2011‐04‐08

GPFS Consolidation and

Relocation to Milan

08 April 2011

GROUP 5

CONTENTS

{ Client Requirement Analysis

{ Italian Working Practice

{ Global Benchmarks

{ Revised Space Budget

{ Proposed Site Analysis

{ Recommendation

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1. Client Requirement

{ Relocate to one international head office in Milan

{ To consolidate the business
{ To reduce cost base and improve communications
{ Enhance the company’s space efficiency
{ To improve sustainability
{ To energise and retain the best staff
{ To become more innovative
{ To occupy a building which reflects and enhances the
corporate image

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 2011‐04‐08

2. Italian Working Practices

{ Investment in Italy
{ Development in regional policy
{ Construction Costs
{ VAT
{ Building Contracts
{ Building Procurement
{ Leasehold
{ Maintenance Charge
{ Responsibilities
{ Commencement Notice
{ Historical constraints

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3. Global Benchmarks

{ New Santander Building (Milan) – Solar Powered, Carbon Neutral

{ Il Sole 24 Ore HQ (Milan) – Refurbishment to sustainable & low

energy building

{ Ernst & Young HQ (Amsterdam) - exceeds Dutch environmental

building standards by 10 percent.

{ Global Real Estate Sustainability Benchmark

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4. Revised Space Budget

Initial sq.m/p Revised sq. m/p

Net Useable Area 13,718 9.2m² 10,924 7.3m²

(NUA)

Net Internal Area 15,090 10.4m² 12,016 8.0m²

(NIA)

Gross Internal Area 16,448 16.4m² 13,218 8.8m²

(GIA)

Gross External Area 17,065 10.4m² 13,713 9.2m²

(GEA)

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 2011‐04‐08

Site 1 – Via Meravigli

Meravigli,, 14

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Site 1 - Micro Environment

z Located in CBD
z Very close to public transport
z Close to main attractions of the city
z Financial district of Milan
z Area is surrounded by a variety amenities
z The area has a large amount of vacant office space
z High level of traffic noise
z Not easily accessible for construction purposes
z £455/m² average rental cost in the area

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Advantages
{ Milano CBD
{ Public transport links
{ A variety of amenities
{ Shorter development time
(12 months)
{ Possible to change
internal layout
Disadvantages
{ Floor plan shape and layout
not very suited to clients
requirements
{ Building itself out of date and
does not reflect the clients
image particularly well
{ Preservation order for external
façade
{ High costs involved in creating
a highly sustainable
development
{ No potential for development
{ Increased traffic noise

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Increasing office vacancy rate for Milan City, Assago – Rozano, San
Donato Milanese & Sesto San Giovanni

Decreasing take-up of office space in the same areas

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Site 1
1-- Cost Plan

Rate  Area 
Total
(Euros per m2) (m2)

Construction Costs € 1,890  13,174 € 24,898,860

F it
Furniture & Equipment
&E i t € 350
350  13 174 €
13,174 4 610 900
4,610,900

Additional Costs to attain 
€ 1,080  13,174 € 14,227,920
Gold LEED Standard
Contingencies 10% € 4,373,768 

Total Cost € 48,111,448

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Site 2 – Piazza IV Novembre

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 2011‐04‐08

Site 2 – Micro Environment

{ Becoming an extension of Milan’s CBD

{ Benefits from major infrastructure improvements and urban
renewal projects
{ There has been an uplift in rental and capital values in line with
prime CBD
{ Veryy Close to Milan Central station and other transport
p links
{ a variety of amenities within the vicinity
{ Residential properties in the area have a high /m2 ratio
{ High level of noise from traffic in the area
{ Medium accessibility for construction purposes
{ €390/m² prime rent cost

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Advantages Disadvantages

{ Open plan layout { Refurbishment time is estimated

{ Flexible office layout to be around 24 months
{ Building represents Client’s
{ No immediate investment
image opportunity
{ Highly sustainable building –
Class A
{ Possibility of a future
investment opportunity
{ Good Central Location –
extension of CBD
{ Excellent transportation links –
opposite Central Station
{ Close to a wide range of
amenities

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Cost Plan for Site 2

Rate  Area 
Total
(Euros per m2) (m2)

Fit Out Costs €1,329  13,174 €17,508,246

Contingencies 7% €1,225,577 

Total Costs €18,733,823

Residual Valuation
Site Value: €10,900,000

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 2011‐04‐08

{ Large office development nearby (Porta Nuova)

{ Increasing office transactions in Central area
{ Residential sector sales starting to increase slightly
{ Planned hotel in the area but the increasing office space will increase the demand
for hotels as 60 -70% of hotel demand is for commercial purposes in Milan

