oscar offices 2014 – jll

OfficeOSCAR 2014 | Service Charge Analysis for Offices

| Office OSCAR 2014 | Service Charge Analysis for Offices2

Foreword

“As a component of total occupation cost, service charges continue

to be in the spotlight for occupiers and targets. Most landlords

have responded by embracing the Royal Institution of Chartered

Surveyors’ Service Charge Code, which was updated in 2014. A key

component of the Code is for Landlords to be more transparent in

their presentation of data, which we endorse.

LaSalle Investment Management’s clients and many other

landlords have placed great weight on ensuring their service

charge budgets are optimal and year end reconciliations are

presented in a clear, open and timely manner. This approach can

only lead to a better working relationship between owners and

occupiers. The mutual benefits of well managed occupational costs

don’t need to be explained.

Office OSCAR has played a pivotal role over the last 31 years, in

providing comprehensive data on service charges against which

landlords and tenants can benchmark their buildings. Crucially, it

also highlights energy consumption statistics and averages. LaSalle

Investment Management is totally committed to understanding and

improving environmental efficiency across its managed portfolios.

I am therefore delighted to be asked to write this foreword and hope

you find the data to be of assistance in assessing occupational costs.

On behalf of JLL, I would like to acknowledge the considerable

assistance in the production by BDO, who have provided detailed

analysis of the data. I would also like to thank the many contributors

who have provided information and advice in the production of this

year’s Office OSCAR.”

Paul Till

Head of National Business Space

LaSalle Investment Management

3

Executive summary 4

The database 5

National average service charges 7

Total service charge by building location 9

Total service charge by building size 11

Service charge trends 13

Definition of terms 28

Geographical areas 29

Contents

Data Contributors include

Landlords

Aberdeen Asset Management, LaSalle Investment Management,

Aviva Investors, Legal & General, Hermes,

Standard Life Investments, Caudwell, Railways Pension Scheme

Deutsche Asset & Wealth Management, British Land, Land Securities

Agents

Broadgate Estates, Tideway, Green Property, Capita, Savills


Executive summary

Introduction and BackgroundOffice OSCAR was first published in 1983 and this is the 31st edition in the

annual series. We are very grateful to our in-house clients and the external

contributors and their agents, a number of whom have newly contributed to

Office OSCAR this year.

We are particularly pleased to acknowledge the considerable contribution of

BDO to this year’s analysis and we look forward to working with them closely

in producing the future editions of Office OSCAR.

The service charge categories in Office OSCAR closely mirror those found

in the Royal Institution of Chartered Surveyors’ Service Charge Code.

The data analysed within Office OSCAR primarily observes the influence

of building location, size and air conditioning upon cost. However, other

important variables influence cost such as hours of operation, levels of

security, reception services, number of lifts and the qualitative standard of

management. These factors should be taken into account when considering

the spread of values shown within this report.

This Year’s Principal FindingsThe average service charge cost for running Air Conditioned buildings was

£7.19 per sq ft whilst those for Non Air Conditioned space was £5.71 per sq

ft. For the matched data set the figures were £7.07 per sq ft and £5.79 per

sq ft respectively.

Using matched data, the cost of running Air Conditioned buildings fell from

£7.20-£7.07 per sq ft (1.8%) compared with the previous year, whilst Non Air

Conditioned properties rose slightly from £5.75 per sq ft to £5.79 per sq ft

(0.6%).

The average cost of running all Air Conditioned buildings is circa 26% more

expensive than those for Non Air Conditioned properties. This represents a

slight increase over the previous year, but slightly below the 10 year average

of circa 30%.

It is significantly more costly to run a property in the City, Docklands and

West End than the rest of the country. For Air Conditioned buildings, they

are 35% more expensive, whilst for Non Air Conditioned properties, this

differential is 47.5%.

For Air Conditioned buildings in the matched data set, most cost categories

have remained relatively constant, but security and fabric repairs and

maintenance have fallen by circa 8% and 9.9% respectively. For Non Air

Conditioned properties the most significant decrease in costs is in respect

of electricity and fabric repairs and maintenance (a 6% and 13% reduction

respectively).

