Abstract

The public sector is the largest UK landowner and space occupier with local authorities owning and managing the majority of the real estate assets to meet services to the community. As central funding of these services reduce and the knowledge economy is changing the way we live, local governments are looking at more efficient and effective ways of managing their real estate operations and creating investment value to bridge the gap between funding shortfalls and the demand for public services. Several local authorities are now investing in commercial properties as a way to generate long term stable income streams although current practices are highlighting narrow portfolio diversification, management challenges, fee leakage and limited awareness of the knowledge economy on future real estate returns. This research paper examines the issues and provides a conceptual framework for a Sovereign Public Sector Property Fund which can create local level opportunities alongside a stable long term income stream. This can be achieved through a pooling of prime local government real estate assets to offer portfolio diversification with quality management, good governance, local authority appointed steering committee members and exposure to opportunities to benefit from aspects of the knowledge economy. Supported by central government, individual real estate assets in a Sovereign Public Sector Property Fund can provide a local destination with placemaking potential in the post COVID-19 era. Strengthening the connection between people and place, the real estate in the fund can be the catalyst for local employment opportunities and support surrounding communities. This exploratory study covers an important part of the UK economy and offers a valuable insight into creating a new real estate investment vehicle which can elevate the often underutilised prime local authority real estate assets.

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