PricewaterhouseCoopers (PwC) at First Point, Buckingham Gate, Gatwick

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1 Mr T Beresford-Knox Head of Planning Services Crawley Borough Council Town Hall The Boulevard CRAWLEY RH10 1UZ PricewaterhouseCoopers LLP Plumtree Court London EC4A 4HT Telephone +44 (0) Facsimile +44 (0) Direct Phone +44 (0) pwc.com/uk 10 September 2008 Our ref: MJS Dear Mr Beresford-Knox PricewaterhouseCoopers (PwC) at First Point, Buckingham Gate, Gatwick I refer to your recent conversations with Malcolm Preston, the Partner-in-Charge of the PwC Gatwick office. As discussed, our Licence Agreement to occupy the ground floor of the First Point building expires in March It is our desire to enter into negotiations with First Point landlord for a new Agreement to continue our tenure, however, we understand that the building has an airport related User Clause that restricts the entities that may be in occupation. We also understand that we may request that Crawley Borough Council relax the restriction so that PwC may remain as a tenant in the building. For your consideration, I list below the case for PwC to remain in occupation of First Point 1. History The PwC Gatwick office was created by the consolidation of our Maidstone and Croydon offices in February The practice commenced trading with an initial headcount of 70 staff which occupied 7,500 sq ft of serviced office space through Regus. Since then the office headcount has increased to 230 and this has been mirrored by revenue growth of approximately 30% compound per annum. To accommodate this growth we have increased our occupation of First Point to include the whole of the ground floor, totalling 15,500 sq ft. During the last 4 years, we have developed good relations with the landlord and other occupants and have not received any complaint or problem with our occupation of the building. Therefore by entering into a new agreement to remain in occupation, we would, in effect, be extending the 4 year tenure that we have already enjoyed. 2. Why First Point? The location of the building was crucial to the initial and continued success of the PwC practice. PwC has strong links with the aviation and travel industries which is emphasised by an airport location. Malcolm Preston is the PwC travel Partner and clients of the firm include BA, BAA and Page 1 of 5 PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

2 other businesses based at, or around the airport such as TUI, DNATA, LSG, Skychefs, ACE etc. In addition, we have targeted many of the business at the airport as future clients. PwC is also a global professional services firm and as such Gatwick airport is an important transport node for international staff and clients. First Point is now a recognised Business Hub for international staff and clients who can carry out business at our office without the need to travel into London. The same is true for UK staff as First Point provides an accessible office for staff that are based around the UK. During 2007, PwC undertook 8,200 flights to or from the airport, with many of these staff visiting the office to undertake meetings and/or conferences. The PwC Gatwick office also serves the whole of the south east of England (excluding London). Our staff require mobility and ease of access to clients. The proximity of the building to the M23 (and subsequently the M25, M20, M3) is an important factor in the success of this office. Also, due to the intense utilisation of the airport by our staff, the PwC travel team is largely based at First Point. 3. Options for a Relocation from First Point Over the past 12 months we have undertaken a real estate review and conducted an extensive search within the locality for suitable premises for relocation to include Crawley town centre and the Manor Royal. Our search comprised of 2 essential requirements: (i) New or modern, grade A office premises: PwC requires modern buildings that (a) convey the image of a modern professional services firm and (b) have the associated high standard specification (building fabric and engineering systems) that allow for efficient and intensive occupation. (ii) Large, open plan floor plates: Due to the nature of our business, it is important that we have large and efficient floor plates to allow our staff to interact with each other. We would consider a 15,000 sq ft floor plate to be a minimum. This requirement is mirrored throughout our premises of a similar size throughout the UK New Developments We have investigated the possibility of relocating to new developments: City Place has been seriously considered but discounted due to the strong presence of a competitor firm Crawley Business Quarter - development has been mothballed Existing Buildings We have also considered existing building stock: Spirent House floor plates too small and the building has subsequently been let. No.4 Tillgate Business Park floor plates too small (2)

