February 2002

The scheme is offered by new division called B-Serv, which has been set up to develop innovative approaches to property provision. According to managing director Steve Lee: "Dotcoms and emerging e-tailers often want flexible property options and short-term leases, but this may conflict with the property fund manager's desire for a highly secure, long lease."

A solution, he says, could be for Brixton to talk to the occupier in conjunction with a third-party logistics specialist, which would provide the necessary guarantees without imposing unduly tight constraints on the e-tailer's freedom of movement. Some people call it "pallet hotelling", he says.

 

"We've developed a mathematical model that works out the risk of an occupier defaulting on a lease," Lee says, "and we've been pleasantly surprised how little the rate has to be adjusted when the term is reduced. The trick is to achieve a high degree of accuracy in the calculation."

He says this approach depends on the property company's ability to spread the risk over a very large property portfolio - something Brixton can do, since it has a large pool of industrial premises spread across the South East. "And we would acquire in other areas to support specific contracts," Lee adds.