5

A/C Buildings Non A/C Buildings All Buildings

Location 2013 2013 2013 Matched Matched Matched Data 2013 2012 Data 2013 2012 Data 2013 2012

Chart 1 Building Location profile - Year end 2013

City and Docklands 39 27% 52 26% 55 32% 11 9% 12 8% 16 10% 50 19% 64 19% 71 22%

West End 35 24% 47 24% 36 21% 28 23% 33 23% 37 24% 63 24% 80 23% 73 22%

Greater London 26 18% 34 17% 31 18% 18 15% 20 14% 22 14% 44 16% 54 16% 53 16%

South East 17 12% 27 14% 19 11% 15 12% 16 11% 19 12% 32 12% 43 13% 38 12%

Midlands 8 5% 10 5% 10 6% 24 20% 29 20% 26 17% 32 12% 39 11% 36 11%

Outer Regions 21 14% 29 15% 22 13% 26 21% 33 23% 33 22% 47 18% 62 18% 55 17%

146 100% 199 100% 173 100% 122 100% 143 100% 153 100% 268 100% 342 100% 326 100%

10

20

30

40

50

60

0

Chart 2 Building location profile

Sam

ple

Size

2013 - Matched Non A/C

2013 - Non A/C

2012 - Non A/C

2013 - Matched A/C

2013 - A/C

2012 - A/C

City & Docklands West End Greater London South East Midlands Outer Regions

Location

The database

The database is drawn from audited or certified accounts falling within the 2013 calendar year.

This year’s database comprises 342 buildings (a 5% increase over the previous year), of which 199 are Air Conditioned and 143 are Non Air Conditioned.

When considering the OSCAR database it is important to note the following are excluded:

• Insurance• Interestreceipts• Exceptionalexpenditure• VAT• Costswhichrelatedirectlytotenants’demisedareas

In the last three years we have included “like for like” analysis for properties included in that year and the previous year’s survey. Our readership have continued to welcome this initiative and we have included a similar analysis this year. There are 268 properties (78% of the overall sample) which have been subject to analysis in both this and last year’s sample of which 146 are Air Conditioned and 122 Non Air Conditioned.

When considering the data, it should be noted the size of the property can have a bearing on the overall rate per sq ft of each service charge. We detail in page 6 the size profile included within this year’s sample for both Air-Conditioned and Non Air Conditioned properties.

Roundings Rounding differences may occur due to the values published being displayed to a restrictive number of decimal places.


A/C Buildings Non A/C Buildings All Buildings

2013 2013 2013 Matched Matched Matched Sq ft Sq m Data 2013 2012 Data 2013 2012 Data 2013 2012

Chart 3 Building Size Profile - Year end 2013

24,999 sq ft and under 2,322 sq m and under 32 22% 44 22% 38 22% 34 28% 45 31% 43 28% 66 25% 89 26% 81 25%

25,000 - 39,999 sq ft 2,323 - 3,715 sq m 13 9% 26 13% 16 9% 26 21% 33 23% 31 20% 39 15% 59 17% 47 14%

40,000 - 99,999 sq ft 3,716 - 9,289 sq m 46 32% 58 29% 54 31% 43 35% 45 31% 54 35% 89 33% 103 30% 108 33%

100,000 sq ft and above 9,290 sq m and above 55 38% 71 36% 65 38% 19 16% 20 14% 25 16% 74 28% 91 27% 90 28%

146 100% 199 100% 173 100% 122 100% 143 100% 153 100% 268 100% 342 100% 326 100%

Chart 4 Building size profile

Sam

ple

Size


2013 - Non A/C

2012 - Non A/C

2013 - Matched A/C

2013 - A/C

2012 - A/C

24.999 sq ft and under 25,000 sq ft - 39,999 sq ft 40,000 sq ft - 99,999 sq ft 100,000 sq ft and above

80

0

70

60

50

40

30

20

10

Building Size

7

National average service charges

The following trends have been noted:

• M&EcontinuestobethemostcostlyitempersqftbothforAirconditioned

and Non Air Conditioned space at £1.59 per sq ft (22.0%) and £1.19 per

sq ft (20.8%) respectively. The same position applies to the matched data

being £1.58 per sq ft and £1.19 per sq ft respectively.

