Ten Broadway Land Size and Dimensions - Assignment Example

Ten Broadway Land Size and Dimensions ASSUMPTIONS According to the Association for the Advancement of Cost Engineering International (AACE), a cost estimate is defined as a thorough evaluation of all speculated costs of elements that will be necessary in the project as stipulated by the scope (AACE 1990). Ten Broadway is a proposed building that will sit on 1.72 acres and will have a total of 600,000 square feet of office space. The prime land is located in Central London (Pre-)Development stage Acquisition costs Ten Broadway Acreage and land demarcation Figure 1: Ten Broadway Land size and dimensions Source:www.tenbroadway.com The land is located in central London. From a government document which accesses the current value of land based in London, the prices are elative and dependent upon two factors. These two factors form the principle upon which various developments take place. 1. Development can involve refurbishment. In this scenario, the building’s original structural framework remains in its exact location and major improvements done on it 2. Development can also comprise of re-development which involved the demolition of the existing building and a new design constructed in its place. The following table outlines the correct range of associated land value inputs that will be used in this viability analysis. The analyzed land transactions has been based on 1. The net sales area (NSA) or existing building’s cumulative or net internal area’s (NIA) average price per square foot 2. Proposed development’s NSA or NIA average price per square foot Table 1: Land Transactions Summary in London Summary Average Price psf (NIA/NSA existing) Average Price psf (NIA/ NSA proposed) Offices £ 480 £240 Residential £350 £275 Riverside Residential £500 £480 Hotels £400 £260 Source: http://www.cityoflondon.gov.uk/services/environment-and-planning/planning/planning-policy/local-development-framework/Documents/appendix-4-land-market-commentary.pdf Ten Broadway is estimated to house 600,000 square feet of office space. The financial times dated on September 2nd, 2014 estimated the place to have a capacity of holding the specified amount of office space. From the assumption made, and the price range of properties in Broadway and regions around the New Scotland Yard based on Rightmove website, a site that has the current prices of properties to let, and to sale found at http://www.rightmove.co.uk/property-for-sale/Broadway.html and Zoopla found at http://www.zoopla.co.uk/, it then becomes evident that the acquisition costs based on this report may be valued at: £ 480 (existing value according to city of London government) x 600,000 = £ 288,000,000 Professional fees However, the pre-acquisition costs are not only about the purchase of the property, they also include expenses which are incurred in the process of acquisition aided by professionals. For instance, property evaluators and site surveyor may also require a fee surveyors. According to the United Kingdom’s government, there exists a specific clause under Annual Tax based on Enveloped dwellings (ATED). It stipulates that valuation of property can be done by the company with interests of purchase or through hiring of professional evaluators. The company can only be in the capacity to conduct its own valuation if it has people with the specific skill set. If it chooses to hire professionals, then it will have to incur professional fees. According to the site: https://www.gov.uk/annual-tax-on-enveloped-dwellings-the-basics#valuation-of-property , the following table is derived for the acceptable fees to be charged for the property evaluations by a valuators: Table 2: Chargeable rate amounts for chargeable period ranging from 1 April 2014 to 31 March 2015 Property value Annual chargeable amount 2014 to 2015 More than £2 million but not more than £5 million £15,400 More than £5 million but not more than £10 million £35,900 More than £10 million but not more than £20 million £71,850 More than £20 million £143,750 Source: https://www.gov.uk/annual-tax-on-enveloped-dwellings-the-basics#valuation-of-property The firm will therefore incur a charge of £143,750 if they consult professionals in property evaluation and survey during the acquisition period. S 106 costs These are associated section 106 Agreements costs. They arise as a docket of the Town and Country Planning Act of 1990. The agreement is defined as an obligation to make a positive contribution to the local area where the entity premise exist having obtained consent from the planning authorities. Some of the planning obligations to be considered include Contaminated land clean up Provision of affordable housing Contribution to infrastructure to make the area accessible According to Walsall Council on its environment act, a clause under the Monitoring and Administration Costs for Completing Planning Obligations stipulates a minimum charge of £950 or an equivalent of 9% allocated for payments of the planning application fees is to be paid as soon as the company completes the chosen planning obligation. This clause is obtained in the following government site, http://cms.walsall.gov.uk/index/s106_costs.htm . Legal and organizational Expenses These S 106 costs are also accompanied with associated legal fees which may be charged by the solicitors, quantified as solicitors costs payable at planning obligation completion. If the company wishes to use Walsall MBC Solicitors, then it will incur £2500. This charge is stated under the clause: Legal Costs for completing Planning Obligations found in the government website: http://cms.walsall.gov.uk/index/s106_costs.htm . These solicitors will be responsible for handling all the legal