|Phoenix Community Housing HQ|
Most commercial developments are usually instigated by a Property Development company. Their primary objective is to secure a consent for their proposals and then construct and let the building as quickly as possible. They will usually then sell the completed development to a property fund who will derive income for the period of the lease and also benefit from the increase in the value of the land over the period that they own the asset.
The issue with this arrangement is that the original Developer does not benefit from any lifecycle improvements, like energy efficiency measures, which could be incorporated into the scheme at design stage. This tends to result in buildings that satisfy the minimum criteria demanded by Planning Authorities and Building Control Departments, but provides little or no incentive to achieve higher levels of performance. Also, if the development is speculative, with no identified end user then there is a natural tendency to adopt generic solutions that will accommodate a range of different occupiers but which may not provide the ideal fit for any organisation.
To help identify the parameters that the proposed building should satisfy Developers will seek advice from Letting Agents who advise on what the market currently demands and the rent that they can anticipate that the market will pay. Their advice is based on a deep understanding of properties that are available and the rents that they have secured. This market intelligence is historic and while it is adjusted to take account of underlying trends in the economy it is always based on historic examples.
|Romero House CAFOD|
The final party to have their influence are Landlords who manage the output of the development process. Yet again they are advised by Agents who as we know are not willing to place a premium on sustainable building design. The other issue that frustrates investment in the existing building stock is the effect of supply and demand in the UK property sector. Our economy is heavily dependant on property as an investment asset class and in general its value over the medium to long term has steadily increased. The combination of an undersupply of new stock and the inertia caused by steadily increasing property values, results in there being little incentive to make the significant investment required to improve the performance of existing buildings. This is a major problem as a large percentage of our building stock is now not fit for purpose in terms of its energy performance and the cost of renovation will be dramatic. To make the task even more difficult, making significant improvements to the energy performance of existing buildings requires the tenants to move out, but since there is already an undersupply there is nowhere for all the tenants to go!
So what is the alternative? Well, for a number of organisations who want a high performing, sustainable workplace they are choosing to circumvent all of these disconnections and develop their own buildings. This approach allows them to design bespoke solutions that fit their specific needs and which will perform to the highest standards of social, economic and environmental sustainability. A significant advantage of this approach is that it limits the number of parties who need to make a profit from the development process. These savings can be reinvested to fund the performance enhancements that they demand. I guess if the market cannot supply what you demand then why not cut out the middle men and make it yourself?