• InthematcheddataforAirConditionedproperties,thelargestfalls

are in respect of security (an 8.0% decrease) and Fabric Repairs and

Maintenance (a 9.9% decrease). All the other costs categories have

remained relatively constant.

• IntermsofmatcheddataforNonAirConditionedbuildingsthereare

slightly larger variations with Management Fees (8.1% and M and E

Services (8.3%) have shown the largest increase. Fabric Repairs and

Maintenance and Electricity on the other hand have shown decreases of

13.0% and 6.2% respectively.

• ThegreatestdifferentialincostsbetweenAirConditionedandNonAir

Conditioned buildings continues to be Security and M and E where they are

42.1% and 31.4% higher respectively.

Component service charge propertiesThe audited service charges have been analysed on individual service charge

lines using headings recommended by the RICS Code of Measuring Practice.

Average service charge rates

Total data set

Class Rate per sq ft

Air Conditioned £7.19

Non Air-Conditioned £5.71

Matched data set

Class Rate per sq ft

Air Conditioned £7.07

Non Air-Conditioned £5.79

CommentsIn the year there has been a decrease in average service charge costs for

both Air Conditioned and Non Air Conditioned properties when compared with

the previous year. The decreases are slight being 0.8% for Air Conditioned

and 2.9% for Non Air Conditioned. Using matched data, Air Conditioned

properties show a 1.8% decrease and Non Air Conditioned properties a

marginal 0.6% increase.

Air Conditioned and Non Air Conditioned buildings are reasonably close in

terms of costs in respect of:

• Gas

• Water

• Managementfees

• LiftsandEscalators

• Fabricandmaintenance

Air Conditioned buildings cost more in terms of:

• SitemanagementResources

• Electricity

• Security

• M&EServices

And possibly also

• CleaningandEnvironmental


A/C Buildings Non A/C Buildings

2013 2013 2012 Change in 2013 2013 2012 Change in Total Matched Matched Matched Total Matched Matched Matched Data Data Data Data Data Data Data Data

Chart 5 National Average Component Service Charges - Year end 2013

£psf % £psf % £psf % £psf % £psf % £psf % £psf % £psf %

Management Fees 0.63 8.8 0.62 8.8 0.61 8.5 0.01 2.2 0.59 10.3 0.56 9.7 0.52 9.1 0.04 8.1

Site Management Resources 0.71 9.8 0.70 9.9 0.73 10.1 -0.03 -3.2 0.59 10.3 0.57 9.8 0.58 10.1 -0.01 -1.8

Electricity 0.96 13.3 0.90 12.7 0.89 12.4 0.01 1.3 0.65 11.4 0.67 11.5 0.71 12.3 -0.04 -6.2

Gas 0.33 4.6 0.32 4.5 0.32 4.4 -0.00 -0.2 0.31 5.3 0.32 5.6 0.31 5.4 0.01 2.8

Water 0.15 2.1 0.14 1.9 0.14 1.9 -0.00 -1.6 0.13 2.2 0.13 2.3 0.13 2.3 0.00 -2.2

Security 1.35 18.8 1.36 19.2 1.48 20.5 -0.12 -8.0 0.95 16.7 1.00 17.3 1.02 17.8 -0.02 -2.2

Cleaning & Environmental 0.98 13.6 0.98 13.9 0.96 13.3 0.02 2.5 0.87 15.2 0.88 15.1 0.86 15.0 0.01 1.6

M&E Services 1.59 22.0 1.58 22.3 1.58 22.0 -0.00 -0.3 1.19 20.8 1.21 20.9 1.12 19.5 0.09 8.3

Lifts and Escalators 0.20 2.7 0.20 2.8 0.19 2.6 0.01 3.6 0.17 2.9 0.17 3.0 0.17 3.0 0.00 0.1

Fabric Repairs and Maintenance 0.30 4.1 0.28 3.9 0.31 4.3 -0.03 -9.9 0.28 4.9 0.27 4.7 0.32 5.5 -0.04 -13.0

