Booms are for anyone – recessions are for winners

Peter Brimelow

In a recession, those in the property industry review their role and explore new ways of adding value in order to position their company for work. Whether it's through offering a service that the competition doesn't, or becoming proactive in bringing opportunities to the table, the industry and everyone in it has to adapt to survive

This is precisely what is happening. Architects, who have an understanding of the commercial development process and the way that retail and commercial areas in cities work, are becoming increasingly proactive in identifying opportunities. They are developing creative angles for their clients so they can kick start development, benefiting the developers and clients that they serve while ensuring their own survival.  

Architects have in fact always had the potential to play an active role in formulating and shaping deals, and enabling projects to come to fruition. The very nature of what they do means that they must create and spot viable business opportunities which can be translated into their architecture - attracting tenants, securing planning consents, managing stakeholders and delivering successful projects.  

They cannot do it alone, however. Having developed an idea, where the creative process really takes off is when the architect combines his expertise with the agents’ knowledge of property ownership, lease structure, sites on the market, and operators looking for new space. Together, they can introduce a developer and deliver the expertise and resource to drive complex projects forward. Successful development is a team process - the strength is in working together.

Developing partnerships with agents works both ways too. Often, agents find development opportunities. Some architectural practices, us included, have already made it clear to those they work with that they are willing to speculate time to look at sites and develop feasibility proposals to test the viability of an idea, and then to produce the plans and visuals that will sell the scheme and secure a tenant. With a possibility of a pre-let, this kind of team work can turn an idea into a viable development opportunity.

Developers should take advantage of the improved team working and the enthusiasm of their consultants.  In the good times, architects and agents appreciate the patronage and loyalty shown by clients, and the benefits of working creatively together. In the difficult times, they know that they must share the risk at the early stages of projects, and welcome the opportunity to apply lateral thinking and creativity to the beginnings of an idea for a site.

Collaboration in action - Change of use
With many sectors effectively on hold, and with it their schemes, there is an opportunity to provide some momentum by reviewing the development sites and seeking planning consent for a different type of project.

A client specialises in student housing for universities and teaching facilities for overseas students, bringing international students to universities to help them grow their business. In London, bed space and the associated cost is at a premium.  Having designed a residential scheme of 150 units, which secured planning and was subsequently put on hold, we realised that the site could easily accommodate teaching facilities and bed spaces for students. We connected the relevant parties and the site now represents a major higher education campus, which will provide 350 bed spaces.

In another case, a site just outside London was originally intended for a residential scheme, which was no longer viable. The site was perfect for a garden centre and had the opportunity for ancillary retail space, so the idea was taken to a retail agent with garden centre expertise. The garden centre element creates a retail development that is acceptable in planning terms and the client once again has a viable proposition.

Private and public sector collaboration
A shopping centre in a medium sized British City requires redevelopment. It accommodates a large indoor market, leased to the local authority who sublet to market stall holders. The market is suffering following the opening of a large value clothing retailer, and would benefit from downsizing, but the council are tied into a long lease. A strategy was needed.  

The solution proposed is to redevelop part of the city adjacent to the primary retail area to create a new market quarter with significant critical retail mass by combining the existing outdoor market, indoor food market and relocating the indoor market from the shopping centre. Through a retail agent, the opportunity has been introduced to a developer who specialises in markets, and which will carry out the market quarter development, manage the facility and let the market stalls. The space in the shopping centre will then be released allowing it to be redeveloped as prime retail space. Through this process, we have positioned ourselves for two major development projects.

Joining forces
An umbrella organisation has three separate charitable trusts, which own various buildings in the same city block in London. Each charity was looking to refurbish its property independently, but the combined value of the portfolio would be significantly enhanced if the properties were redeveloped in a coordinated manner. Bigger and better retail units at ground floor could be provided, the number of vertical circulation cores reduced, and high value more desirable commercial space at the upper levels created. The combined portfolio also offered a greater opportunity for residential development because, by linking the properties, it was possible to solve means of escape issues.  

The trusts are not commercial developers, and did not have the vision or the skills to deliver a coordinated development strategy. We discussed our ideas with a central London agent, and suggested taking it to a developer with a track record for this type of complex project. We have introduced the parties, and hope to be part of an exciting major development in a prime London location.

Lateral thinking
A pension fund owns a city block in the centre of a major British city - the ground floor of the block is retail use, and there are offices above. A European client in the apart-hotel sector is actively seeking sites in major British cities. The planning authority is keen to see a significant landmark building on part of the site, but development is impossible because of the commercial value of the ground floor retail units.  

Through working with the asset management surveyors, a window of opportunity due to the expiry of one of the retail leases was discovered. This would provide the opportunity to erect a new structural frame within the retail unit to support the development of a five-storey, 140-bed apart-hotel above. For the fund, this creates a new development opportunity; for the hotel operator, a prime site in the centre of the city is made available; and a new project is created.

A positive recession impact
These examples show the positive impact of creative thinking. If more and more architects and agents take a proactive commercial approach and seek out opportunities, and if the upshot of greater competition as the recession really bites is more creativity and a keener instinct for a good deal, then we will together be able to keep projects moving and maintain a degree of development momentum, which can only be good news.

Peter Brimelow, director at Brimelow McSweeney Architects