Savills’ World Research spotlight on Office Refurbishments in UK Regional Cities Summer 2017 reveals that rising construction costs, along with build cost inflation, is causing developers to switch their attention to refurbishments.
Refitting, often a key element of refurbishment, has also become a key component of many of today’s office upgrade. Formica Group, aware that a war on talent is feeding office design, is increasingly seeing the delivery of creative internal fit-outs that aim to inspire staff and entice millennials. The addition of attractive reception areas and the installation of gyms and bars being prime examples of the extra dimension being added to offices to secure top tier talent.
Research indicates that over the next three years, 38% of the total speculative office space in the UK will be delivered in the form of refurbishments. As a result, the average rent of UK offices will rise. Savills believes we are now at the stage in the cycle where landlords have an opportunity to refurbish secondary stock to secure rental uplift.
Phil Wise, European Marketing Director at Formica Group, comments: “Attitudes to refurbishment are changing with landlords and facility managers viewing the process, when executed correctly, as being on par with the build of new stock.
“The material properties of the interior and exterior surfacing specified for office projects is integral in terms of ensuring functionality and aesthetic. Office builds need to look good to set the right tone for occupiers and clients alike. At the same time, materials need be durable, hygienic and low maintenance to ensure value for money and for the investment in the refurbishment to be an attractive proposition for landlords.”
Just as the life cycle of a building deteriorates over time so too does office aesthetic, often at a faster rate. Manufacturers that offer easy to install surfaces with substantial décor options facilitate the freedom for offices to change and adapt their look to support increased productivity and comfort.
Smart surfaces with a versatility of application that include properties such as anti-fingerprint and thermal healing, thereby permitting the revival of burnished surfaces, are also being increasingly specified for their aesthetic durability.
Over the last five years the UK refurbishment market has grown. In 2016, refurbishments accounted for 25% of Manchester’s Grade A take-up and is expected to continue growing over the next year. With many cities expanding, fringe locations which were once undesirable are also experiencing significant refurbishment activity, Birmingham’s inner ring being a prime example. Furthermore, in Bristol refurbished rental growth has exceeded new build rental growth.
Increasingly landlords are refurbishing secondary space to attract and retain tenants. With UK regions at their lowest level of Grade A availability on record, it is understandable why investment is moving away from new builds to the lower relative risk of refurbishment projects. Since refurbishment projects also present an opportunity to refit an office to further appeal to occupants, the benefits of versatile surfacing that offers the freedom of adaptive design is an attractive proposition.