by Linda Welch
Flexibility has rapidly become the hi-tech developers’ buzzword. Though the theme is now very familiar, property men retain a healthy respect — rather than contempt — for a concept so closely related to successful schemes and healthy profits. Last week’s Online hi-tech buildings conference was no exception, with flexibility not surprisingly emerging as a key issue.
“Design what you think you need for the users and then double the capacity,” was the advice of Phillip Siller, vice-president and counsel of Olympia & York Developments of Canada. Though he was talking about ducting for wiring, he neatly expressed an idea that held good throughout the conference.
Developers of hi-tech property must remember that they are working in an area where technological advances could make their buildings obsolete within a matter of a few years if they are not designed to accommodate substantial change and that the tenants that they are trying to attract will be changing in size and structure as fast as their product.
The importance of flexibility was borne out in recent research into hi-tech occupiers’ requirements carried out by the marketing team of the 1.5m-sq ft Stockley Park, Hillingdon.
Peter Mantle of Jones Lang Wootton (who are joint letting agents at Stockley Park with Grant & Partners and Morgan Grenfell Laurie) told the conference that the research involved interviewing more than 200 hi-tech users. A number of common factors were established:
Lease terms are of primary importance and they must give the occupier the freedom to expand (or contract) with ease; high-technology companies are usually very aware of how they use their space and tend to look for buildings with an easily adaptable configuration; and buildings must be easily subdivided, with heating, lighting and air-conditioning zoned to facilitate alterations.
The latter two factors are matters of design which can be solved on the drawing board. However, long leases have been sacrosanct to institutional investors in the UK for so long that change requires a fundamental shift in thinking. In capitalisation terms, however, there is relatively little difference between a 15-year lease and a 25-year lease, and the shorter term with a break clause at 10 or even five years will make the building more attractive to occupiers, according to Mr Mantle, and if the developer has created a truly flexible building, there should be no problems reletting it if the tenant does choose to break.
Re-fitting expense
Peter Mantle also pointed out that many hi-tech tenants rip out fittings supplied by the developer (usually at a cost of around £8 to £10 per sq ft) and subsequently spend around £25 per sq ft fitting a building out for its own requirements. Mr Mantle feels that this is a significant argument in favour of providing units to a shell and core finish, which is economically efficient from the developers’ point of view and also provides the occupier with total flexibility.
The cost of fitting out a building to standard developers’ specifications should be given to the tenant in cash so that he can have it fitted out as he wants. Reviews would then be carried out on the basis of standard specification. However, this approach can be a success only if contractors can be brought back on to site rapidly for such works.
On the other hand, Jonathan Coote, the chief investment surveyor of Sun Alliance Insurance Group, felt that indicated that developers were not willing to spend enough in providing the right fittings.
Richard Mais, joint managing director of Beacontree Estates, pointed out total flexibility in terms of use is currently difficult to attain within this country’s planning laws, as they “do not allow a total hi-tech building to be used for a single use”. In fact, most hi-tech buildings in the UK have been erected under the class 3 use class. The proposals for changes in the planning use classes are being warmly welcomed by the hi-tech sector.
