The offices market can be viewed with a degree of cautious optimism for 2018.
Following the Brexit vote, the London commercial market was understandably anxious for a while, but its confidence rebounded relatively quickly.
At the recent CN Summit, it was interesting to hear several developers such as British Land talking about their longer-term commitments – not just for 2018 but 10-20 years ahead. They definitely see investment opportunities and tenant demand in the capital, especially in the City of London, which will retain its prominent status whatever the outcome of the Brexit negotiations.
No doubt there will be more Brexit-led impacts down the line, but this long-term outlook is positive news for contractors.
Outside the capital, the trend in all major cities is for more prelet developments, such as Allied London’s One Spinningfields in Manchester.
Speculative developments are fewer and further between, but there are still a handful emerging. For example, our own Bam Properties, in partnership with Hermes Investment Management, has just embarked on Capital Square in Edinburgh, currently the city’s largest speculative office development.
What is driving the nature of commercial developments coming to the market – prelet or speculative – is the quality of product. High-quality spaces still command a premium value. The emphasis is on sustainable, flexible buildings that help developers realise efficiencies not only during their construction but also in the way they are managed and maintained.
“Contractors that want to do well in the commercial market need to take more time to truly understand developers’ drivers”
Maximising the lettable space and being able to quickly reconfigure buildings to meet the changing needs of tenants are also critical factors. This is what the market wants.
Sustainability means more than economics and fuel bills. It now encompasses place-making and design that encourages wellbeing and a positive lifestyle. Gyms and cafes, for example, mean a sense of community can be created. Enlightened occupiers want to offer employees a high-quality working environment that treats people as valuable assets.
The contractors who will succeed in this scenario will be those who are ahead on digitisation and delivering smart buildings. More offsite prefabrication and the use of techniques such as 3D printing will be similarly critical factors.
Developers are also looking more carefully at collaborative procurement routes to help them achieve their ambitions. Two-stage tendering is becoming more prevalent and contractors that can integrate design, construction and facilities management can expect to enjoy good prospects.
Contractors that want to do well in the commercial market in 2018 and beyond need to take more time to truly understand developers’ drivers, be willing to challenge the brief and dare to innovate.
As always, embracing change is the best way to survive it.
David Cotton is director of business development at Bam Construct