As Workman celebrates its 40th anniversary, leaders of the firm share their plans and vision for the future, within the UK’s rapidly evolving property industry.
Here, Ben Kearns, Partner and Head of Venture, outlines the challenges and opportunities presented by today’s commercial real estate market.
What has Venture achieved for clients over the past year?
As project feasibility continues to prove challenging in the current economic climate, our Venture team continues to combine agile critical thinking and technical expertise to help clients successfully deliver a breadth of major projects.
From project management of complex retrofit schemes such as 10 Brindleyplace, to monitoring development teams on behalf of funders such as Federated Hermes’ Hestia residential schemes – or as a client representative to provide project oversight – our focus is on our clients’ commercial priorities.
What are clients grappling with, and how is Venture helping solve their business problems?
In these times, which are both lean and volatile, we are working closely with clients to understand their objectives and focus on their priorities.
Speed to establishing the feasibility and viability of projects is key, so we are turning stones quickly to assess potential returns, and unearthing the best opportunities for any potential project.
How is the market changing?
The new norm has moved quickly post-pandemic, with pressures of market volatility, reduced finance, construction costs, supply chain and labour market issues.
This volatility and uncertainty is reflected in the political landscape. With all eyes on a general election during 2024, and increased talk of much-needed planning reform – whatever the political result – to enable the industry to build-build-build.
We are also seeing a greater diversity of investor, where our client base is broadening to include high-net-worth individuals and family offices, as well as the ubiquitous institutional investment funds.
In terms of market sectors, investment in industrial & logistics and purpose-built student accommodation have slowed slightly, in part due to pressures thrown up by the Building Safety Act. Conversely, the mid-tech and life sciences sectors are on the rise, with constrained supply in key locations across the UK.
Resilience in the built environment and the obvious opportunities derived from co-location is helping to support confidence in both retail and office retrofit projects, with fresh impetuous driven by carbon reduction and ESG requirements helping to reduce energy consumption and bolster future letting potential among the most desirable occupiers.
How do ESG considerations fare under these conditions?
Understanding our clients’ end goals obviously means the brief varies with regard to ESG strategy.
The first step to deciding whether to redevelop or retrofit needs to be based on whole-life carbon assessment, which we carry out in-house thanks to our expert ESG team and ESG Project Advisor service.
Generally, the best opportunity to minimise embodied carbon and hit ESG goals comes from retrofitting existing stock, so this must always be our first consideration.
What has been the impact of the Building Safety Act?
The Building Safety Act 2022 has brought about significant changes for high-rise residential buildings, as explained here by Steven Rodd, Partner and Head of our Fire Safety Group. Enhanced Building Safety Regulator and building control functions will now appear on critical paths for completion and handover of new projects.
The Act is intended to improve both safety for buildings and ongoing resident communication. It introduces new legal responsibilities for the registration, document submission and ongoing resident engagement of these residential buildings.
Facing the need to heavily protect against fire in high-rise buildings, developers are negating the risk by bringing in reduced-height and lower mass developments, which lends itself to repurposing existing stock.
Investors and owners are keen to work well within the boundaries of the Act to indemnify against more stringent future rules. Although the rules currently apply solely to the residential sector, their impact has positively resounded across all other sectors, bringing an increased focus on compliance.
How is Venture helping clients navigate the new regulations?
Our specialist teams are alive to the new rules, providing day-to-day advice to clients across the residential marketplace, in PBSA, build-to-rent, and affordable housing.
Working closely with insight from our Fire Safety Group , our project managers can provide detailed insight, helping design teams and contractors navigate new regulations and purchaser requirements to the benefit of time and cost.
What are your hopes and predictions for the coming year?
The prospect of planning reform, which looms large over the election, regardless of the winner’s denomination, would prove liberating for many opportunities.
Not only to improve housing for the UK, but also to drive the construction industry – which has been blighted by insolvency – more widely.
The planning system is simply too lethargic and bureaucratic, stifled by red tape. We regularly encounter planning authorities in special measures, outsourcing their planning roles resulting in delays and inconsistency, creating too much uncertainty for projects operating within narrow margins
Regardless of outcome, a general election could energise political ambition to bring about planning reforms, releasing a higher degree of certainty for large schemes, thereby increasing the speed of delivery.
Currently it can cost six-figure sums and take years just to gain planning consent, so it’s a big cost and time investment with no guarantee of returns. This is a further contributing factor to current market stagnation, which needs to shift if the industry is to regain buoyancy during 2024.
Inflation has eased and interest rates reduced, while work pipelines for contractors in the commercial sector have shortened, leading to increased competition. These ingredients could help to ease construction costs, enabling previously postponed feasibility studies to be re-assessed and kickstarted into live and viability projects.