TOTAL 7.19 100.0 7.07 100.0 7.20 100.0 0.13 -1.8 5.71 100.0 5.79 100.0 5.75 100.0 0.04 0.6

Management Fees

Site Management Resources

Electricity Gas Water Security Cleaning &Environmental

M&EServices

Lifts & Escalators

Fabric Repairs and

Maintenance

Chart 6 National average component service charges

Serv

ice

Cha

rge

PSF

(£)

2013 - Total Non A/C



2013 - Total A/C

2013 - Matched A/C

2012 - Matched A/C

1.80

0.00

1.40

1.20

1.00

0.80

0.60

0.40

0.20

1.60

Cost Category

9

A/C Buildings

City & Docklands West End Greater London South East Midlands Outer Regions £psf £psf £psf £psf £psf £psf

Chart 7 Component Service Charge by Building Location - Year end 2013

Management Fees 0.69 0.72 0.62 0.55 0.56 0.51

Site Management Resources 0.77 0.78 0.96 0.57 0.43 0.40

Electricity 1.16 1.00 0.68 0.87 0.97 0.90

Gas 0.34 0.30 0.28 0.33 0.57 0.36

Water 0.15 0.19 0.11 0.13 0.15 0.19

Security 1.85 1.52 1.37 0.86 1.09 0.72

Cleaning & Environmental 1.06 0.95 1.14 0.93 0.81 0.79

M&E Services 2.03 1.81 1.66 1.12 0.97 1.00

Lifts and Escalators 0.26 0.24 0.15 0.14 0.20 0.11

Fabric Repairs and Maintenance 0.31 0.29 0.28 0.35 0.16 0.32

TOTAL 8.62 7.79 7.24 5.84 5.92 5.30

Non A/C Buildings


£psf £psf £psf £psf £psf £psf

Chart 9 Component Service Charge by Building Location - Year end 2013

Management Fees 0.66 0.79 0.60 0.52 0.47 0.48

Site Management Resources 0.77 0.72 0.64 0.51 0.44 0.51

Electricity 1.08 0.68 0.55 0.90 0.58 0.47

Gas 0.44 0.26 0.29 0.39 0.30 0.27

Water 0.18 0.14 0.10 0.11 0.10 0.15

Security 1.89 1.25 1.28 0.61 0.82 0.39

Cleaning & Environmental 0.98 0.88 0.84 1.04 0.77 0.85

M&E Services 1.88 1.61 1.22 1.11 0.81 0.87

Lifts and Escalators 0.19 0.21 0.17 0.20 0.13 0.13

Fabric Repairs and Maintenance 0.24 0.37 0.23 0.35 0.13 0.33

TOTAL 8.31 6.92 5.93 5.72 4.56 4.43

Total service charge by building location

Average service charges for Air Conditioned buildings located in the City,

Docklands and west End are circa 35% more expensive to run than the rest of

the country. For Non Air Conditioned properties the differential is circa 47.5%.

We noted last year that costs in running properties in the City and Docklands

were greater than those for the West End for Air Conditioned properties. This

year we have seen the cost differential widen further (£8.62 per sq ft against

£7.79 per sq ft).

The costs of supplying M & E Services and Security in London for both Air

Conditioned and Non Air Conditioned properties is almost twice as expensive

as the rest of the country.

Charts 7 to 11 show a two tier service charge structure for those buildings

inside and outside London.


Chart 8 Total service charge by building location: A/C buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

£ pe

r sq

ft

12.00

0.00

10.00

8.00

6.00

4.00

2.00


10.39

8.62

6.85

9.33

7.79

6.25

9.67

7.24

4.81

7.62

5.84

4.05

7.16

5.92

4.68

6.42

5.30

4.18

Chart 10 Total service charge by building location: Non A/C buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

£ pe

r sq

ft

12.00

0.00

10.00

8.00

6.00

4.00

2.00


9.84

8.31

6.78

8.78

6.92

5.06

7.91

5.93

3.96

8.06

5.72

3.38

5.86

4.56

3.26

5.65

4.43

3.21

11

Total service charge by building size

A/C Buildings

24,999 sq ft and under 25,000 - 39,999 sq ft 40,000 - 99,999 sq ft 100,000 sq ft and above £psf £psf £psf £psf

