Joint Ventures in Airspace Development

17th May 2023

leaseholders save money

Airspace development is quickly becoming a growing trend as more property owners seek to maximise the potential of their buildings by developing unused rooftop space writes Danny Wittenberg, our Head of Development in this month's Flat Living Magazine.

Whilst some may opt to sell off their roof or airspace to developers, others are turning towards a more collaborative approach, entering Joint Ventures with developers to achieve a common goal and enjoy the various benefits.

Some of the biggest advantages of a Joint Venture in rooftop development is the sharing of resources, risk, and expertise. Typically, this might involve a number of residents sitting on a board and representing the freehold entity, thus bringing together a diverse group of residents with unique viewpoints that can be invaluable for the developer in helping to understand the building. This knowledge is key to understanding logistics of the site, how the current building systems operate and what the main concerns are of the residents. It’s also vital in providing a conduit to all the other residents for information flow and maintaining a good relationship.

However, there’s no hiding that working with a JV partner and multiple stakeholders can present challenges and in an ever changing and volatile world, it’s vital to find the right partner.

Managing the expectations of hundreds of existing residents, each with their own opinion, requires a clear strategy and approach to ensure a favourable outcome for all. A good partner will work closely with freeholders and residents to compile a ‘shopping list’ of improvements they want to see for their building, ranging from communal upgrades to outdated heating and electrical plant or fixtures and fittings, to improving the aesthetics of common areas and external landscaping. You can then work collaboratively to understand priorities, develop the scope of works and costings, before agreeing on the way forward, thus providing clarity to all parties from the outset. As a developer, it is equally important partners have a consistent board with strong leadership and individuals that act as a conduit for the wider leaseholder group.

As a result, you are able to successfully deliver a project having listened to the needs of the residents and having transformed the tired areas of their building into modern, design-led spaces that they can be proud of, and which will ultimately increase the value of their properties.

Another challenge in Joint Ventures is balancing the competing priorities of residents, including those who own their apartments and those who rent. Investors are often more concerned with the financial return on their investment and increasing the value of their property, while owner-occupiers and renters may be more focused on the operational aspects of the development and how it will affect their daily lives. To address this, it’s important to include residents in early discussions and decisions related to site logistics, the programme and general site management.

For example, on a recent airspace project in Hendon, we met with residents and the main contractor to walk the site together and understand the movements of the residents, areas of sensitivity and any other considerations pertinent to the operation and usage of the site. This included listening to concerns around loss of parking during the build period. We addressed the concerns by coming up with a solution to facilitate alternative parking areas on site to ensure that resident parking wasn’t disrupted.

It’s also important to remember that a project’s entire lifecycle, from early negotiations, through to planning, design, construction, and sales, can span various changes in freeholder board structure. It’s not uncommon to have to establish new relationships multiple times throughout a project. Maintaining a good set of records and communications is critical if this happens, ensuring a smooth handover and making sure that the relationship stays strong no matter who is representing the freeholder. Regular weekly meetings also ensure that the freeholders and residents are kept up to date and there is transparency in the process, thus building trust between the parties.

Another challenge is with ever changing regulatory reforms, especially in relation to fire regulations in recent years, understanding the requirements can be difficult to navigate for existing residents or freeholders. As one of the founders of the Association of Rooftop and Airspace Development (ARAD), we’re at the forefront of understanding these changes and championing good practice and learning within the industry so that people can be confident in what we do. Within ARAD’s growing community, we have access to the leading minds in the industry which gives comfort to our JV partners that we’re doing things the right way.

All in all, JVs can be a smart and effective way to approach rooftop development and should be a win-win for everyone, working together to meet challenges head on and finding solutions. The key to a successful partnership sits in finding the right partner who shares a vision for the project and possesses the necessary resources to make it a success. Beyond the passion and a willingness to collaborate, what you need most is a strong board with clear leadership, well-defined objectives for the development and a high degree of two-way trust. With that, a well-executed Joint Venture agreement can offer significant long-term success and in doing so, can help to re-shape London’s skyline in a collaborative way while creating invaluable relationships!

This article first appeared in the e -edition of Flat Living magazine.