3 Churchill Court buildings overall too large and Grade B accommodation. Gatwick 23 Grade B accommodation Overline House, Station Way Grade B accommodation with no mechanical and electrical engineering services Premier House, London Road Grade B accommodation We have therefore concluded there are no suitable options for relocation and that remaining in occupation of First Point is the only viable way forward. 4. The Impact on PwC employees upon relocating away from the area. One of the reasons behind the decision to occupy First Point was to provide a Business Hub for PwC International and UK staff and clients who utilise the office for meeting and conference purposes (see 2 above). The South Terminal train station is also central to our operation. First Point is heavily utilised by PwC London based staff for meetings and conferences as the journey time from Victoria is only 30 minutes. The same is true for the Gatwick based staff, the majority of whom commute daily by train. Should PwC be required to relocate away from First Point, then it is anticipated that the Business Hub concept will cease and the disruption to staff commuting would be significant and would also possibly result in increased utilisation of the private motor car. 5. The Impact on the local economy and local community should PwC relocate away from the area Our search for suitable accommodation within the borough of Crawly has not produced an alternative to First Point. As a result we would have no option to look further afield. Established business locations such as Leatherhead, Redhill and Reigate would naturally become the focus of attention. Indeed PwC has a headlease on a 38,000 sq ft building in Redhill that may be suitable and available for our occupation. PwC also provides significant support to the local community within Crawley, including: Weekly Volunteer Reading Help - 8 PwC staff visit local primary and secondary schools to assist children with reading. BA Eurotraveller numerical skills course. PwC take an entire year group from 2 local schools to teach numerical skills and how to adapt to real life situations. Business Dynamics 1 day course to local schools - We provide assistance to 4 schools on a quarterly basis. Golden Lion Children s Trust PwC has provided significant support to this charity, the Mayor of Crawley s chosen charity, because of its direct links to the airport. For example, we provided 16 staff to assist carers in the logistical support for a flight for 100 children to Jersey. PwC is one of the fastest growing and the largest professional services organisations south of London. As a result, we believe that a move away from the area would have a negative impact in (3)

4 terms of the local economy and also the local community. It would also attract significant negative publicity, particularly as we have promoted the region so heavily over the past 4 years. 6. The Current demand for airport related office accommodation and the way in which the demand is changing. Demand for office accommodation at the airport has changed over the last 10 years and is continuing to change. Research carried out by Stiles Harold Williams (SHW) has stated that 10 years ago, approximately 30% of SHW requirements received for office accommodation was for air related users. In 2008 that figure is less than 20%. This change can be attributed to: The growth of the low cost airlines. For example, EasyJet is now the largest operator at Gatwick and its business model does not require significant operational (and expensive) office space at the airport. Efficient use of office space by Gatwick Airport Ltd resulting in less demand and increasing availability of office space at the airport. As a result, vacant office space at March 2008 accounts for approximately 82,000 sq ft of a total 354,500 sq ft office building stock with airport related users. This represents a 23% vacancy rate at the airport, whereas the office vacancy rate within the Crawley area (excluding the airport) is circa 9% Dealing with First Point specifically, the building totals 62,417 sq ft of which approximately 16,000 sq ft (25%) is currently vacant. By September 2008, this total will increase to 20,000 sq ft following the decision by an airport related occupier to relocate away from the airport. It should be noted that 8,700 sq ft of the vacant space has been on the market for 12 months with no significant interest. It is the opinion of SHW that the impact on the supply of air related accommodation at Gatwick Airport will be insignificant should PwC be permitted to proceed to lease 22,000 sq ft as it would represent approximately 6% of the total office accommodation at the airport. 7. Conclusion PwC has strong ties with the local travel and aviation industries. We have also developed strong ties with the local community to provide assistance with local schools and charities. PwC is a global firm and is recognised as an intensive customer of Gatwick airport. It is also one of the fastest growing professional services firms in the south east. International and UK staff/clients come to Gatwick for meetings and conferences There are no suitable options for relocation within Crawley town centre or the Manor Royal. There is also insufficient time to have a building constructed. This may lead to PwC having to consider a location away from the borough. The proposal to lease 21,000 sq ft would represent only 6% of the total office stock at the airport. There is currently 82,000 sq ft of vacant office accommodation that is likely to increase over time. We therefore request that Crawley Borough Council relax the Planning restriction at First Point and permit PricewaterhouseCoopers to enter negotiation with the landlord for a continued occupation. (4)

5 Yours sincerely Matthew Stevens PricewaterhouseCoopers Real Estate (5)