Ian Ellis, exec chairman of property outsourcing giant Telereal Trillium, explains how the Comprehensive Spending Review will affect his company, including an anticipate 20% drop in profits from the public sector side of its business.

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There is no way you can have an order book shrunk and not have a drop in profits.

We have a contract with the Department for Work and Pensions covering 23m sq ft, signed in 1998. Our contract with them allows them to walk away from leases. As the government comes out of more and more buildings we’ll pick up liabilities, lose income and have higher costs.

In the life of this parliament, we’ll end up with 4m sq ft of empty space to deal with. These are 1960s and 1970s secondary properties in provincial towns.

In the past, we’ve been able to let these to quangos or councils. The culture has been one of: “the government will renew because it always renews.” Most bodies have expanded rather than shrunk.

That is no longer the case. There is more surplus coming to the market, and there is shrinking demand from the public sector overall.

We might buy more public sector assets, from banks that pick up bad assets in provincial towns that have been vacated by the government. We’ve been set up so that we can deal with these problems. We share the pain with the government

We’re like soldiers prepared for war.

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