Chart 11 Component Service Charge by Building Size - Year end 2013

Management Fees 0.86 0.68 0.59 0.52

Site Management Resources 0.81 0.56 0.67 0.72

Electricity 0.94 0.95 1.07 0.88

Gas 0.48 0.44 0.32 0.21

Water 0.21 0.13 0.13 0.14

Security 1.04 1.28 1.41 1.53

Cleaning & Environmental 1.14 0.88 0.99 0.90

M&E Services 2.17 1.29 1.36 1.51

Lifts and Escalators 0.29 0.16 0.16 0.17

Fabric Repairs and Maintenance 0.47 0.25 0.25 0.24

TOTAL 8.41 6.61 6.96 6.83

Non A/C Buildings

24,999 sq ft and under 25,000 - 39,999 sq ft 40,000 - 99,999 sq ft 100,000 sq ft and above £psf £psf £psf £psf

Chart 13 Component Service Charge by Building Size - Year end 2013

Management Fees 0.76 0.57 0.50 0.41

Site Management Resources 0.68 0.58 0.54 0.48

Electricity 0.60 0.70 0.67 0.64

Gas 0.31 0.33 0.30 0.28

Water 0.13 0.16 0.11 0.10

Security 0.61 0.95 1.14 1.30

Cleaning & Environmental 1.01 0.84 0.83 0.71

M&E Services 1.47 1.12 1.04 1.00

Lifts and Escalators 0.22 0.16 0.14 0.11

Fabric Repairs and Maintenance 0.41 0.24 0.22 0.17

TOTAL 6.20 5.64 5.51 5.19

In previous Office OSCARS we have commented upon the economies

of scale in running larger buildings, generally the larger the building the

cheaper it is to run. This trend continues in respect of Non Air Conditioned

buildings where it is 9% less expensive to run a building over 40,000 sq

ft (compared with 12% last year). For Air Conditioned properties between

25,000 and 39,999 sq ft it is interesting to note the costs of running these

buildings has fallen at a greater rate than the other categories (£7.14 per sq

ft to £6.61 per sq ft). In particular electricity and M & E Services have fallen

in excess of the norm. We shall keep this under review in future analysis to

establish whether this trend continues.

Fabric Repairs and Maintenance and M & E Services are the most costly items

of expenditure for buildings under 25,000 sq ft compared with other categories

representing 31.4% of costs for Air Conditioned buildings and 30.3% for Non

Air Conditioned. The buildings in this sample tend to be of older stock and have

aging plant and equipment and requirements for more frequent repairs.

12.00

0.00

4.00

11.00

6.00

8.00

10.00

2.00

7.00

5.00

3.00

9.00

1.00


Chart 12 Total service charge by building size: A/C buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

10.29

8.41

6.54

8.78

6.61

4.44

9.16

6.96

4.76

8.31

6.83

5.36

Chart 14 Total service charge by building size: Non A/C buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

24,999 sq ft and under 25,000 - 39,999 sq ft 40,000 - 99,999 sq ft 100,000 sq ft and above

£ pe

r sq

ft

8.27

6.20

4.13

7.67

3.62

7.19

5.51

3.83

6.68

5.19

3.70

5.64

24,999 sq ft and under 25,000 - 39,999 sq ft 40,000 - 99,999 sq ft 100,000 sq ft and above

12.00

£ pe

r sq

ft

0.00

11.00

7.00

5.00

4.00

2.00

1.00

3.00

6.00

8.00

9.00

10.00

Chart 15 Service charge trend indexation data 1983-2013

OSCAR year

Inde

x

JLL RPI index base 1983

A/C cost index

Non A/C cost index

IPD Office rent index

Chart 16 Service charge total trend data 1983-2013 Non A/C: A/C cost ratio

A/C cost index

Non A/C cost index

Cost differential

OSCAR year

£ pe

r sq

ft

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

8

0

6

2

1

3

4

5

7

12 13

350

0

300

100

50

150

200

250

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

13

Service charge trends

Since the inception of Office OSCAR we have monitored service charge

trends, matching these against the Retail Price Index (RPI) and the IPD Office

Retail Index. We set out in Charts 15 and 16 the latest data. The general trend

has been for costs to track the RPI and it will be noted that this remains the

case this year. With an improved market, the gap between Air Conditioned

and Non Air Conditioned costs has increased slightly, using the total dataset.

