Every co-location project is different so there is no blueprint for success. However, successful projects have a range of common ingredients.
There are four key stages common to co-location projects:
- partnership development
- business planning
- property acquisition, refurbishment and fit out
Depending on the nature of the project, these stages may happen sequentially, or develop in parallel.
Each stage requires a specific set of skills and experience, which organisations embarking on co-location projects need to recognise and resource. Managing the delivery of a co-location project is a major piece of work, which, to ensure success, requires dedicated staff time and appropriate technical input. This resourcing also needs to be sustained over time.
Allowing sufficient time for project and partnership development is crucial, particularly when using model 2, where several organisations are coming together to jointly acquire and occupy premises.
Time needs to be spent identifying what each partner can bring to, and expects from, the arrangement:
- Finance – where is the money going to come from, how will it be raised and what contribution will each party make?
- staff time
- skills and experience
- type and extent of shared space
This will result in the ‘hard’ elements of partnership development being clearly articulated in legal arrangements for the partnership, alongside developing personal and professional relationships. Allowing a ‘get out’ option so that partners can withdraw from the project during this phase ensures partners think critically about whether they want to progress to the next stage.
Good investment in partnership development should result in a clear vision for the co-location project. Where a single organisation is leading a co-location project, this vision development is equally important.
Clarity on where the landlords sit on the spectrum from maximising income generation to maximising support for tenants will inform all aspects of the business plan – from what sort of space is provided to the services package and type of agreement offered to tenants. Follow this link to our section on letting space
A business model that secures affordable rents for your target market alongside long-term financial sustainability for the project should be the goal. Grant funding can certainly be secured for developing the project and for capital investment in the building. For more information on grant funding follow this link to our section on financing your project
Building a case for ongoing revenue funding that depends on grant income requires serious consideration:
- What happens when the funding comes to a close?
- Are you prepared to dedicate time to ongoing fundraising?
- If your target market includes very poorly-resourced organisations, perhaps you need to cross-subsidise their rent through charging nearer market rents to more established, ‘anchor’ tenants
Gaining a clear picture of the full costs of ongoing management of the building is crucial to a realistic business plan.
Property acquisition, refurbishment and fit out
As property-based ventures, co-location projects can, and have, suffered all the pitfalls associated with acquiring, refurbishing and managing property. Discovery of asbestos during refurbishment, or failure to budget for VAT costs, refurbishment time and budget overruns, have all dogged co-location projects.
In selecting the right property you will need to consider:
- structural condition
- environmental considerations
- level of refurbishment required / permitted by the lease agreement (if applicable)
- property’s use class (change of use may require planning permission) (information regarding use classes can be found on here
You will need to be clear about the basis on which you wish to acquire the property – a freehold, or a short, or long, lease. Putting together the right finance package – investment from project partners, grants or loans – will have a major impact on the project’s financial viability.
Configuring a co-location building requires thought. Common problems include failing to maximise co-location benefits by duplicating space provision eg. each organisation having its own reception; insufficient space dedicated to storage (particularly in open plan layouts); and access and security not designed with multiple users (and out of hours users) in mind.
Alongside the challenges of running a property project, the main issues that have arisen in co-location are, unsurprisingly, related to partnerships and sharing. To ensure your building runs smoothly it is good to consider processes such as:
- well thought through legal agreements with tenants
- clear ‘rules’ and guidance brought together in a tenants’ handbook
- tenants’ forums to raise and clarify issues
- sufficient staffing for property and facilities management
For more information of property management follow this link.