procedures which will be involved in the purchase and acquisition of the property. Market Study fees There are various options which ADFG can conduct a market survey. It can use its research and development team or it can outsource the operation. This operation is always based on finding the possibilities of returns of investments or profits that will be expected if it adopts to pursue the project. Sample information obtained from http://data.london.gov.uk/housingmarket/ gives specific deliverables that will, serve as key points of the market study. They include: London’s current economic situation The unemployment rate in London for possible sourcing of manpower for the project The average house prices in London Private sector annual growth rates The trend of the average interest rates obtained in the real estate industry in London Mortgage financing Construction material costs The survey may include online researches or physical identification. If ADFG adopts to use online sources for their basis of research, then it will incur internet costs and power costs. If it resorts to physical location market survey, then many other expenses such as travelling expenses, airtime and credit will be incurred. The project assumes the market study will adopt the use of the internet due to its large global resource repository. It will incur charges ranging on its usage and type of medium used. These prices are regulated by the government but set by the local internet service providers. The business will incur £3,000 for installation of high speed broadband to facilitate this operation. This statistical estimate is made with reference to a declaration made by the government of London found at: https://www.london.gov.uk/priorities/business-economy/for-business/business-support/businesses-get-up-to-3000-for-high-speed-broadband . Appraisal fees The company may have two options when it comes to the charging of appraisal evaluations, termed as appraisal fees. The appraisal will consist of various key elements that warranty a charge based on whether the company decided to do the appraisal using its in-house team or outsource. Contents to be included as proposed by a government document titled, The Green Book found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf , involve numerous activities forcing the company to incur wholesomely. The contents will include Full, Outline or preliminary business cases, health impact assessments, regulatory impact assessments, integrated policy appraisals, environmental appraisals, health and safety impact appraisals and evaluation and audit reports. The fees charged will be for the generation of the document valued at £2,932.78 based on the council tax 2015/2016 outlined at https://www.croydon.gov.uk/advice/counciltax/ctaxcharges/counciltaxrates . The rates are based on bands and an assessment table is below: Table 3: Appraisal fee charges based on scoe and bands Council Tax bands and amounts payable 2015/16 Valuation Band Croydon Services GLA Total Band A £ 780.93 £ 196,67 £ 977.60 Band B £ 911.08 £ 229.44 £ 1,140.52 Band C £ 1,041.24 £262.22 £ 1,303.46 Band D £ 1,171.39 £ 295.00 £ 1,466.39 Band E £ 1,431.70 £ 360.56 £ 1,792.26 Band F £ 1,692.01 £ 426.11 £ 2,118.12 Band G £ 1,952.32 £ 491.67 £ 2,443.99 Band H £ 2,342.78 £ 590.00 £2,932.78 Source: https://www.croydon.gov.uk/advice/counciltax/ctaxcharges/counciltaxrates Environmental survey costs According to information content found at www.defra.gov.uk, an estimate of £90,000 will be incurred in environmental survey which will include activities such as soil resource surveys, soil management during construction and the viability scaling for landscaping. CONSTRUCTION STAGE The basic building specifications as computed by BCIS are: Figure 2: BCIS building specifications for construction development in the Great London Region Source: http://service.bcis.co.uk.libproxy.ucl.ac.uk/BCISOnline/Analyses/BuildingSpecification The BCIS extract below is a representation of the average cost database with reference to Cornnwall of the time period of Q2 2012. It does not include abnormal costs, infrastructure costs nor external building costs. Figure 3: Cornwall average cost estimates The construction charges keep shifting hence a projection in the cost would bring uncertainty. These factors are based on two broad spectrums identified as Non-carbon sensitive costs Carbon sensitive costs Carbon sensitive costs Labour costs: there is uncertainty in the evolution of labour. The present scenario is that labour force is highly insufficient for technical work high volume delivery. There is a likelihood of an increase in the skill set to meet the demand. Cost impacts are negligible. Material Costs: Costly alternative materials with guaranteed high performance qualities. These are not in the mainstream hence highly priced. With the adoption to lower U-values in the construction industry in London, material costs are likely to fall through the utilization of economies of scale. Technology Costs: The European and global level has seen the maturity of renewables. Technology advancements and bulk purchases are likely to guarantee a decrease in the cost of renewables. Non-carbon sensitive variances They are inclusive off regional variations of factors of inflations and deflations. The construction cost has a large variation across the United Kingdom hence affecting labor costs. The current market is deflated. The table below is an extract from a government site found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6378/1972728.pdf that shows the extra-over costs incurred in building. It is based on Part L2010 reviews and changes made. Table 4: Building and construction extra-over costs with 2010 changes subject to Part L2010 Read More