Roundtable: Remodeling and refurbishment

As new building projects are in short supply and refurbishment is gaining increasing prominence – Place gathered some of the region's leading property minds for a discussion around remodeling and refurbishment. The roundtable was held at the People's History Museum in Manchester and sponsored by Curtins Consulting and Claremont Group Interiors .

In attendance were:

• Paul Unger, editor, Place North West

• Dave King, director, Shed KM, and panel member, Places Matter! Design Review

• Mark Latham, development manager, Urban Splash

• Martin Ellerby, director, Fresh Start Living

• Roy Stewart, chief executive, Centre for Construction Innovation North West

• Carl Abbott, manager of Salford University's Centre for Research and Innovation

• Steve Burne, managing director of AEW Architects and member of Greater Manchester Chamber's property committee

• Phil Meakin, partner, P3 Property Consultants

• Jon Moister, technical director, Curtins Consulting

• Tim Frankland, director, Claremont Group Interiors

• Gavin King, associate, Sheppard Robson

• Jim Gosling, associate, BDP

Public sector opportunities

The roundtable participants were asked if they saw public spending cuts and the expected disposal of assets by local authorities as a business opportunity to remodel those buildings for commercial uses.

Steve Burne, managing director of AEW Architects, said: "One of the problems I think is that although it makes sense to do that, the councils are just looking very short term. So every department is being told 'you have to find 40% cuts', and they're just panicking and it doesn't give them the facility to be able to plan. We did some work with Manchester, where they were consolidating to a new office in Wythenshawe and that just slipped through before the cuts but they wouldn't do it now [because of cost]. That will free up five or six different offices that they were in before."

Jon Moister, technical director of Curtins, added: "In Rochdale, the council is in 16 different locations there and is moving into one. It makes a lot of sense but politically it's difficult because of the cost outlay and it doesn't sit well against the cuts."

Despite reservations about cost, said Carl Abbott of Salford University, asset disposal is in theory moving up the agenda. He added: "The councils are at a very early stage of understanding their assets and getting the data together for those assets. Once they start looking at the efficiency of the buildings they're in, it hits them in the face. They can build something slightly more expensive that will be a lot cheaper to maintain but it's kind of a theoretical thing that people show at the moment."

The issue is affected by the political context of winning votes, according to Tim Frankland of Claremont. "You're looking at the period of saving costs over 25 to 30 years whereas every politician is looking at the next elections."

It was also suggested that there is a problem of understanding what happens to all the surplus stock after it's been rationalised. Politically, this presents a challenge as there may be buildings that would struggle to let or re-sell in this market.

Mark Latham of Urban Splash commented: "Some of the changes are being kicked around in the system about presumed development opportunity rights for conversion. That might help but a lot of authorities, politically, are not going to want to vaporise their employment land allocations. They want to keep it for employment use. There's no big office occupiers, I imagine, in Rochdale right now queuing up to take over all the office stock."

Offices

A lack of supply for new-build office space in today's market has put added emphasis on the refurbishment market. Jon Moister, technical director at Curtins, said: "There are few new build offices currently under construction in the Greater Manchester area and the larger schemes which are being developed tend to be owner occupier buildings. Curtins is currently working on the new municipal offices for Rochdale Council and whilst this building will provide 200,000 sq ft of grade A, BREEAM 'excellent' space it will not be available to the open market.

"The anticipated requirements by major tenants such as Lloyds Banking Group, Pannone and KPMG may well kick-start the new-build schemes like One St Peter's Square, where Curtins are part of one of three design and build teams shortlisted to tender. However, recent surveys predict that there will be an under-provision of quality new office space by 2013, and when you consider that three quarters of new lettings are for 3,000 sq ft of floor space, it suggests that the refurbishment option may be well placed to meet the market demands in the short to medium term."

Moister added: "There has long been a perception that refurbishment is a compromise against new build, however this is not necessarily true. It is more likely that the lean towards new-build is more to do with nervousness of the anticipated risk and unforeseen associated with refurbishment, and if these can be managed properly then refurbishing becomes an attractive solution.

