Construction companies need to unlock the huge opportunities in remodelling UK buildings by taking new ideas and financial models to the market, a leading industry analyst and commentator told delegates at the CIOB annual conference in Leeds this week.
Brian Green said that significant changes in working and leisure meant that many buildings were no longer fit for purpose. More home working, hot desking, internet shopping and home entertainment had affected the way we used buildings and the space needed, he said.
Green cited both the government and Tesco as two big clients and users of buildings that were changing what they did.
“The government is trying to get down from using 13 sq m per person to 10 sq m per person and even 8 sq m for new buildings. Tesco recently announced it wants to become a multi-channel retailer and is talking about refreshing, repurposing and remodelling, not building new stores.” Green also pointed to half-empty high streets as an example of how buildings needed to change.
He added: “The building stock is worth £1.8 trillion for non-domestic and £2.2 trillion for domestic. This gives an idea of the scale and huge opportunity there could be in repurposing buildings to rematch them to their purposes.” So the message from me is: don’t expect to be doing the same kind of work – but the challenge is to translate that need into demand and the construction industry needs to find ways of doing that.”
“It’s essential industry finds ways of driving private investment – and also look to other parts of the world where there are faster growing construction opportunities.”
Noble Francis, Construction Products Association
His message to be more proactive in kick-starting work came as two leading economists said that the economy had turned a corner, but that the sector can only expect sluggish growth.
Noble Francis, economist at the Construction Products Association, said that the industry could expect to see output fall by 2% this year, following a fall of 8% last year. But that would still equate to £96bn. Echoing Green’s remarks he said: “It’s essential industry finds ways of driving private investment – and also look to other parts of the world where there are faster growing construction opportunities.”
Francis said that the CPA anticipated growth of 2% next year and 4% the following year. Growth would come from infrastructure and housing, where next year 10,000 more units are expected to be built, he said.
Francis said he did not expect the Green Deal to contribute to the anticipated growth in the repair and maintenance sector, what growth there would be in RMI would come from increased property transactions. “The Green Deal could have an impact in the public sector, but that’s probably balanced out by cutbacks in spending.
“We expect rail to grow – and don’t forget that includes new stations and buildings, not just tracks. I suspect the chancellor will announce new schemes in the comprehensive spending review, but this will probably be re-announcements.”
Francis’s caution was underlined by HSBC’s chief economist, Mark Berrisford-Smith, who said: “We’ve finally turned a corner – but we are five years away from normal growth levels. Construction is going to be pivotal to driving that growth.
“The next five years we will see slow healing in western economies, but we’ll look back in 2018 and say it’s been a sorry decade. In the last five years wages have fallen by 8% and consumers have no confidence to spend.”
Berrisford-Smith said that meaningful growth would only come from increased consumer confidence and spending, and to do that the government had to stop “obsessing about austerity and inflation, and focus on growth. You can see they’ve started to tone it down,” he said.