However, this is marginal and the cost differential between Air Conditioned

and Non Air Conditioned has remained largely flat for the last five years.

When considering the individual cost categories under Charts 17 and 18 the

trend we have noticed for a reduction in electricity costs in Air Conditioned

properties has levelled off, but continues in Non Air Conditioned buildings.

The other interesting feature is that there continues to be a slight fall in the

spend on security across both Air Conditioned and Non Air Conditioned

space.

Chart 17 National Average A/C Cost Category Trends

Management Fee

Site Management

Resources

Electricity

Gas

Water

Security

Cleaning &

Environment

M&E Services

Lifts & Escalators

Fabric Repairs &

Maintenance

JLL RPI Index

£ pe

r sq

ft

0.00

0.20

0.50

0.80

1.10

0.90

1.20

0.60

0.30

1.30

0.70

1.00

0.40

0.10

1.40

1.50

1.60

1.70

1.80

20131997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

OSCAR year


Chart 18 National average Non A/C cost category trends

Management Fee

Site Management

Resources

Electricity

Gas

Water

Security

Cleaning &

Environment

M&E Services

Lifts & Escalators

Fabric Repairs &

Maintenance

JLL RPI Index

£ pe

r sq

ft

0.00

0.20

0.50

0.80

1.10

0.90

1.20

0.60

0.30

1.30

0.70

1.00

0.40

0.10

1.40

1.50

1.60

1.70

1.80

20131997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

OSCAR year

15

0.00

3.00

2.20

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

2.40

2.60

2.80


0.91

1.01

1.66

0.59

0.23

2.47

1.36

2.62

0.53

0.69

0.48

0.77

0.53

1.16

0.66

0.34

0.090.15

0.06

1.85

1.23

1.06

0.76

2.03

1.44

0.44

0.26

0.08

0.31

0.08

Chart 19 Component Service Charge City & Docklands: A/C Buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

£ pe

r sq

ft

Management Fees


Electricity Gas Water Security Cleaning & Environmental

M&EServices

Lifts and Escalators

Fabric Repairs

0.00

3.00

2.40

2.20

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

2.60

2.80

17

0.89

1.06

1.72

0.66

0.25

2.56

1.28

2.36

0.50

0.66

0.43

0.77

0.49

1.08

0.45 0.44

0.220.18

0.11

1.89

1.21

0.98

0.68

1.88

1.40

0.26

0.190.12

0.24

0.00

Chart 20 Component Service Charge City & Docklands: Non A/C Buildings (spread of middle 70% of service charge costs) Upper Limit

Mean

Lower Limit

Water Security

£ pe

r sq

ft

Management Fees


Electricity Gas Cleaning & Environmental

M&EServices


Fabric Repairs

3.00

2.20

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

2.80

2.40

2.60


Chart 21 Component Service Charge West End: A/C Buildings (spread of middle 70% of service charge costs)

1.04

0.72

0.40

0.78

1.15

0.40

1.48

1.00

0.530.50

0.30

0.10

0.40

0.19

0.00

2.16

1.52

0.88

1.38

0.95

0.52

2.41

1.81

1.20

0.39

0.24

0.10

0.45

0.29

0.12

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

3.00

2.20

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

2.40

2.60

2.80

19

Chart 22 Component Service Charge West End: Non A/C Buildings (spread of middle 70% of service charge costs)

0.79

0.61

1.08

0.72

0.36

1.06

0.68

0.31

0.46

0.26

0.06

0.22

0.14

0.05

1.99

1.25

0.52

1.20

0.88

0.55

2.28

1.61

0.94

0.32

0.21

0.10

0.66

0.37

0.08

0.97

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

3.00

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

2.20

2.40

2.60

2.80


Chart 23 Component Service Charge Greater London: A/C Buildings (spread of middle 70% of service charge costs)

0.10

0.80

0.62

0.44

1.58

0.96

0.33

1.08

0.68

0.28

0.48

0.28

0.07

0.180.110.04

2.33

1.37

0.42

1.52

1.14

0.75

2.24

1.66

1.07

0.22

0.15

0.08

0.46

0.28

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.40

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

2.20

21

Chart 24 Component Service Charge Greater London: Non A/C Buildings (spread of middle 70% of service charge costs)

