Kevin Costner may have believed in the classic film 'Field of Dreams' that "if you build it, they will come" but Kevin Costner is not a lawyer. A lawyer would ask: "Build what?"; "Who will come?"; "When will they come?"; "Has anyone considered the access rights required for a fully operational building site and the health and safety implications?"
Developments are complex. Not only in legal terms as lawyers balance everything required to buy or lease land; to build upon it and provide all the necessary rights for the new development to do whatever it is the client requires (and more). But also in logistical terms. Each development requires an architect to design it and a contractor to build it. That contractor will have sub-contractors working on individual elements. Those sub-contractors may sub-contract further. Then you have tenants. If it's a shopping centre there could be 100 retailers aiming to open their doors on the same day. Each of those retailers are likely to have rights to dictate how their unit will look. The architect needs to consider this in the context of the whole development, and this will have a knock on effect on the contractor and other sub-contractors. All of this needs to be coordinated so that the doors all open on the same day at the same time without so much as a hammer, decorator or JCB digger in sight.
Each development may only have one legal team but there will be a raft of other teams involved. Coordination is vital, as is sharing information among everyone in the various project groups. Lawyers' roles often evolve into the realms of project manager, and the need to work together and use the latest technology to share information is paramount.
Taking one example, every retailer in a new development signs a contract to take a lease when the centre is built. Each agreement requires the developer to satisfy certain conditions before the retailer opens its doors. One condition may be that the surrounding vicinity of the store is free of construction work for one month before the anticipated opening date so that it is safe for merchandising to take place. Some retailers may take a month to merchandise, some will only need a few days. While the agreement for lease specifying this will likely gather dust at the back of a filing cabinet, the professional team must be aware of this requirement to ensure the condition is met. This is just one condition. Every contract will contain many more. And each of these conditions will be different. When you consider that there could be dozens of retailers, each with their own specific requirements, there are hundreds if not thousands of conditions and time limits to be reported and actioned to ensure every retailer is ready to open on the big day. Without a central resource to share this information, miscommunication is rife and delays are inevitable.
We know of a developer who introduced a bespoke communication tool to capture and store key information centrally via an external 'cloud', to help improve how they managed the development of a major shopping centre. Following its launch, the developer shared this tool with its consultants so that everyone connected with the project shared the same information. Having all of the information in one locationallows developers to have far more informed conversations with its project team on the current status of lettings, and what the retail delivery timetable is for each unit as they prepare for opening.
But this is just one project. The need for a common platform increases when you deal with portfolios of properties - and across the wider property market. To take another example, lease summary documents, which detail the key information relevant to asset managers, are usually produced in Word format and are transcribed and re-keyed multiple times which is inefficient from both time and risk management perspectives. Standardising processes, not just within a portfolio but across the market, would benefit all project teams by reducing the time spent duplicating work and even more importantly, would also increase accuracy given that critical lease related information would be transferrable as properties are bought, sold, developed, leased and managed.
Groups like OSCRE (Open Standards Consortium for Real Estate) and others have led the way in developing standards that are shared across the property profession. This will continue as technology advances and developers and investors push for greater costs savings; increased efficiencies and accurate information to inform their decision making. Because, unlike Kevin Costner, modern property professionals need more than just hope.
About the author
Deborah Wales is a partner in the Real Estate team of national law firm Dundas & Wilson. She specialises in retail investment, development and asset management for listed property companies and property funds.
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