoothing and "stale" valuations. Finally, sector differences are  highlighted, using monthly and quarterly data. 
 

Lease Structures, Terms and Lengths: Does the UK lease meet Current Business Requirements? A Report on the Attitudes of Occupiers in the UK
Neil Crosby, Virginia Gibson and Melanie Oughton
For the Royal Institution of Chartered Surveyors

As a result of earlier research for the DETR, Crosby and Gibson were commissioned by the RICS to undertake research into the attitude of corporate tenants to the leasing process and to identify their particular concerns.

The research found that issues of the length of occupation and the ability to terminate leases dominated the list of concerns.  International occupiers were particularly concerned over the mismatch between lease term and business planning horizons and the inclusion of breaks clauses were seen as an important element of a modern lease.  The mode and period of rent review were not as important. 

The Influence Of Valuers And Valuations On The Workings Of The Commercial Property Investment Market
Andrew Baum, Neil Crosby, Paul Gallimore, Patrick McAllister, Adelaide Gray
Funded by the Education Trusts of the Investment Property Forum, Jones Lang LaSalle and
the Royal Institution of Chartered Surveyors

Are valuers simply ‘scorekeepers’ or do they actively affect prices, liquidity and turnover in the commercial property investment market?  New research sheds additional light on the real impact that valuers and valuations have on the market. The research concentrated on the production and use by institutional clients of periodic valuations for performance measurement purposes and shows that:

• valuations can be distorted by the influence of clients
• fee levels have severally restricted the number of firms able to carry out these valuations profitably. .
• valuations can alter significantly as a result of the appointment of new valuers or portfolio managers

Evaluating Office Space Needs & Choices
Virginia Gibson
In association with Christopher Hedley, IPD Occupiers Property Databank
Andrew Procter and Bill Fennell, Actium Consult

The property market in the UK has changed significantly within the last decade.  Both the demand for and supply of office property have particularly been affected. Occupiers’ requirements for ever-greater flexibility and the landlords' continued search for sustainable returns have resulted in a range of new property products. Shorter contracts, serviced space and outsourcing have increased the diversity of property solutions available to occupiers.

This research sought to answer the question: Are occupiers able to assess these new choices and make informed property decisions?  In order to do this, they must have adequate cost data and a framework for evaluation which ensures that they are comparing equivalent situations. If a serviced office is to be compared with a more traditional leasehold situation, the extra costs of fitting-out and servicing the latter must be incorporated into the process.
The results indicate that there are some forces of resistance to the changing market which come from occupiers. The lack of occupancy cost data and an inability to explicitly separate the cost of the services from the cost of the risk transfer for greater flexibility are inhibiting occupiers from evaluating the new property products in a rational way.  This in turn is acting as an inertial force on the further development of the serviced space market and other innovative property solutions.

Space Race: The Contribution Of Property Markets To The Competitiveness Of London & Frankfurt
Colin Lizieri and Andrew Baum with Nick Williams and Melanie Oughton

Property markets play a key role in the competition for ascendancy as Europe's financial capital. Space Race is the  final report of a major research project funded by Development Securities plc and develops the insights of Who Owns The City? which was published in 1998. The report examines the contribution of property markets to competitiveness and investigates supply and demand in London and Frankfurt. Survey data from the two cities highlights market strengths and weaknesses. The study concludes that London is likely to maintain a dominant role within Europe, but cannot be complacent or ignore threats to its competitive position.