The London property developer Telford Homes has seen its profits more than double in the latest sign of surging demand for bricks and mortar in the capital.
Telford Homes is the latest homebuilder to benefit from the mismatch between demand and supply in London, with Wednesday's announcement of bumper profits following spectacular results from Barratt, Bovis and Persimmon earlier in the year.
Continue reading...Leaked documents reveal a crisis in the £15bn Crossrail project, Europe's largest construction site, with industrial relations close to collapse and workers too scared to report injuries for fear of being sacked. Crossrail's managers are accused of photographing or videoing contractors' staff who may be in danger and emailing it to others "with unmasked glee".
The culture at the site of the east-west rail link is "almost entirely counterproductive" to delivering the project safely, on time and on budget, according to a damning internal analysis seen by the Observer. It adds that injured workers are "afraid to report due to the likelihood of being laid off".
Continue reading...Trade unions and human rights campaigners have criticised the failure of the United Arab Emirates to address the exploitation and mistreatment of migrant workers building a flagship complex of five-star resorts and museums.
The International Trade Union Confederation, Human Rights Watch and campaign group Gulf Labor expressed disappointment after the second annual audit of conditions on Abu Dhabi's Saadiyat Island, where a new Louvre and the world's largest Guggenheim museum are being built.
Continue reading...Recessions don't usually create distinctive new spaces. The "new" capital skyline now under construction is mostly made up of buildings shelved during the first phase of the Great Recession, and at this rate London as it "should" have been in 2010 won't be finished for some years yet something even more true of the cancelled skyscrapers of Leeds or Manchester.
Yet there is one obvious offspring of the collapse of the old model: the pop-up. The japery of the term oh, look, what used to be a wasteland has now got an organic hot dog company on it! makes clear the sort of thing we're dealing with, part of the mental regression of a generation elsewhere bent on reviving cupcakes. Pop-ups are fun! A railway yard with boutique shops! A "shopping village" on a council estate! An arthouse cinema in an abandoned petrol station! A burger bar in an Asian women's advice centre! (The last of these, recently opened in Hackney as "The Advisory", is surely one of the most offensive: the decay of social provision given a fun, ironic spin.)
Continue reading...Britain's biggest trade union is locked in a campaign with the bosses of the largest engineering project in Europe over claims that workers have been blacklisted for raising health and safety concerns. When I heard from the Unite union about the situation faced by Frank Morris, an electrician who says he was sacked by Crossrail for trade union activity, it reminded me of the time I was thrown in jail, and the suffering my comrades had to endure, for being prepared to stand up to our bosses.
Believe it or not, acting was never my career choice. I got into the entertainment game because I was a victim of blacklisting. In the end I got lucky, but thousands of workers from the construction industry had their lives and the lives of their families destroyed as a result of this murky practice.
Continue reading...Official figures showing falling wages are masking booming pay deals for white-collar construction employees and other professional jobs that will spread to other parts of the economy, the boss of one of Britain's biggest recruiters has said.
Construction firms are paying inflation-busting salary increases to architects and other professional staff because of competition for their services, said Alistair Cox, the chief executive of Hays.
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My best friend, Beryl Foote, who has died after a stroke, aged 67, was probably the first woman quantity surveyor in the British building industry. Many images of Beryl come to mind. Almost invisible behind vast pads in hockey goal while still wearing her glasses. With hard hat and steely glare in place to face down the toughest sub-contractor on the biggest construction site. Climbing effortlessly through steep bluebell woods pointing out every tiny plant and naming every bird's song.
After shaky grades stopped her studying mathematics at Reading University, she dropped out of an electrical engineering degree at Warwick to become a pupil quantity surveyor in 1966 to John Laing. Thus began nearly 50 years in what she called "a bastion of male supremacy", working all over the south of England on both big and small commercial and domestic sites, transferring from the John Laing Group to George Wimpey. She was seen as a role model, was still working when she died and contributed to a case study of women in industry. She was gratified when the occasional woman began to appear on site, but lamented that they were so few.
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This year there were 4.6m people who were self-employed in their main job, with the rises over the past few years having a big effect on the overall employment numbers
About 15% of those working in the UK in 2014 are self-employed - the highest proportion in the four decades that data has been collected on the subject.
As well as these 4.6m people, there were also an extra 356,000 who had a second job in which they were self-employed according to a release by the Office for National Statistics (ONS).
Continue reading...British construction firm Carillion has raised for the third time its merger proposal for engineering company Balfour Beatty, with new terms that value its rival at £2.1bn.
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Just like the apocryphal shrinking Pizza Express pizza, British houses have been getting smaller.
The average home typically covered 1,647 sq ft and boasted four bedrooms in the 1920s, according to analysis by the Royal Institution of British Architects, but today's versions have three bedrooms and are 925 sq ft.
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Large industrial (50,000 sq ft plus) take-up during Q2 2014 dipped by 19% on the previous quarter, but increasing development activity is beginning to address the market’s supply issues, according to Gerald Eve’s latest Prime Logistics bulletin.
Total take-up stood at 8.4 million sq ft, compared to 9.8 million sq ft in Q1, a figure that is just below the five-year quarterly average, but above-trend on a rolling four-quarter average. The largest individual deal of the quarter – indeed, one of the largest of the past ten years – was Primark taking 1.06 million sq ft at Islip in the Southern East Midlands, a letting that not only underpinned Q2’s take-up, but also demonstrates the continuing demand in the market, albeit from a retailer with no plans to sell online.