"If a building is structurally remodelled, then the internal space can be dramatically changed to reflect the requirements of the modern occupier. Curtins' specialism, Ecofurbishment, is based around a unique approach specifically developed to provide a cost effective and practical solution to such projects. Ecofurbishment is the economical remodelling of existing buildings using intelligent structural engineering techniques. Good examples of this are the buildings we have done at Skyways in Speke, where we converted a 1940s aircraft hangar into the headquarters for Littlewoods, Fort Dunlop in Birmingham where we converted a derelict tyre factory into a quality office suite, and Exchange Flags where 1930s buildings were reanimated in Liverpool's business quarter."

Dave King, partner at Shed KM and panel member of Places Matter! Design Review, commented: "I'm interested in these 1960s blocks that are in cities and are not very useful. You can take somewhere like Centre Point in London, which is an icon, but it's half empty. It's not the kind of office space people want to be in. It's another area of redeveloping dereliction in city centres – what's left over from commercial initiatives of the late 1950s, 1960s and 70s? These buildings are there but they're not looked after and they're falling to pieces. If you go into the City of London, where the money is, even now they can afford to take down a 13-storey office block and build different styles of building with huge trading floors. The whole typology of offices has changed and we're left with these things and what to do with them."

Frankland added: "Only the larger corporate occupiers can really afford the big open space, the £25/sq ft to £30/ sq ft space. As they migrate, that leaves a lot of space that people like Bruntwood will take advantage of for £15/sq ft to £20/sq ft space and that's where a lot of smaller companies will want to go to. Bruntwood have cornered that market in making something presentable and useable at that cost."

Residential

The disposal of surplus housing stock, especially tower blocks, can provide developers with the chance to gain good buildings at affordable prices.

Martin Ellerby is director of Fresh Start Living, a Salford-based developer doing just that. He said: "We have been going about two years. We're a product of the recession rather than a victim of it. We saw there was a gap in the market for ordinary, pragmatic housing solutions to affordable housing. Over the past decade or so, during the boom, money was freely available, some developers were getting a bit carried away with schemes. So we've brought a reality check to development and one of the things that has allowed us to do that is tower block refurbishments."

Ellerby said the tower blocks present the chance of a quick turnaround compared to new-build, normally about nine or ten months because the planning process is so much quicker with existing buildings.

He added: "The challenge we have with the residential tower blocks is how we balance the trade-off between kerb-side appeal – which the city centre tends to offer – and the blocks we tend to work with which are well located but are without the kerb-side appeal of the city center."

There are more than 3,000 local authority tower blocks in the UK and many are scheduled for demolition because councils often do not know what else to do with them.

Councils are often not aware there are developers willing to take the blocks on and, said Ellerby, they can turn a half-million pound demolition cost into a capital receipt, bringing in private sector investment and a wider tenure mix to the borough.

Mark Latham, development manager at Urban Splash, is leading the renovation of the massive Park Hill in Sheffield, Europe's largest listed building with 874 apartments. Latham said: "It's interesting because we historically started with the stuff everyone now would see as the easy stuff – the beautiful mill buildings, warehouses in Liverpool, in Ropewalks, which you'd now perceive as easy to sell and market and which have kerb-side appeal. Twenty years ago those places were the most abandoned parts of the city. So what Martin is doing now is really interesting. On an urban city scale and sustainability-wise for the country it's the right thing to be addressing these places, the sort of inner doughnut."

Latham continued: "We've always been trying to look at what's the next abandoned or forgotten housing typology or building typology. The stuff we did with Dave (King of Shed KM) and at Chimney Pot Park in Salford was a classic example of that. The tragedy of replicating that is you've got ownership problems in the way of that, often. What we were able to do at Salford was to get a critical mass of a number of streets so that it becomes affordable; whereas so much terraced stock is in multiple, small private landlord ownership and prevents redevelopment."

Dave King added: "In Liverpool there's a huge amount of terraced housing stock which is derelict and available. But nothing can be done with it now because there's no grant funding, which you do actually need. So we have in Liverpool derelict streets, one after another."

Sustainability and energy performance

The move by occupiers towards more environmentally friendly, energy-efficient space is limited by cost. While it may be good public relations for a firm to say they are in a 'green building', it may even save them significant sums of money in the long-term, the short-term focus on cash-flow will govern their decision over where to locate.

Phil Meakin, partner at surveyors PS Property Consultants believes "occupiers go out with requirements but nobody's tested it really and said 'what is the saving you make with that greener building'?"

There was a consensus that the evidence surrounding the green performance of buildings is very weak and tends to focus on products rather than the ongoing operation of a building.

