44 DEBATE
Neil Watson
Tracy Clavell-Bate
Jamie Grimshaw
You’ve got to stick with it, be patient and work through it
Tom Hargreaves Neil Higson
Karen Hirst Continued from page 43
The biggest issue I see is delay through lack of resource, lack of staff and lack of experience in the local authority planning service. Again that is not a criticism, it is a fact. I’ve been doing this role for 30 years and I can see how things have deteriorated now to a point where it’s become an absolute crisis. The planning system is broken.
NW: If you want the development industry to be serviced properly, and we desperately want to do that, you’ve got to resource it properly. And we’ve cut too far in some of the areas to be able to reasonably do that.
TH: The build cost side is a challenge. We’ve had big spikes but we’ve seen materials stabilise in the past couple of years. What is going to happen though, and it falls back to recruitment and retention, is that labour costs are going to be on an upward trajectory.
I’ve got clients who’ve said, ‘I’m going to wait on development,’ but costs aren’t going to change, this is the reality now, this is what we’ve got to work with.
There is also a lack of contractor availability. We got jobs where contractors have gone into administration over the past 12 months. So, we’re seeing that contractors are being very selective about the jobs they’re picking up.
Ian Liddle
JG: I’ve had clients with development funding agreed by lenders that have put the projects off for 12 months. One of the reasons is the valuations they have had on these sites previously. They are pretty scared what the figure is going to be if they get them valued now.
NH: Over the past two years there have been 14 interest rate rises. If you’ve got a development that’s coming through in that time, if it’s been delayed because of planning or rising build costs or lack of labour, development finance is going up and rents have cooled, exit yields have softened because the interest rates have risen.
So the exit values that you’re looking to get may not necessarily be there. You have then got to go back and tweak the terms of a lease, potentially with a tenant that you’ve got in situ.
Trends also affect development, such as the beds versus sheds fight that’s been going on for land acquisitions over the past couple of years.
We have seen industrial land value for prime sites in the North West rising up to £2m an acre. Industrial developers for the first time have been able to outbid residential developers. You could argue that has got in the way of residential development.
And one thing we’ve not really touched on is the energy crisis and ESG and the investor demand now for energy efficient properties and net carbon agendas.
Paul Walton
The trend of working from home has meant new build office developments have almost been non-existent since the global pandemic.
A glut of office investment sales are hitting the market because owners and landlords know they have to get them to a certain energy efficient standard by 2030. Refurbishment costs are rising because material and labour have risen but rents haven’t because there isn’t the demand.
I fear for the landlords who haven’t got the capital to see through those refurbishment projects, and the only way is change of use to residential.
JG: I sometimes wonder from a residential point of view, are we actually trying to build the right types of homes that people want to live in these days? Are the new houses we’re building going to cater for a modern workforce that needs to work from home?
KH: Although there is flexibility in working from home, some people don’t want to and it is how we create that flexible space for them and also how we put something back into town centres. We’re working at the moment to repurpose a building in Preston to create space for that flexible working
Business is about people, we need to interact and it can’t just all be on Teams or working at home. So you do need a mix there.
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