Office revamps - more than a facelift
The London office construction market is seeing a welcome boost as we head into Summer 2021. Construction Enquirer magazine reports that the market has recovered by 20% over the last six months.
These figures come from the Deloitte London Office Crane Survey which is regarded as a measure of the capital's development and property leasing markets. One of the most interesting highlights of the latest research is that the majority of 'new starts' in the office market are refurbishments.
What's driving this surge in office building upgrades?
One factor being raised by a number of property experts is that tenants are looking for spaces that offer a good indoor environment, with occupant health in a post-COVID world very much front-of-mind. It makes sense for property owners to upgrade air conditioning systems or adding the latest filtration tech, for example, if it means the difference between finding paying tenants or being left with empty space.
A second factor, and one highlighted in Deloitte's report, is the growing corporate concern with net zero goals. Corporates looking to lease office space are asking about the 'green' credentials of buildings. What's more, Environmental, Social and Governance (ESG) factors are now very much on the radar of big investors. Property that doesn't fit with corporate ESG goals is not an attractive financial prospect.
These factors are already at play in the London office market. The shift to hybrid home-office working means that tenants currently have more power in negotiations with commercial landlords. Many are using this shifting balance to ask for better building performance, and it's already affecting the market. Buildings which are viewed as expensive to upgrade to higher environmental standards are losing tenants - and value.
Building services, of course, have a significant role to play in all of this. Legislation at national and local level (see the new London Plan) is pushing for higher operational building efficiencies. There is a real focus on reducing our reliance on fossil fuels for heating and hot water provision in commercial buildings.
Engineers and installers are well aware that the technology to achieve better buildings is already available. The question has always been, how to persuade clients to pay for it? The changing attitudes that seem to be developing now may mean that (finally) it's easier to persuade clients to invest in more sustainable and energy efficient building services.
One more small piece of evidence that things are changing is from a recent report from property specialist Savills. It points out that in recent years, high BREEAM ratings have become standard practice in the office market. As Savills notes: "If you wish to achieve a top rent in most UK office locations, then a high BREEAM rating is increasingly essential".
The last 18 months have caused massive upheaval, but they have shown that it is possible to adopt new ways of doing things. I think that the changes in how we work - and where - offer an opportunity for building services professionals to reach out to clients looking for ways to do better with their spaces. Now is a good time to provide insights into issues such as indoor air quality; energy efficiency; and low-carbon technologies.
The office revamp could be far more than a face lift. It's an opportunity to make a lasting difference to building performance that's better for the environment, the occupier and the investors looking to make their property fit for the future.
This article appears on the Mitsubishi Electric Hub