14 NSC
Jun 20
The outlook was reasonably bright for
commercial developers on the eve
of the world heading into the hugely
disruptive COVID-19 pandemic.
Although there were a few voices reminding
us that good times don’t last forever, and that
a correction of some sort was due after years
of growth in capital values and yields, the
glass looked at least half full.
The amount of new office space under
construction in London had hit an all time
high earlier this year, with construction
started on over five million square feet of
office space in the six months to 31 March,
according to the Deloitte Crane Survey, as
developers took heart from a possible end
to Brexit uncertainty. This was 41% higher
than the long term average and was 29% up
on a year previously. Confidence in the post
Brexit London office market was proving to
be higher than many had expected.
Since then, the change has been dramatic,
with offices having been stripped almost
bare of staff under lockdown. Cancellations
of projects already underway were thought
to be unlikely, but developers were hanging
fire on a large number of schemes.
Architects’ confidence has fallen to an all
time low according to a RIBA Future Trends
Survey in May. Architect workloads were
33% down on the same period a year ago.
Some 39% of projects had been put on hold
since March and 14% of architects had been
placed on furlough.
Architects’ confidence levels and
workloads are traditionally bellwethers,
but this time the storm arrived with the
forecast, thanks to an immediate shut down
of many sites. Since then the Construction
Products Association and other respectable
forecasters have only added to the gloomy
outlook.
The big unknown now is what the speed
and strength of the post crisis turnaround
will be. Forecasters are almost unanimous
that there will be no rapid return to previous
peaks. The other major unknown is what
impact living with the threat of future
pandemics and the new vogue for working
from home will have on commercial
buildings of the future.
Offices exert a strong attraction
The jury is out on what the long term future
of the commercial office will be, with various
possible trends pulling demand in different
directions. Prophets of doom see everybody
working at home, and insist that today’s
hollowed out offices will be a permanent
feature. Others think that the perceived
benefits to employers of having staff work
from home could be shortlived, outweighed
by the inherent attractions and advantages
of office life.
Financial services has been a major
end user of commercial developments
since the 1980’s, especially in London, but
if even large funding deals for corporate
mergers of some £30 Billion can be managed
successfully by homeworkers, as has
happened in recent weeks, and equities,
bond, foreign exchange and financial
derivatives markets can be operated by
workers at home during the recent times of
market turmoil, then who needs offices?
Office optimists say that relationships
forged from face-to-face meetings over
many years are however what gave people
confidence enough in each other to become
parties to these major deals and trades
without direct contact. The employees
involved had hard to acquire financial
nous built up over years from face-to-face
relationships, and would have benefitted
from face-to-face training.
Younger people in particular are drawn
to cities and office environments, to make
themselves known to superiors and to
meet other like-minded people, forging
relationships that support careers and
can last working lifetimes. Working in a
small bedroom in a shared flat might have
only a short-lived novelty factor. Some
commentators however are saying that
younger people seem to be enjoying the
commute-free lifestyle that lockdown has
given them.
Those with more experience might fear
the ‘out of sight out of mind’ syndrome, and
worry about being overlooked by head office
while languishing in the backwoods of a
suburb or village.
The pull of the office is strong. Some
companies are reportedly going to ask
staff to spend two or three days in offices
and other days working at home. In the
short and medium term companies can
be expected to ask some staff to stay away
from the inner city offices where they are
used to congregating, some using satellite
premises instead and coming to the main
offices only for meetings, training or
occasional days. Demand for these satellite
spaces may rise.
Many industries, especially financial
services, have demands imposed by
regulators on being able to demonstrate
operational resiliency, so they have always
maintained satellite offices for emergency
use; these business continuity spaces might
Sector Focus
Adaptable steel for future
buildings
The immediate future for commercial buildings looks challenging
as the economy emerges from the pandemic-enforced lockdown.
Nick Barrett says that the adaptability, circular economy and
health and safety benefits of steel could heighten its attractions
as the framing material of choice for this important sector.
A new focus on healthy workspaces and the
environment generally is a likely outcome
of the pandemic and steel scores well on all
relevant measures.
/Construction
/Multi-storey_office_buildings