Shopping centre owners facing rent and service charge deferrals resulting from the lockdown will probably have reacted by putting everything from day to day maintenance to major projects like refurbishment or plant replacement on hold. The timing and pattern of a return to non-food retail trading is yet to emerge but it’s clear that centres will not be able to operate the same way they did before, at least for the time being. It’s likely that a range of new measures such as controls on the volume of customers, outside queuing, one-way systems and floor markings will need to be adopted to maintain social distancing. In the midterm it looks as if money will continue to be tight.
On top of the cost of adapting spaces to meet these new standards, retail tenants and asset valuers will expect you to continue to look after the property, addressing the challenge of prioritising repairs and maintenance within the limits of available service charge. Potential investors, through an acquisition or an exercise to raise additional finance will also want assurances that there is no backlog of maintenance. The anticipated sale price could be vulnerable if a purchaser is able to exploit building deficiencies which come from a failure to address maintenance or repair tasks.
Amongst all the other pressing issues on your agenda, some simple steps taken now will help put you in full control.
- Make sure all statutory and mandatory insurance inspections have been carried out and that certification is up to date. If any have been missed, they need to be scheduled now.
- See if any new maintenance needs have arisen as a result of reduced operation. For example, plant or building systems could have been closed down incorrectly because of the speed of the lockdown or the rapid imposition of social distancing .
- Assess how much planned work wasn’t carried out, so it can be reviewed afresh, prioritised and absorbed into a new plan.
- Review your Planned Preventive Maintenance strategy for the building. It will need to change; new patterns of trading could mean longer operating hours for plant but less intense wear on other parts of the building. Planned refurbishments to lifts and escalators may be pushed out further because they are used less intensively, finishes in public areas may wear differently with social isolation measures in place. The maintenance cycles for every element will need to be re-planned. That will change your budget too.
- Money will be tight, so decide what can be deferred and for how long. Think strategically, focus on compliance and prioritize only what must be done.
- Finally, keep talking to your retailers. The more they know about what you’re doing to look after the asset the less likely you are to receive objections to service charge spend.
Building Consultancy is always here to help you to manage risk, so you can move on with your business.