0.29

0.77

0.60

0.43

0.89

0.64

0.39

0.96

0.55

0.14

0.50

0.29

0.08

0.17

0.10

0.02

1.90

1.28

0.67

1.11

0.84

0.58

1.80

1.22

0.63

0.17

0.06

0.44

0.23

0.02

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.00

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.60

1.80


Chart 25 Component Service Charge South East: A/C Buildings (spread of middle 70% of service charge costs)

1.33

0.52

0.70

0.55

0.40

0.86

0.57

0.28

0.87

0.42

0.33

0.14 0.13

0.05

0.21

1.47

1.56

0.86

0.24

1.23

0.93

0.63

1.12

0.68

0.14

0.05

0.23

0.57

0.12

0.35

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

23

Chart 26 Component Service Charge South East: Non A/C Buildings (spread of middle 70% of service charge costs)

1.43

1.72

0.73

0.52

0.31

0.77

0.51

0.25

1.53

0.90

0.26

0.57

0.39

0.20

0.18

0.11

0.03

0.61

0.00

1.38

1.04

0.70

1.11

0.49

0.32

0.20

0.08

0.69

0.35

0.01

2.20

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.60

2.00

1.80

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.00

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.60

1.80


Chart 27 Component Service Charge Midlands: A/C Buildings (spread of middle 70% of service charge costs)

0.67

0.56

0.45

0.58

0.43

0.29

1.25

0.97

0.69

1.00

0.57

0.14

0.190.150.11

1.44

1.09

0.75

0.98

0.81

0.64

1.25

0.97

0.68

0.20

0.27

0.13 0.11

0.22

0.16

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.00

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.60

1.80

25

Chart 28 Component Service Charge Midlands: Non A/C Buildings (spread of middle 70% of service charge costs)

0.71

0.47

0.24

0.68

0.44

0.21

0.96

0.58

0.20

0.52

0.30

0.08

0.16

0.10

0.04

1.29

0.82

0.36

1.04

0.77

0.49

1.23

0.81

0.40

0.18

0.13

0.07

0.22

0.13

0.04

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.00

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.40

1.80

1.60


Chart 29 Component Service Charge Outer Regions: A/C Buildings (spread of middle 70% of service charge costs)

0.64

0.51

0.38

0.56

0.40

0.25

1.26

0.90

0.53

0.58

0.36

0.14

0.33

0.19

0.05

0.99

0.72

0.45

1.04

0.79

0.54

1.23

1.00

0.76

0.16

0.11

0.06

0.58

0.32

0.06

Management Fees



M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit

2.00

1.20

1.00

0.80

0.60

0.40

0.20

0.00

1.40

1.80

1.60

27

Chart 30 Component Service Charge Outer Regions: Non A/C Buildings (spread of middle 70% of service charge costs)

0.770.77

0.68

0.48

0.27

0.51

0.25

0.47

0.17

0.44

0.27

0.10

0.28

0.15

0.02

0.70

0.39

0.08

1.21

0.85

0.49

1.21

0.87

0.52

0.13

0.03

0.22

0.50

0.33

0.15

Management Fees


Electricity Gas SecurityWater Cleaning & Environmental

M&EServices


Fabric Repairs

£ pe

r sq

ft

Upper Limit

Mean

Lower Limit


Definition of terms

Cost categoriesThe Royal Institution of Chartered Surveyors’

Service Charge Code first came into effect on

the 1st April 2007 and the Third Revision was

issued in February 2014. From discussions with

our clients and other managing agents, it would

appear that the Code has been fully embraced

and there should therefore be greater uniformity

in the way that service charges are presented

across the industry.

