The age-old development model rests on the bedrock of being able to build back better – and the bigger the better. But this assumption is being undermined by climate change concerns, amplified by COP26 this month.
First, in the shape of tightening energy regulations. Landlords are being pressed to upgrade existing stock, rather than let the block guzzle gas until it’s time to demolish and build bigger. Last week, Landsec budgeted £130m to do just that by 2030.
A change in political atmosphere is evidenced by councils shifting preference from tear-down to the more voter-acceptable option of make do and mend. Westminster City Council is just one authority expressing a preference for environment-friendly refurbishment.
But proclaiming your 100,000 sq ft office block is zero carbon when it is replacing a 60,000 sq ft shoe factory sounds like greenwash, even if technically it is true. Earning an acceptable margin from refurbishment will be tougher than earning what might be called ‘betterment’ income from building bigger. Ready for that?
Even so, building back better – for want of a better slogan – will occupy much of the market. Planet Property – for want of a better catch-all – has embraced sustainability with fervour. The Cadogan Estate and Shaftsbury are the latest to pledge a zero carbon future. For big UK landlords, taking the climate pledge is obligatory.
Riding alongside are the planet-spanning agents. JLL in particular has hitched a good part of its future to providing planet-saving advice to clients. This is a good thing. The planet will only be saved by billions of small changes made by millions of firms.
Thirty years ago, agents were only good for advising architects on what type of air conditioning tenants preferred. Today, real estate advisers are stealing whole washing lines full of green clothes from designers and engineers. Must be exhilarating for them to play the goodie at last. Only one plea: tone down the virtue signalling. Saving-the-planet advice is also aimed at sustaining the bottom line.
Gove is Good
New housing secretary Michael Gove has been making sensible, pragmatic decisions on non-planet-saving issues, training government guns on the real Grenfell target – those who supply the flammable products – and promising salvation for trapped leaseholders.
The planet will only be saved by billions of small changes made by millions of firms
He has shot a warning across the bows of councils reluctant to set housing plans by allowing a bitterly contested site in Warrington for 1,200 homes to go ahead, partly on the basis that there is no local plan. A review of the flaky numbers used to justify the need for 300,000 homes a year is also promised.
There is talk of top-down projects such as the Oxford-Cambridge arc being quietly pigeonholed. ‘Grand Projets’ don’t sit well with ‘levelling up’ apparently. I am told a substantially altered version of Robert Jenrick’s planning bill is now being drafted but will not be published until after the May local elections, emerging, blinking, into the sunshine as the Regeneration and Planning Bill. The ‘R’ word perhaps being a nod toward refurbishment?
Proptech is no prop
Think algorithm-assisted data will give you an edge? Read this from Robert Armstrong in the FT this month: “There are two very basic but evergreen lessons. First, companies that claim to have superior data and better decision algorithms, which will allow them to extract better-than-historical results from any given market, should be greeted with immediate scepticism. This is especially true when the market happens to be going up when those claims are made.
“Second, when companies enter into a business that is structurally different from the one where they have proven success, there is a decent chance they will screw it up. The real estate website business is not the real estate business.”
Be warned. The same may one day be said of planet-saving consultancy. We have to wait until the next downturn to see what ‘core’ competencies are left after the inevitable shake-out.
Peter Bill is a journalist and the author of Planet Property and Broken Homes