Industry expert CBRE has warned commercial property investors of the financial risks they might be experiencing due to increased building inefficiency and slow implementation of sustainable practices and digitisation strategies across portfolios. In a recent publication, it revealed that while positive strides have been made, property managers are moving too
The latest market analysis by Revolution Brokers suggests that the total level of investment into the British commercial real estate sector is set to cool in 2022, having enjoyed a 40% year on year increase between 2020 and 2021. Last year, just shy of £50bn was invested into the commercial
Building a commercial property cannot be approached in the same manner as a residential one. There are different considerations for both types of construction. Knowing the things to think about when constructing a commercial property is essential for a successful project. With the following information, you will know what you
BDC 319 : Aug 2024
Industry expert CBRE has warned commercial property investors of the financial risks they might be experiencing due to increased building inefficiency and slow implementation of sustainable practices and digitisation strategies across portfolios. In a recent publication, it revealed that while positive strides have been made, property managers are moving too slowly to adopt greener practices. Despite evidence showing green strategies have significant commercial benefits, such as driving higher rents and occupant retention, the industry seems to have trouble developing a better portfolio sustainability. With this in mind, Cillian Casey, Regional Vice-President EMEA at CIM, is calling for decisive action to improve portfolio sustainability. “The fact that two separate reports, published a year apart and to different regions, have come to the same conclusion about sustainability’s appeal to tenants clearly sends a strong message that decisive action is needed. Commercial property investors and managers need to accelerate the adoption of greener practices and equipment, especially given the property sector’s vital role in achieving net zero by 2050,” he said. “Promptly ensuring operational efficiency across portfolios will be key to immediate emissions reduction, with data analytics technology set to play a pivotal role in this, especially as energy demand continues to grow. However, untangling the sheer volume of data to determine priority actions remains a major challenge for facilities managers given the overstretched nature of many facilities and operational teams.” With property operations accounting for 28% of global carbon operations and the fact that 80% of 2050’s buildings have already been built, the need for immediate steps is crucial. According to Mr Casey, optimising operations with data offers a more financially prudent route than alternatives such as carbon offsetting, given predictions offsetting prices will rise exponentially in the near future. “The current external cost of carbon offset purchasing undoubtedly has an appeal for building owners and investors, but priority should be given to driving everyday efficiencies and optimisations in the way buildings are run. Organisations may leave themselves in a precarious position as costs rise, and by not prioritising or considering alternative options, they could be vulnerable to an ever-worsening financial situation that could have been avoided. “By digitising operations across portfolios through the use of data-driven detection and diagnostics software such as CIM’s PEAK platform, stakeholders can take immediate steps toward more efficient and sustainable building performance. As this latest CBRE report shows, greener buildings are very attractive to prospective tenants, and therefore command higher rental yields. By embracing change now, commercial property owners and managers can create immediate additional value for businesses while emissions are lowered,” Cillian concluded. Building, Design and Construction Magazine | The Choice of Industry Professionals
The latest market analysis by Revolution Brokers suggests that the total level of investment into the British commercial real estate sector is set to cool in 2022, having enjoyed a 40% year on year increase between 2020 and 2021. Last year, just shy of £50bn was invested into the commercial sector, with the revival of a pandemic-stricken London market driving this activity with £21.2bn worth of investment alone. This equated to a 40% increase in commercial real estate investment when compared to 2020, with an average of £4.162bn invested every month. As of July this year, £22.2bn has already been invested into the British commercial property sector, an average monthly total of £3.172bn. Based on this rate of investment, Revolution Brokers estimates that total commercial real estate investment should stand at almost £38.1bn by the end of the year. While this is higher than the £35.7bn invested in 2020, it would mark a year on year decline of -24% versus the £50bn invested in 2021. But what’s behind this annual decline in investor appetite for commercial property? It would seem an oversaturation of stock available on the market may be to blame. Between 2019 and 2020, the level of commercial real estate listed for sale across Britain fell by -26%, with this heightened demand also pushing up the average asking price of commercial plots by 6%. This trend continued between 2020 and 2021, with available stock falling by a further 14% year on year, with the average asking price this time climbing by a notable 34%. However, the level of stock available on the market in 2022 has actually climbed by 7% versus last year, with this additional supply also causing the average asking price to drop by -17% year on year. Founding Director of Revolution Brokers, Almas Uddin, commented: “While the residential property sector has boomed during the pandemic, the commercial landscape has been far more complicated, with Covid restrictions hitting the hospitality and office sectors particularly hard. Despite this, the commercial sector enjoyed a notable level of investment in 2021, as many anticipated the impending uplift that work and leisure spaces enjoyed following a return to normality. This market activity has remained robust so far in 2022 which is a reassuring sign, however, we estimate that it will sit below the benchmark set last year. This isn’t unusual following a period of particularly high investment and an influx of stock to the market has also reduced the asking prices of these commercial plots. Of course, this does present a good opportunity for the savvy investor to strike while the price is right and bolster their commercial portfolio for a better price than they would have been able to a year ago.” Data Tables Full data tables available online here.
Building a commercial property cannot be approached in the same manner as a residential one. There are different considerations for both types of construction. Knowing the things to think about when constructing a commercial property is essential for a successful project. With the following information, you will know what you need to consider when taking on a commercial property building project. Why Are Commercial Buildings Different? When it comes to the differences in residential or commercial buildings, usage is straightforward. Obviously, a residential building is a housing building, such as an apartment or single-family home. A commercial building is for business purposes, such as an office building or a retail center. Sherman Pole Buildings recommends individuals fully understand the constraints involved in constructing a commercial building. There are also different permit requirements for the two types. From parking lots to elevators, there is are many requirement codes and permits that must be met or obtained. 4 Things You Need to Think About When Building a Commercial Property There are a few things you should consider before beginning a commercial property building project. Careful consideration will help you to plan accordingly so mistakes can be avoided. 1. Consider the building type and proper location. Each type of commercial building is going to have its own unique set of needs. Properly considering the building type and placing it in the proper location will be beneficial for helping you avoid problems with permits, codes, and construction. 2. There are zoning laws that have been put in place to ensure commercial buildings are put in exact zones and built to exacting specifications. Making sure you have all the right permits and are building according to commercial zoning laws is essential. 3. Cost is a big factor when planning a commercial building project. Consider your budget and properly plan for the costs to avoid unwanted surprises. You do not want to be in the middle of your building project and find you are low on financial resources. Ensure loans are approved before starting excavation of the building site. 4. Choosing the right contractor is a big decision when it comes to a commercial building project. The right professional should be highly skilled and attentive to detail. The best team of professionals working on your project will help to ensure issues can be avoided. Plan for Problems No commercial building project is complete without some level of irritation. Problems are likely to arise at some point in the course of planning or construction. Being prepared for issues like weather disturbances and permit problems will help you to avoid frustration. Do not be afraid to ask for professional help if you feel you are getting too stressed. Conclusion A commercial building project is a big undertaking that requires careful planning and a team of professionals. Getting the right permits and having an ample budget in place is beneficial. A lot of the stress involved in building a commercial building can be avoided with proper planning and consideration. Make sure you do not rush the planning process because it will be one of the most important aspects of building your new building project. Rushing the process will lead to improper steps being taken that result in problems that can become costly. When in doubt, always rely on the expertise of commercial building professionals to ensure the work is carried out to exacting standards.
