Wales Building a Better Future


Decarbonising construction – is change the Client’s responsibility?


The environmental efficiency of our buildings and the construction process is increasingly important, with many clients, particularly in the public sector, making this a key criteria for new developments and regeneration.


Jo Rees


The NEC, whose contracts are used widely across the property sector, has introduced the X29 Climate Change Option clause. The


intention is to “tangibly demonstrate carbon reduction initiatives on future builds across the construction sector” and to reduce the impact of emissions throughout the lifecycle of an asset. The clause makes compliance with climate change requirements mandatory, with failure to comply a “defect”. But it is left to clients to determine the scope of their climate change requirements and whether key performance indicators should be included, and this type of contractual approach is very much in its infancy.


Drivers for change Some client change has been introduced by green investment funding for carbon reduction plans to make small incremental changes to existing estates. These contracts are target driven and require an understanding of the status quo and a detailed scope of work, which is measurable. While attractive to the education sector and clients with good estate management, anecdotal evidence suggests that there is work to do to ensure that local supply chains are equipped to undertake this work.


At a recent roundtable discussion held by Blake Morgan, where every party to a construction project was represented, there was broad agreement that a more mandated approach may be required to progress change. A suggestion was made that if the funding for new builds mandated an operation off grid, this would drive the innovation of decarbonisation. There are examples where we can learn from other countries, for example, developments in Swiss towns prescribe a maximum watt usage for the build, so as to drive innovation.


In addition, we need to improve transparency and accountability to enable compliance with climate change requirements to be assessed. Many organisations are already capturing performance data; implementing data sharing platforms to enable the entire supply chain to access this information will be critical.


In the meanwhile, viability concerns, a generally poor understanding of life cycle assessment, and lack of long-term accountability means that currently, construction contracts will not necessarily deliver the environmental benefits sought.


Clients and their funders need to have a long hard look at this, as integrating decarbonisation into corporate governance, and investing in actionable decarbonisation projects, will soon become a given for the Gen Z user.


For legal advice on decarbonisation, contact Blake Morgan’s team of Infrastructure experts, and to join our Developing


Connections forum, sign up here.


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Cardiff Office Prime Rents to Reach New Record Level in 2024 says Knight Frank


workplace strategies, and landlords that can deliver this will reap the benefits of increased rental income as a result.”


The Knight Frank report reveals that Cardiff office take up in 2023 was down 16 per cent on the previous year at 277,222 sq ft. Notably though, the 89 occupier transactions that took place was in line with the five-year annual average.


Hodge House in central Cardiff where the largest leasing transaction of 2023 took place


The prime rent for Grade A office space in Cardiff is set to reach record levels later this year, according to property consultancy Knight Frank.


Its annual UK Cities report forecasts increases from the £25.00 per sq ft level in 2023.


Matt Phillips, head of Knight Frank’s Cardiff office said: “There are deals currently under offer on existing buildings that will increase the prime rent in the first half of the year and we expect prime rents for some new buildings will reach £30.00 per sq ft by year-end.


Matt Phillips, head of Knight Frank’s Cardiff office


“Occupiers are seeking well- located offices with strong ESG ratings and amenities to support post-pandemic


COMMERCIAL PROPERTY MONTHLY 2024


The most active occupier group during the year was the TMT sector, where one fifth of all transactions took place. The largest leasing transaction of the year was the 19,243 sq ft letting to technology firm Veezu at Hodge House in central Cardiff. The business relocated its head office from Newport to Hodge House, which recently underwent a £17m refurbishment to transform the 110,000 sq ft office building.


Grade A availability had reached 414,033 sq ft by the end of 2023, the highest number on record for Cardiff. This represented a 51 per cent increase over 12 months and was 59 per cent above the five-year average.


Matt Phillips said: “The increase is in part due to refurbishment completions along with grey space coming to the market on behalf of existing occupiers with longer lease commitments. Looking ahead, the development pipeline comprises 107,010 sq ft, all of which is speculative. This scheme at 1 John Street, Callaghan Square, is due to complete in 2025.


He added: “Even with the backdrop of macro uncertainty and local ‘issues’, the UK office market is active, although market polarisation is widening. While high-quality space with good amenities will attract occupiers, unrefurbished offices will struggle or be repurposed for alternative uses if outside primary search areas.


“Most leasing activity is currently taking place in the TMT, professional services, and construction & engineering sectors, and this is expected to continue in 2024.


“Cardiff remains under-supplied in the flex market and we expect to see new operators in the next 12 months. As businesses crystalise their approach and future workplace needs, the demand for Cat A+ and fitted solutions is beginning to increase.”


Meanwhile, in the investment market office investment in Cardiff reached £41.4m in 2023, 41 per cent below the 5-year annual average but up 58 per cent from 2022. The largest deal to complete in 2023 was the sale of Airbus Office Campus for £26m to AW Properties.


Property companies accounted for 83 per cent of investment turnover in Cardiff during 2023.


For more details please visit: - www.knightfrank


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