Residential sector sales in Milano Hotel occupancy rates (%) in

2007-2010 Milano
23,000 70.00
22,000
21,000
2007-2010
20,000 65.00
19,000
18,000 60.00
17,000
16,000
15,000 55.00
14,000
13,000
12,000 50.00
11,000
10,000
-표준 -표준 -표준 -표준
-표준 -표준 -표준 -표준
Source: www.aica‐italia.it
Source: www.agenziaterritorio.it

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Site 3 – H Building Via Sbodio 2

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Micro--Environment
Micro

{ Outskirts of Milan
{ Close to ring road – good links to motorway and Linate airport
{ Area popular for industrial companies
{ New medical research centre has recently been constructed next door
{ Fewer amenities,, shops,
p , restaurants,, cafes,, bars etc in the area
{ Few financial institutions located here
{ 10-15 minute walk to nearest station
{ Low level of traffic noise in the area
{ Easily accessible for construction purposes
{ €240/m² prime rental cost

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Advantages Disadvantages

{ Floor plan flexible to suit { Small usable area

client needs { Investment opportunity
is limited
{ Modern and innovative
design
{ Highly sustainable
development possible
{ Investment opportunity
{ Reasonably well located
to transport links –
ring road, motorway and
Linate airport
{ Quiet Location

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Cost Plan for Site 3

(Euros per m2)
Demolition & Removal*
Construction Costs
Furniture & Equipment
External Works & landscap
ing
Additional cost for general 
contractor
Additional Costs to attain 
Gold LEED Standard
Construction Duties
Contingencies
Rate  Area 
Total
(m2)
€ 11,82  63.750,00 € 753.525,00 
€ 2.200,00  25.312,00 € 55.686.400,00 
€ 350,00  8.684,00 € 3.039.400,00 
€ 150,00  4.783,00 € 717.450,00 
7% € 4.213.774,00
€ 220,00  25.312,00 € 5.568.640,00 
€ 50,00  30.095,00 € 1.504.750,00 
15% € 9.864.812,25

Total Costs € 81,348,751
Residual Valuation
Site value: -€46,200,000

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Currently a 38% vacancy rate

4% fall in transactions since 2009

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Recommendations

Rent site 2

{ Best match with client requirements

{ Currently only available on leasehold

Potential to buy site 2

{ Good investment opportunity

{ GPFS prefers to own property

{ Possible opportunity to lease remaining space as a boutique hotel

{ Cost of purchasing property likely to rise

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Proposed Procurement Route

{ In the case of our recommended site we would propose

that a traditional contractor takes care of all work
packages but is obliged to share the cost of specialist
work packages with project manager for purposes of
benchmarking

{ The main issue with procurement is Civil law overrides

the contract provisions and this would make it necessary
in all cases to have a bespoke contract drawn up by an
Italian lawyer to suit the intended composition of the
works

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References

Colliers Presentation
Colliers Report
Jones Lang LaSalle Presentation
Jones Lang LaSalle Report – Piazza Quattro Novembre
Jones Lang LaSalle Report – H building, Via Sbodio
EC Harris Presentation
EC Harris Cost Data
DTZ Website

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Thank You for Listening

Do you have any questions ?

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 Group 5 – Akcre Consulting

Executive Summary (max 2 pages)

General Power Financial Services (GPFS) (Europe) has undertaken the strategic decision to rationalise its
five current operations centres within Europe into a single European Headquarters with Milan identified as
the area best suited to their needs. This decision has been taken in order to increase efficiency, enable
growth, increase communication, enhance the image of the company and to set a new benchmark for
companies within their sector, amongst other factors.

Having considered the needs of the client along with the current changing working patterns driven by a
growing understanding of employee motivation, communications technology improvements and the
increased importance of sustainability, a preliminary space budget has been produced. The space budget in
the original submission indicated that GPFS (Europe) would require a gross internal area of 16,448m² and a
net usable area of 13,718 m² within its proposed European Headquarters. When divided between the
employees of GPFS (Europe), the net usable area equates to 9.46m² per person.

However since arriving in Milan further research and study has indicated that these figures were on the
conservative side. Having visited the three potential sites it was possible to see that each site would have
different space requirements as well as having different strengths and weaknesses. The next step taken
before any cost information was utilized, was to carry out a SWOT analysis for each site to assess these
relative strengths and weaknesses. We have also carried out some rankings on a site by site basis which can
be seen in Figure 1 at the end of this executive summary. It was also possible to see that each site would
have different space requirements. Then following a review of the information supplied to us by Colliers,
Jones Lang Lasalle and EC Harris the space requirements were adjusted accordingly. Once this was
completed rates supplied by EC Harris were used to assist in the production of cost plans and residual
valuations which were carried out to assess the viability of each site. Each of the cost plans can be seen in
Appendix 1 and the Residual Valuations in Appendices 3&4. However on site 3 the rate for demolition and
site clearance appeared high so a revised rate was used using supplied Italian cost data.

