Europe

TFT Edinburgh at 5: from Europe to the Royal Mile

TFT’s Edinburgh office is celebrating its fifth birthday with a difference. The office bash might have to wait for another year, but we’re looking back on some of our favourite projects to date, and the big things which lay ahead.

Alasdair Balfour, Associate in our Edinburgh office, talks to us about travel on the job and new developments close to home.

“I’ve enjoyed building close and longstanding relationships with our fantastic clients, and our team across the company. From our Edinburgh base we’ve delivered instructions in the city, across Scotland and further afield too, including England, Ireland, Northern Ireland and mainland Europe.

After all, the buildings don’t come to us!

My highlights are always exploring new locations. I relish the challenges that come with working in different places, with new projects in new contexts. Some personal favourites include inspection of just under 5m sqft of Grade A office accommodation across Paris, Berlin and Frankfurt. Those were to produce reinstatement cost assessments (RCAs) for a European portfolio. I also completed a range of separate Technical Due Diligence instructions across France and Spain, including a 800,000sqft industrial unit near Madrid.

Closer to home, it’s always exciting to see your city change and grow. In particular, I’m proud be part of the evolution of Edinburgh as its sites and buildings evolve to the commercial opportunities of our times. Major development sites aren’t common in the city centre right now. But I was privileged to work on the multi-use redevelopment of New Waverley.

I was a Fund Monitor for the new purchaser of the 190,000sqft office building, Queen Elizabeth House. I was overseeing the development obligations associated with the purchase, building contract and tenancy. It’s an impressive facility, right in the heart of the city with striking views east and west down the Waverley valley as far as Berwick Law, near North Berwick in East Lothian. As with many things, occupancy has been delayed by COVID-19 but it’s only a matter of time before the area is fully brought to life by its inhabitants.”

New Waverley is part of our nation-wide instruction from Legal & General to monitor the development of Government hubs in major cities across the UK. Find out more about some of the other schemes in that project, in Liverpool, Cardiff and Glasgow .

The rise of the contractor ‘Brexit clause’

Predictions from the UK property industry on the likely impact of Brexit continue to change and develop as negotiations progress. One of the more immediate concerns which face projects underway now and commencing soon is a possible trend towards contractors adding a ‘Brexit clause’ to the terms of their contract.

This clause relates to limiting the level of risk which contractors are willing to accept with respect to procurement and delivery of materials. Where contractors would normally take on the risks associated with importing materials, the ongoing Brexit discussions make for an unpredictable future process in which supply chains might be blocked or delayed beyond contractors’ control.

In cases where a Brexit clause is added to a contractor’s terms, the contractor is expecting the client to accept the risk involved in the form of project delays or cost fluctuations (as a result of tariffs or storage costs for example).

TFT is currently aware of a few instances of these amended Brexit clauses to date and advises clients that these are likely to become more common as uncertainty of the UK’s relationship with the EU continues, particularly if ultimately a “no deal” outcome is reached.

Our further advice to clients is to understand the supply chains for construction products and materials at an early stage to identify areas of risk. As an example, whilst a product may be produced by a UK manufacturer, it may have components from elsewhere all over the globe (or more importantly in this instance, from one of the 27 remaining EU countries). This level of scrutiny of the source of origin for products and materials will be beneficial from a risk perspective and may also be of benefit for sustainability reasons.

Additionally, it is worth clients and their advisors undertaking further due diligence during the contractor selection process to understand what contingency plans they have for managing some of the risks around importing of materials. For example, some contractors are already putting in place holding facilities either side of major ports such as Dover and Calais. With such facilities in place and with careful consideration of lead-in times, this will help to alleviate possible effects to programmes caused by importing delays.

Some contractors are also forward purchasing Euros to the value of supply chain commitments for goods and services from EU member states, to avoid the impact of currency fluctuations. In addition to the above, some contractors are looking to amend contract terms where if, following Brexit, there are more onerous changes to statute in the UK which were previously covered by EU legislation, the contractor is looking to push that risk back to the Employer.

If you have further questions relating to the nature of these Brexit clauses and next steps to resolve supply chain issues, please contact Dan Henn, Partner and Head of Development and Project Consultancy.