How can architects increase the value of space? An AJ roundtable of industry experts, in association with Kinsgpan, discussed providing real value for the end client
What is the real value of space in commercial developments? Recent research commissioned by Kingspan found that capital expenditure to achieve a thinner building envelope leads to large increases in return on investment – up to 4,000 per cent in some cases. Delivering on design and performance is a given for any architect. But how do you go about providing real value for the end client?
When it comes to commercial buildings one approach is to make sure they achieve maximum return on their investment by creating as much lettable space as possible. During MIPIM UK this year, a pan-industry panel of experts met up to discuss the benefits of marginal gains, the real value of space in commercial real estate and what potential there is to maximise future opportunities.
Kicking off the discussion, the client representatives were asked what they look for in an architect and how they deem a project an architectural success. ‘I guess the best architects that we worked with are the ones that listen to us,’ said Andrew Thorp, director of architecture at Waitrose. ‘They listen but they also provide something beyond the brief. What we’re left with is always the most critical thing. It’s not just about building something that looks great on day one, it’s got to look good in five years’ time. If it’s always looked as if it’s been there – it looks great.’
We need assets that are going to stand the test of time and not require heavy maintenance
Phil Birch, sustainable development Manager at Waitrose was quick to concur. ‘I think looking at long-term value is very important,’ he said. ‘It can be quite difficult if you’re looking from just an architectural point of view. Aesthetics and capital costs are always going to be a significant decision-influencer, but we need assets that are going to stand the test of time and not require heavy investment in terms of maintenance and replacement costs. But then also how does one quantify that value from the aesthetic angle but also the operational element as well?’
Turning the question around to the architects, Oliver Bayliss from Buckley Gray Yeoman responded: ‘There’s a quantifiable value which is the amount of office space or commercial space you can achieve on a floorplate, and that’s to do with wall thicknesses, circulation space, the sort of nuts and bolts of stuff that you can put a number against. Then there’s a whole other chapter of where value lies – a mixture of all the sort of hidden elements and the hidden skills I’d like to think a good architect brings to the table – floor-to-ceiling heights, the type of light fitting that you choose. It can add just as much if not more value to a space than purely the area alone.’
Iterating the role of architect as expert, Rory Bergin, a partner at HTA, added: ‘There are also questions about the value to society and the value to us all working in real estate in a major city. I think we also have a role in advising clients about what’s reasonable value and what is the best route for them to steer through the complex maze of permissions and legislation that enables them to get to where they want to get to.’
Yiming Wang from UCL argued that the models used to ascertain value were skewed in favour of the tangible aspects of a project – that the quantitative rather than qualitative aspects of projects remained the focus of developers and clients.
If we look at how much value is created by good design, there’s a lot of potential capital value
‘From a real-estate finance perspective, I think the value of architectural innovation actually has always been underestimated,’ he said, ‘because, especially in the commercial sector, we’re not only talking about the rental unit, but also how much income, how much cash flow we can earn from consumers. If we look at how much value is created by good design of shops, office buildings, commercial space … actually there’s a lot of potential capital value. Not everything can be quantified.’
Some members of the panel felt specification was sometimes overlooked, and that its benefits addressed many of the issue raised during the discussion. Products have intrinsic value, but demand has to exist for a product if it is to be viable, and the benefits of its impact have to be tangible.
‘We were essentially a manufacturing business first of all, so you have to keep that in mind,’ said Richard Bernley, managing director of Kingspan. ‘What we can’t have is an infinite number of products and solutions because it’s not efficient to manufacture all the products. But in finding the most effective way of convincing people to use what brings best value – and that may not be the products that we make, it could be somebody else’s –it’s understanding what value looks like.’
Chris Spicer, associate director at the Sweett group expanded on this. ‘Certainly with Design-and-Build contracting, there is always going to be an element of enabling that freedom of choice and competitive procurement,’ he said. ‘We need to accept that investing more up front will yield greater benefits later on. We could write a performance specification that the thermal performance needs to be Y, and you could buy whatever product meets that specification.
‘Do we go for BREAM Outstanding because it’s a great PR exercise or is it because it delivers a building that offers long-term value? And that’s very much what we’re building into our thinking at the moment: how do we deliver environmentally responsible schemes that are also affordable and offer social benefit?’
In the future, methods that are available to clients and architects to maximise a building’s performance, and closely monitor capital value, are two things Wang thinks will become more closely aligned.
‘If you can link some of the sustainability analysis in the language and terminology that investors are familiar and comfortable with,’ he said, ‘then we can start quantifying the monetary value of health and wellbeing, in carbon and all these other areas which are very important topics; then I think that will go back to that early-stage financial capital appraisal work.’
- Chris Spicer, associate director in the sustainability team, Sweetts Group
- Phil Birch, sustainable development manager, Waitrose
- Rory Bergin, partner, Sustainable Futures, HTA
- Yiming Wang, lecturer, UCL
- Andrew Thorp, manager of architecture, Waitrose
- Richard Bernley, managing director, Kingspan
- Oliver Bayliss, associate director, Buckley Gray Yeoman
- Owen Pritchard, editor, AJ Specification