We detail below for ease of reference the items

included within each category:

Management1. Management

• ManagementFees

• Accountingandauditfees

NB – this currently incorporates the ‘Accounting

Fees’ cost category as defined within the RICS

Service Charge Code

2. Site Management Resources

• FMStaff/concierge/receptionistcosts

• Siteaccommodation(rent/servicecharge/

rates)

• Officecosts(telephones/stationery/pettycash)

• Helpdesk/callcentre/informationcentre

• Landlord’shealth,safetyandenvironmental

risk assessments, audits and reviews

NB – this currently incorporates the ‘Health,

Safety and Environmental’ cost category as

defined within the RICS Service Charge Code

Utilities3. Electricity

• Electricity

• Fuel(standbyelectricalpower)

• Electricityprocurement/consultancy

4. Gas

• Gasandheatingfueloil

• Gas/fueloilprocurement/consultancy

NB – this currently incorporates the ‘Fuel Oil

(Heating)’ cost category as defined within the

RICS Service Charge Code

5. Water

• Waterandseweragecharges

• Waterconsultancy

Soft services6. Security

• Securityguardingandreceptionists

• Securitysystems

• Postroomandmaildistributionservices

7. Cleaning & Environmental

• Internal/external/windowcleaning

• Hygieneservices/toiletries

• Carpets/matshire

• Wastemanagement

• Pestcontrol

• Floraldisplaysandlandscaping

• Suspendedaccessequipment,maintenance

and repairs

NB – this currently incorporates the ‘Suspended

Access Equipment’ cost category as defined

within the RICS Service Charge Code

Hard services8. M & E Services

• M&Emaintenanceandrepairs

• M&Einspectionsandconsultancy

• Lifesafetysystemsmaintenanceandrepairs

• Lifesafetysystemsinspectionsand

consultancy

9. Lifts & Escalators

• Liftmaintenanceandrepairs

• Liftinspectionsandconsultancy

• Escalatormaintenanceandrepairs

• Escalatorinspectionsandconsultancy

10. Fabric Repairs & Maintenance

• Internal/externalrepairsandmaintenance

• Re-decoration

Other termsExceptional Expenditure

• Projectworks

• Refurbishmentsandmajorrepairs

• Draw-downfromforwardfundingaccounts

• Sinking/replacement/reservefunds

• Depreciation/repaymentcharges

• Estate/externalservicecharges

Base-level Service Charge

• Thefullservicechargecostsofrunninga

building excluding exceptional expenditure.

This provides a measure of the cost of

providing routine operational services to a

building.

Full Service Charge Costs

• Thefullexpenditurerunningthrougha

service charge account, including exceptional

expenditure, but excluding any interest receipts

and insurance costs.

Air Conditioned

• Abuildinginwhichcoolingandheatingare

provided in the majority of the lettable space

via the landlord’s central plant installation.

Non Air Conditioned

• Abuildinginwhichonlytheheatingis

provided in the majority of lettable space

via the landlord’s central plant installation.

Tenant’s supplemental air conditioning plant is

disregarded in this context.

29

Geographical areas

City & Docklands EC1, EC2, EC3, EC4 and E14.

West End of London W1, SW1, WC1 and WC2.

Greater London

This region includes those postal districts roughly bounded by the M25. W, WD, HA, NW, N, EN, E, IG,RM, DA, SE, BR, CR, SW, SM, KT, TW, UB.

South East

Those postal districts including and lying inside: PO, SO, RG, OX, MK, SG, CB, CO.

Midlands

L,WA,M,CW,SK,S,ST,DE,NG,WV,DY,WS,LE,B,CV,NN.

Outer Regions

All postal districts outside of the Midlands and South East.

Contacts

Nigel WheelerChairman+44 (0)20 3147 [email protected]

Nick LeesLead Director +44 (0)20 7087 [email protected]

David GriffinDirector+44 (0)20 3147 [email protected]

Gary SmithSurveyor+44 (0) 20 3147 [email protected]

Duncan AshmanPartnerService Charge Accounting+44 (0)117 930 [email protected]

Property & Asset Management

JLL Office

JLL

40 Bank Street

Canary Wharf

London E14 5EG

+44 (0)20 3147 6040

jll.co.ukCOPYRIGHT © JLL, IP, INC. 2015. All Rights Reserved. While every effort has been made to ensure accuracy and completeness, we cannot offer any

warranty that factual errors may have occurred.

JLL cannot accept any legal responsibility for any damage or loss suffered by reason of any inaccuracy or incorrectness concerning information and material

in this report.

BDO

oscar offices 2014 – jll

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