The biggest and cheapest measure we can implement in the building community to help the environment is to change human behavior, put Roy Stewart of CCI NW. "With schools, you can change the behaviour of children but with offices, how easily can you change the behaviour of middle-aged men? Yes you can do the retrofit bling or whatever, but a lot of it comes down to how we actually use buildings."

Carl Abbott of Salford University added: "You can educate people but I think we need to educate ourselves about how people behave. I don't think we understand sufficiently well how people behave. This is actually the key. Tenants want what they want, not what you want them to want. Unless you understand that, then the business is going to fail. Everybody's the same, the upfront cost is what you concentrate on. If you can spend money on reducing energy or getting a new kitchen, you'll go for the new kitchen. It doesn't pay back but it makes you feel good."

Motivating companies and staff to change is another question. There is not the motivation at board level or on the ground to do it at the moment. Perhaps the market needs to change to drives this kind of behaviour. It was felt that very few organisations have somebody at management or board level looking at the long-term implications of the way they use their buildings. For the most part, working culture in the UK is relatively short term. It's gone from a ten-year plan to a five-year plan and most people are now probably surviving with a plan for the next 12 months. The only people looking longer term are global brands and people with a property portfolio, who have to think about it.

Tim Frankland, director of Claremont, added: "But the larger international businesses do have more of a strategy, whereas the SMEs and national businesses don't. They are purely looking tactically rather than strategically. Ultimately it's down to the energy performance, what you're paying for your bills."

That said, landlords with large portfolios are starting to look at installing their own energy centres to generate energy on site for their entire stock of buildings, which has the advantage then that they can sell energy back to the grid and reduce tenant's bills.

Education

In the education sector there is positive encouragement from the Government to pursue refurbishment in the form of the Free School Initiative, where existing buildings are converted to house new, independently managed schools. More relaxed planning legislation associated with these developments makes them an attractive proposition, along with potential economies when compared to the ambitious nature of the recent BSF programmes.

Jon Moister, technical director of Curtins, added: "Works in the further education sector still remain despite the collapse of the Learning & Skills Council funding. Curtins are involved in both new build and refurbishment projects for Hopwood Hall College in Rochdale, where estates rationalisation is still planned. We are currently on site with the new build technology centre and are looking at various feasibility studies for works to their Rochdale campus.

"In the Higher Education sector we are working on several refurbishment projects for the University of Manchester via the Office of Government Commerce, however the new-build developments by Manchester Metropolitan University at Birley Fields and the masterplan works at the University of Salford show the new-build development is also strong in this sector."

Heritage buildings

Mark Latham, development manager of Urban Splash, updated on progress at the renovation of the genuinely iconic Park Hill estate in Sheffield: "We've completed the enveloping for the first phase, which is about one third of the overall estate. In total the development is 996 flats, 1m sq ft. We've fitted out four show flats and we should be starting fit-outs on the first sub-phase of phase one in early summer. We'll be releasing the show flats soon. It's been a phenomenally long process."

Latham strongly defended English Heritage, the government watchdog that often gets criticised for opposing development. Latham said: "Park Hill's a really interesting example. You might have seen the BBC2 programme about Park Hill. That programme was deeply unfair to English Heritage. In the case of Park Hill, they couldn't have been more pragmatic, more helpful, braver, frankly. It's a Grade 2*-listed building and they've allowed us to take it back to the frame. Imagine doing that to a Queen Anne house, it wouldn't ever happen.

"The reason they were prepared to do what they called 'constructive conservation' was due to a cumulative set of arguments about the need to upgrade and make the building performance work for the 21st century, along with the importance of securing it as a place where people will continue to live, aside from what it looks like. Transforming the appearance was part of securing the long-term historic goal of that place, which was to make people's living conditions better.

"It took a lot of persuading but the dialogue was that we had a shared goal, we want to secure this place long term as a place where people choose to live. Because its heritage was so much about the post-war improvement of housing, that's almost part of the listing, not just the physical fabric."

Others made the point that EH took an interest in certain schemes in years gone by that they are now no longer interested in as they do not have the number of staff to deal with the same case-load. Instead, they are leaving scrutiny to the conservation officers in local authorities.

Opening up the planning process to community groups as part of the localism agenda could cause "ridiculous levels of arguing" and delay the consultation process surrounding heritage assets even further. In this context, planners may be reluctant to give consents as they will fear criticism if they do.