Prevention better than cure

Simon John, a partner at real estate advisory business Gerald Eve, offers advice about dealing
with building disrepair and commonplace defects

Every building is different” was a sales pitch I was given when researching my options about what a career in surveying would look like. This quote has never lost its impact since I first heard it.

Over the past seven years, I’ve been fortunate enough to undertake more than 100 building acquisition surveys within the nursery sector across the country, spanning from Plymouth to Peterborough, and Stockport to Southampton. Some nursery groups and settings have been very well attentive as to general day-to-day property maintenance, regular upkeep and improvements, and some groups perhaps not so much.

The key focus of every nursery up and down the country revolves around childcare – this is the core of the business as it must be. Following, in various priorities thereafter, are staff, recruitment, finances, outdoor and indoor facilities, food safety, insurance, hygiene, training etc. Among all of this is your property and its regular maintenance and improvements.

A trend I’ve witnessed is generally how low down the priority list the upkeep and maintenance of a nursery and its property have become. Whether nursery groups are consolidating their existing sites, or acquiring new sites, maintaining your property has never been more important. For the majority of business owners up and down the country, without a property, your business wouldn’t survive. What would happen if we removed all of Amazon’s fulfilment centres? Its business would essentially collapse overnight. Where would it store and distribute the millions of stock it delivers on a daily basis? This same principle has to apply in the nursery sector.

In-house property due diligence in terms of reviewing your existing sites is a necessity to ensure they remain fit for purpose, provide a safe learning and nurturing environment for your core business, and promote an edge over any local rival nursery groups.

Frequently I’ve inspected sites where a nursery hasn’t seen a paintbrush for more than 20 years, or where floor coverings are beyond their life expiry, the electrical installation dates back to the 1970s, or where ad-hoc ‘bodge’ jobs have compromised health and safety. I’ve often seen leaks in a classroom and the manager or owner confused as to why they continue. A cursory look on the roof usually identifies the root cause of the problem, whether it be leaking or blocked rainwater, vandalism or removal of lead flashings or, through the effluxion of time, the waterproof roof covering being at or beyond its expected useable life.

The vast majority of the defects and items of disrepair encountered are seen as preventable through proactive property maintenance. Capturing and undertaking preventative work is a far less costly exercise than permitting issues to exacerbate and snowball into something far larger.

A case in point, last year I witnessed a severely leaning chimney stack on a converted Victorian building. The prognosis was sulphate attack owing to long-standing wetting and drying over a long period of time. The owner was oblivious to this, and the impact, should the chimney stack topple in close proximity to the playground, was unimaginable.

The reactive remediation was a full reconstruction of the chimney stack. This may appear quite an excessive repair, however the reactive measure was the only viable option given the pronounced lean of the chimney. The preventative alternative, upon witnessing failure of the brickwork and mortar pointing, would have simply been localised brickwork repairs and repointing. This would have given much needed stability to the chimney.

This is just one account of an example of a preventative measure which hands down trumps a reactive repair. It’s not worth thinking about the ‘what if ’ if the chimney actually collapsed. Not just the cost of it to rebuild following its collapse, but also the health and safety impact, or reputational damage to that nursery group.

Whether nursery owners are too financially constrained to keep a property in a maintained condition or commensurate as to the requirements of their lease obligations, or whether they hope these defects won’t be spotted during an acquisition, I am unsure.

However, what I can assure is that, part of any due diligence process, an experienced surveyor will root these out. A damning report will follow, which will showcase the property being in the poor condition it is displaying, highlighting the lack of maintenance and investment and the remedial costs to bring it back into the expected condition.

What this will effectively do is: a) give the buyer ammunition to renegotiate the asking price and b) substantially delay the acquisition process.

On numerous occasions, the condition and severe lack of investment in a property has been the reason for transactions failing. Over recent years we’ve seen an ever-increasing appetite from funds and investors entering the early-years market, alongside organic growth and expansion of existing nursery groups. The opportunities therefore to acquire, dispose, develop and expand have grown tremendously.

Therefore, the scrutiny of your property’s maintenance and how well it presents have become ever more prominent. A planned preventative maintenance (PPM) plan is a useful tool to provide foresight as to future remedial and maintenance works, alongside providing a budgetary estimate. This is something your operations or facilities team, or a surveyor can assist you to prepare.

A PPM will clearly illustrate and forecast the building, mechanical, electrical and public health (MEP) services, statutory compliance, and health and safety aspects which need attention based on a priority basis considering their existing condition.

Your property is a valuable piece in the jigsaw of your business and its ongoing operations. The significance of it and its ongoing maintenance should not be ignored. Whether or not you are considering a sale in the near future, do give your own property its necessary due diligence.

Although it may seem like a cliche, ‘getting your house in order’ really does help to assist the transaction process, making it more straightforward and less combative if preventative measures are taken now.

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