The Partnership Client - 5 Tips for Success

Partnerships nationally have had their highs and lows, yet there's clearly upside on offer if they benefit partners fairly by leveraging strengths and minimising weaknesses. 

For Local and Regional Authorities, they offer the opportunity to unlock complex sites with developer partner know-how while providing covenant strength and funding to address commercial risks. 

For developers, they offer pipeline certainty into the medium term and beyond. Plus, a successful track record helps win similar opportunities. There is also the chance to align ESG objectives at project and corporate level.

Requiring ‘developer’ and ‘enabling’ client acumen, partnership strategies are however the hardest strategy to implement in the public sector given there is so much to learn. If done correctly they are a true force to be reckoned with. However if they are set up poorly they risk political, reputational and commercial failure.

Having supported Public clients in various partnership arrangements to deliver residential, university and mixed use development successfully, this post provides 5 tried and tested tips to set one up effectively. 

1. Establish your Objectives

Knowing what you want to deliver is paramount. Is it a strategic site for residential-led mixed use? Perhaps it's a new university campus in a city that has ‘gone without’? Maybe its town centre regeneration and the opportunity for social value uplift? Or is it a complex site in a high value location that's gathering cobwebs and waiting on someone to unlock it?

A good brief together with feasibility studies to determine site capacity, risks, opportunities, and specialist reports on contamination, flood risk, heritage are some of the information required. Then there's appraisals and planning strategy, plus other information on a case by case basis.

While these may not reflect the actual scheme taken forward later, they show you are serious and competent to the private sector. 

Any partner is looking to balance the opportunity for profit against time and risk. If you don’t have your homework done, you risk being taken advantage of or not being taken seriously in the first place.  

2. Know the Financial Implications

The financial implications also need to be established. Expecting a developer partner to wear everything from a risk perspective will not work. The more you establish early, the better. For everyone involved. 

If you are seeking 40% affordable housing, what mitigations are on offer? 

If there is contamination, is there a strategy to address it?. With planning risk, have you had an official pre-app with written advice or something else? 

What about vacant possession and stakeholder support? What have you done to secure them so far? 

How about wider due diligence - have you commissioned advice on site risks such as archeology? 

Seeking a developer partner without your financial and commercial groundwork done is likely to result in a lack of response. Its simply not worth the time and effort to submit a tender return given the risk. So it takes time yes, but it's really worth it in the long run.

3. Land Assembly Strategy

If the site is fully owned and a recent report on title is clear, well done. Offering land assemblycertainty is a real deal maker. But if that's not the case, what is your strategy? 

If the title is complex, can you appropriate it? What about utilities - is mitigation required, if yes, what is it? 

With existing tenants, are you serving notice? Perhaps you are incentivising buy-backs with private owners?

Ransom strips - what is your plan?

Are CPO powers your fall-back or a primary strategy generally? 

The time and risk associated with this element cannot be underestimated. The sooner you begin to work out your mitigation the better.

4. What Would You and Your Partner Do?

Without knowing what you or a partner would do, nothing will happen. Best to get your thinking cap on from risk/opportunity perspective as early as possible.

If enabling works are required, will you appoint contractors directly or expect a partner to do it?

With planning, are you securing an outline permission with a partner following up with the reserved matters applications? Or, will you let them secure it independently, subject to approval? If you secure LDO, what can you offer if they want to change it?

With delivery, will your partner lead as main contractor across all phases? Or will they be a master developer role who procures others on a ‘parcel’ basis instead? 

What about sales and marketing - who will do it? Then there is affordable housing - will you take it or, will it be sold to a.n.other?

5. The Partnership Models 

What you can and can’t do determines the level of risk, control and commercial upside you seek with a partner, in addition to the best model to use. You need to understand the various types on offer to design an appropriate procurement strategy and secure them. There are endless options also available, so please take appropriate legal and commercial advice to get it right. These include -

• Is a development agreement partner best? 

• Perhaps you want a master developer partner? 

• Maybe its a JV undertakes the development? 

• Do you want the master developer seat to planning, then procure partners for plot level delivery? 

• Is a shareholder style partnership best for several parties who pool resources and know-how? 

What Next?

Getting into a strong ‘partnership’ position means being commercially, technically and legally astute at the start and over the full development cycle when it goes live. 

Being fully prepared stacks the odds in your favour, fosters trust between partners and ensures that your organisation gets what they wanted from the project. 

But if you hope that a partner will play nice commercially and solve all your problems while you maintain a hands off, full-risk transfer approach, you will regret it. While it may not impede delivery per ce, there will be significant commercial downside and possibly reputational loss.  

If you’d like some expert help to use a ‘partnership’ strategy, please reach out directly. I’d be happy to explore how you can best optimise your return on time and effort to unlock opportunities with it successfully.