Jangled nerves and clinking glasses
11 June, 2018
Over barbecues and chilled rosé, architects are talking about recession. Not the last one but the next one.
While it may be too early to call, at architect gatherings there’s only one real topic of conversation – will the good times keep on rolling?
Various factors including falling house prices in London and Brexit have made architects nervous and those running large practices with hefty wage bills are particularly concerned.
And the exodus of talent as EU architects leave the UK is not helping things either. It’s not just that EU architects are generally paid less than their UK counterparts, they are often better trained.
In 2008 practices including Foster & Partners and RSHP weathered the downturn because they had commissions spread internationally and were prepared to go where the work was while those who stayed in the UK suffered badly.
Now, practices are concerned that leaving the single market will put a break on expanding their international work and believe Brexit may finally have come home to roost.
The Financial Times has reported a drop in the number of Chinese investors buying property in central London since the Brexit vote – plus there’s a new ingredient which, simply put, we are not the same people as we were in 2008.
A new generation of entrepreneurial companies, The Collective and WeWork to name just two, are changing how we work, shop and even how we live.
The WeWork model – flexible working with yoga and almond milk latte on tap – is now widely copied and has seriously impacted the office market. The number of new office buildings built has fallen 56% since the financial crisis in 2008.
Meanwhile developers are falling over themselves to understand the Millennial mindest. One of the key takeaways is that buildings are becoming less important than the activities that go on inside them.
At a conference this week on the future of East London, Robert Wolstenholme, founder of Trilogy Property, said it is important to “think beyond the building and think about the people and how to bring them together in a creative way”.
With tighter budgets all round, architects fear that building design will be first in the firing line as developers spend money on creating ‘experiences’ and luring culture and entertainment to their sites.
A challenging housing market is not helping either.
Developers with new ideas of how to solve London’s housing crisis are still knocking on architects’ doors but projects that a year ago looked viable, look less so now.
While the build to rent market is booming and those practices who got in early are doing well, rising construction costs, fear of foreign workers leaving London, the Community Infrastructure Levy (CIL), tax crackdowns for buy to let and stamp duty increases are making it challenging for the buy to sell market.
The problems of the retail market are well known but it’s not the lack of investment in bricks- and- mortar shops that’s casting a dark shadow, the entire proposition is now about convenience and community- just look at the recent troubles facing House of Fraser which has just announced it’s pulling the plug on half its sites leaving Acme’s retail development in Chester looking shaky.
Developers well understand that the old model is bust are unsure of what will replace it. On its own this is not enough to tip the UK into another property-led recession but the summer lull is giving architects and their clients pause for thought as they plan for a less certain future.