Expansionary activity has been key to demand so far this year, and with companies such as JCB, Asda and MySale all intending to implement expansion plans, this is expected to continue in the short- to-medium-term. In particular it is in the online retail sector, following on from The Hut Group’s acquisition of nearly 800,000 sq ft across two buildings in Warrington in Q2 that will be one of the main drivers of expansionary demand.
Supply & development
There continues to be a lack of space, particularly high-quality stock, and the overall availability rate during the quarter ticked down to 9.7%, the lowest ever recorded by Prime Logistics. In turn, development activity has been increasing steadily for the past year and will soon begin to address the market’s supply issues; as such, availability has arguably reached its nadir for this property cycle and there will be gradual increases over the medium-term.
With 13 million sq ft under construction due to be delivered this year or next, development is at its highest level since Q2 2008, with speculative also increasing, to just less than 2.5 million sq ft currently under construction. A total of 4.7 million sq ft of space started on site during Q2 – the largest since the end of 2007 – of which 1.8 million sq ft was speculative and 30% was in the London East region. It should be said, however, that speculative development is still a long way short of the totals under construction during 2007.
Steve Sharman of Gerald Eve’s research team said: “Although take-up dropped in Q2, on a rolling annual basis, demand is above long term averages. We expect take-up to improve further in the second half of the year, with continued expansionary demand from major occupiers, especially in the retail and internet retail sectors, and we can look to the development market to see the optimism that is prevailing at the moment.
“New peaks of development, both pre-let and speculative, are a function of both occupier demand and constrained availability, and we expect both factors to continue into the medium-term. We have not as yet seen occupational demand significantly outperform long-run averages though, and continue to wait for the positive impact of a resurgent economy to be converted into significantly increased volumes of take-up.
Richard Ludlow, Head of Gerald Eve’s Logistics Team said: “Availability is at very low levels, and development activity will slowly add to supply volumes over the next few years, but as things stand the lack of suitably high-quality space, crucially in the right regions, remains a significant constraint on the market. Current development activity will eventually increase occupier choice, but demand continues to outstrip supply and this does not dampen our view of continued positive rental growth.”
Investment
The amount of capital targeting the investment market continued to increase during Q2, with capital-raisings and new fund creations contributing to the seemingly ever-growing wall of money. With low levels of supply, development still weak by historic standards and occupational demand strong and growing, it is perhaps not difficult to understand the attraction of the sector.
Prime yields continue to compress on best-in-class stock, as evidenced by L&G’s £114m forward-funding of Waitrose’s Magna Park warehouse; which at a net initial yield of 4.64% set a record low yield for the current cycle. The increased capital targeting the sector is being channelled into a limited amount of prime stock and yield compression at the top of the market is by and large being driven by one or two of the more aggressive bidders.
Given these conditions, new money allocated to the sector is likely to be aimed towards development activity and higher-yielding assets. IPD is already reporting superior quarterly total returns for higher-yielding assets compared to lower-yielding – the first time this has happened since Q2 2010 – and we expect this trend to continue.
George Underwood, Investment Partner at Gerald Eve, adds: “The weight of money for prime logistics stock increased further during Q2 and continues to significantly outstrip supply. This ongoing supply / demand imbalance is resulting in new benchmarks being set quarter-on-quarter and inevitably the heat at the top of the market is pushing greater numbers of investors to consider alternatives such as secondary and development opportunities.
“As such, we are already witnessing prime-secondary yield convergence and prime land values are quickly returning to their pre-recession levels.”
Richard Ludlow continues: “So far, the speculative development activity in the market has been largely undertaken by self-financed companies and has been very targeted and selective in terms of location. As more capital is channelled into the development market, we will see more speculative schemes and perhaps more people considering development in less core locations given the very constrained land market.
“Notwithstanding this, rising land values and increasing build costs are rapidly off-setting the recent inward yield movement and therefore sustained rental growth is likely to be needed to justify more widespread speculative development.”
First produced in 2006 (analysing the 2005 market), Gerald Eve’s Prime Logistics bulletin focuses solely on industrial warehouse properties of 50,000 sq ft or more in size.
Gerald Eve has strengthened its building consultancy team with the recruitment of two new members of staff to its West End office.
Robert Davis arrives as an associate, having formerly worked at Faithful+Gould and prior to that at Atkins. Robert has a civil engineering background and has led on projects including banking headquarters, school builds / refurbishments and mixed-use developments and with clients including Royal Mail. His new role will include projects in the hotel sector and listed building refurbishment.
In addition, Nichola Harper is joining Gerald Eve as a project manager. Nichola was previously with Mouchel and has worked on a range of projects from a theatre refurbishment to fit-out and new construction. Early priorities for Nichola in her new role will include assisting on the fit out of Pernod Ricard’s new headquarters in Chiswick Park and refurbishment of the Girlguiding headquarters in central London.
Richard Fiddes, partner and head of Gerald Eve’s Building Consultancy team, said: “These new arrivals demonstrate Gerald Eve’s ambitions and represent a further strengthening of our already first-rate Building Consultancy team. Both Robert and Nichola have superb experience within the project management sphere and their recruitment will allow Gerald Eve to build further synergies with its strong planning, development and agency teams.”
Robert and Nichola can be reached via their respective email addresses (rdavis@geraldeve.com, nharper@geraldeve.com) or at the firm’s West End office:
72 Welbeck Street, London, W1G 0AY
Tel: +44 (0) 207 493 3338
