By definition a charity is an organisation with specific purposes defined in law to be charitable and is exclusively for public benefit. Few of these purposes directly involve the acquisition, operation, management and disposal of property, and yet the charity sector does routinely operate and manage large quantities of properties. So how does real estate fit into their overall strategies?

Predominantly we see charities in the property world as occupiers – be that of office, retail or industrial space. Many charities have taken leases of shops from which to raise public awareness of their charity and its purposes and to generate additional income from the resale on the high street of ‘previously loved’ goods.

Other charities own or lease operational properties to fulfil their primary community or charitable activity. These may be specific properties such as a school or a lifeboat or ambulance station, or they may be a certain type of historical property such as those held by the National Trust or English Heritage.

Some charities also own properties directly as a result of legacies and are usually held as income-producing assets.

However, not all charity-held properties are those which the trustees might have chosen to deliver their charity’s purposes. There may be gifted or legacy estates or listed buildings, some of which may have been in the charity’s ownership for many decades. Disposing of a legacy property could release valuable equity for a charity but this can only be done under strictly controlled rules – notably ensuring value is maximised and often requiring Charities Commission consent.

In challenging markets, we see the corporate sector develop and execute tactical strategies concerning their real estate portfolios, which includes consolidation, cost saving, lease administration and equity (and debt) raising.

By assessing the properties that they occupy and own in terms of how the space is used, what value they generate as well as what overheads they create, businesses can make informed decisions about their real estate and what may or may not need to change. In order to do this effectively, it’s key that organisations understand their properties and the sectors they may fall in to be it commercial, residential or rural.

Many firms in the corporate sector have property departments that have, for a long time, been developing coping strategies and outsourcing tactical (and some strategic) activities to external corporate account management teams in firms like Savills. This has given these firms much more agility and access to markets, market knowledge and expertise in a way the charities have mostly not done.

As a logical by-product of owning or occupying properties, charities often have a property department, which has historically been good at managing the estate for normal times. But these are not normal times.

With so many sectors impacted by the pandemic, this is a time for charities to look hard at their occupational and legacy or investment properties and seek to reduce costs and to bring in much-needed cash.

This is a time to access the same portfolio, data and project management skills that are available to the corporate sector through their outsourcing arrangements.

This is also a time for charities to cut their cloth according to the circumstances in order to survive if not to thrive.

Further information

Contact Julian Lyon

Contact Savills Worldwide Occupier Services