Gleeds’ Richard Steer casts an eye over the global and domestic trends that will affect the sector over the coming year
At this time of the year I usually offer up my musings on what our industry may face over the next 12 months and how we might respond. Revisiting the predictions made this time last year it has to be said that even Nostradamus might have had trouble foreseeing the disaster that was covid-19. Who can recall a Christmas with bubbles replacing baubles and tiers instead of tinsel?
Now that 2020 is thankfully behind us, the question we must ponder is: what will face those operating in the built environment as we metaphorically dig ourselves out of the wreckage, dust ourselves off and look to the future?
Much depends on the speed of delivery and efficacy of a vaccine of course but, on the assumption that we will soon see mass inoculation, there is a veritable alphabet soup of economic forecasting options available. From a quick V-shaped recovery, to a more gradual U upswing emergence, or possibly even a W up and down pattern…
At the moment borrowing costs are low and the UK property sector therefore represents good value
At the moment borrowing costs are low and the UK property sector therefore represents good value. It has been hard hit during the pandemic, no doubt, but it will return.
For instance, according to UBS bank chairman Axel Weber, regardless of Brexit, he says the financial centre of Europe will always remain in the UK, while Frankfurt and Paris are still squabbling. So, while we may have seen Canary Wharf and other sites empty of people during lockdown, many will return during 2021.
Undoubtedly the London office market has taken a big hit and the last London office crane survey from Deloitte showed just 2.6 million ft2 began in the period between April and September – a fall of 50% on the previous six months. However, I would argue that these have been unprecedented times which have provoked a unique response from the market and, of course, London is not the whole UK property sector.
One thing the pandemic has demonstrated is the importance of strong, reliable IT networks. It is now recognised as the oxygen that feeds business.
I note that the TMT sector – technology, media and telecoms – accounted for 44% of all new pre-lets between April and September. Financial services, which over the past decade has been reducing the amount of office space it takes up, accounted for 20% of new pre-lets during the same period in the capital.
While the enthusiasm for home working will influence some long-term changes in workplace occupation, we are not witnessing the end of the commute or the office. As the novelty of working in pyjamas and fighting with the cat for space on the sofa wears off, people are beginning to miss the sense of community that sharing a workspace with colleagues offers.
A shift toward blended working had been emerging across the world before this and, although its adoption has certainly accelerated, our clients do not wish to lose office space; rather, repurpose what they already own so that networking, face-to-face mentorship and human interaction can function post vaccine.
The resolution of Brexit, the recalibration of the US political system and the focus on climate change will all be driving forces in the year ahead. The pandemic gave us all thinking time and much of it has focused on green issues as the globe was forced to press the pause button for the first time in history.
We may yet “solve” the problem of covid-19 but there is no vaccine for the destruction of the planet and eventually all businesses are going to need to treat the carbon footprint of their organisation with the same reverence they show to their profit and loss accounts. This will not come overnight, but how we build and what we use to construct will soon be as important to our clients as how much a project costs and how quickly it is completed.
I hope that in 2021 we are going to see more than just lip service paid to the diversity and inclusion agenda, too. This is a huge and all-embracing topic which was rightly brought into focus by events in the United States in 2020. As one of the largest industrial sectors in the UK we all have a big job ahead of us ensuring that our workforce mirrors the society we seek to serve and for whom we wish to build.
Finally, although a huge amount went wrong in 2020, one thing of which we should all be proud as an industry is the manner in which contractor, consultant, designer and all associated trades stepped up to deliver on behalf of the health service. The essential role of MMC and the growth of modular construction, the sense of cooperation, and the ability to harness new technologies will carry forward into 2021.
It is not appropriate in all settings, granted, but I argue that once you have saved a client a substantive amount of time and money by using MMC, they will not want to return to traditional construction techniques. That is one prediction that I am confident of making.
Richard Steer is chairman of Gleeds Worldwide