In the original submission inter-organisational relationships between divisions and departments were
considered and illustrated with diagrams. These were also briefly examined whilst in Milan and a result of

Page 1
this is the Stack Diagram for our recommended site which can be seen in Appendix 2 along with a copy of
the space requirements of our recommendation which were seen in the presentation.

Having carried out all of the analysis mentioned we feel that Site 2 – Piazza Quattro Novembre would be
the site best suited for GPFS’s needs. This is taking into account the fact that it is currently only available to
lease. However there is potential in Site 2 as there is the possibility of being able to buy the entire building.
Other key factors that influenced our decision were:

Good investment opportunity

GPFS prefers to own property
Possible opportunity to lease remaining space as a boutique hotel
Cost of purchasing property likely to rise

Figure 1 - Site by Site Rankings on key GPFS requirements

Site 1 Site 2 Site 3 Rankings

Floor plan Shape and suitability 2 3 3
Flexibility in layout (possibility to change) 2 3 4 V. Good 5
Image/prominence 3 4 5 Good 4
Potential Redevelopment Costs 3 5 1 Average 3
Potential for a highly sustainable development 3 4 5 Poor 2
Potential for Investment opportunity 1 4 5 Very Poor 1
Location and accessibility via public transport 4 5 3
Proximity to amenities 5 5 2
Type of construction & suitability to company image 2 3 5
Local Planning issues 3 4 3
Noise/ Traffic 2 3 4
Development Cost 2 4 1
Total 32 47 41

The chart shows that Site 2 meets GPFS' requirements to a greater extent than sites 1 and 3

Page 2
Appendices 3 and 4
Appendices 3 and 4
Appendix 1 - Cost Plans

Site 1 Via Meravigli 14

Construction Costs
Furniture & Equipment
Rate Area
2 Total
(Euros per m ) (m2)
€ 1.890,00 13.174,00 € 24.898.860,00
€ 350,00 13.174,00 € 4.610.900,00

Additional Costs to attain Gold

€ 1.080,00 13.174,00 € 14.227.920,00
LEED Standard
Contingencies 10% € 4.373.768,00

Total Cost € 48.111.448,00

Site 2 Piazza Quattro Novembre 3

Rate Area
2 2 Total
(Euros per m ) (m )
Fit Out Costs € 1.329,00 13.174,00 € 17.508.246,00

Contingencies 7% € 1.225.577,22

Total Costs € 18.733.823,22

Site 3 Via Sbodio 2

Rate Area
2 2 Total
(Euros per m ) (m )
Demolition & Removal* € 11,82 63.750,00 € 753.525,00 *Rates & Areas here are in m3
Construction Costs € 2.200,00 25.312,00 € 55.686.400,00
Furniture & Equipment € 350,00 8.684,00 € 3.039.400,00
External Works & landscaping € 150,00 4.783,00 € 717.450,00
Additional Costs for General
7% € 4.213.774,00
Contractor
Additional Costs to attain Gold
€ 220,00 25.312,00 € 5.568.640,00
LEED Standard
Construction Duties € 50,00 30.095,00 € 1.504.750,00
Contingencies 15% € 10.496.878,35

Total Costs € 81.980.817,35

Appendix 2
Stack Diagram for Recommendation
Numbers in brackets represent Areas in m2
Twelfth Floor

Eleventh Floor

Tenth Floor

Ninth Floor

Eighth Floor

Seventh Floor

Board & Secretaries Common/Ancillary Space

Sixth Floor Product Development (315)
(250) (234)

Community & Gov't Credit Control, Customer Security Fraud and

Fifth Floor Marketing (156) New Graduates (624)
Financing (399) Recovery (418)

Common Financial Corporate Responsibility Common/Ancillary Space

Fourth Floor New Graduates (480) Vehicle Finance (326)
Services (672) & Sustainability (53) (273)

Common/Ancillary Space
Third Floor Human Resources (61) New Graduates (900) Accounts (364) Public Relations (97)
(382)

Second Floor Customer Centre Operations - Call Centre (1775)

Common/Ancillary
First Floor New Graduates (300) Personal Credit Card Business (N&E and S) (1164)
Space(257)

Ground Floor Retail Finance(685)