American developer IDI hopes that competitive construction costs and co-operation with EC companies will ease its entry into the single market. Denis Hall reports.
IDI Group Europe’s motto “God is in the details” should perhaps read “Profit is in the details”.
A conviction that American construction techniques can deliver a better product at lower cost drives the company’s determination to forge a place within Fortress Europe.
The prize is a share in building infrastructure for the distribution market of the world’s largest economic grouping. But, rather than force a bridgehead on alien territory, IDI Group Europe, as its name suggests, has decided to work with the locals.
IDI began to think seriously about the arrival of the EC’s single market after several American companies asked for advice on the development of European distribution warehouses. During the past few years, IDI has become a major industrial development group in the US and, in the past seven to eight years, has built about 25m sq ft of such stock.
As a first step, IDI linked up with four EC development companies to service US demand for modern distribution facilities. Gazeley Properties in the UK, GA in France, Starke Diekstra in the Netherlands and Travaux in Belgium have all signed up.
“It was initially set up to service US clients primarily, but it is now a two-way process, with IDI servicing the needs of European clients in America,” says Gazeley’s Nigel Godfrey.
“The network is seen as a loose association with the primary aim of marketing construction and development services. IDI Group Europe will be demand-driven rather than supply-driven.”
IDI’s David Hardie sees the introduction of cheaper US-style building methods as a key way of attracting the demand. “Individual work [in Europe] is perhaps of a higher quality than in the US. But in the US our construction process is aimed at delivering the goods in the most cost-effective way in which to get the job done.”
In the UK there are more men on the job – a plethora of consultants and unions, with the surveyor perhaps the most distinct difference.
“The quantity surveyor’s role is unheard of in the US, while in the UK it is a constant that has been around for generations. The QS is given a degree of control and responsibility that makes him an important member of the design team,” says Hardie.
The framework within which developers operate is also very different. “Institutions are a force in the UK, but in the US the market is driven by occupiers. In the UK market, institutional demand means that building systems are designed to produce minimal potential management headaches.”
As a result, a tenant gets a higher quality of building, but he also gets a higher rent and a 25-year lease ill-suited to a fast-changing market. In the US, leases run for 10 to 15 years.”
A comparison of costs by Gazeley and IDI reveals a 5%-10% saving on UK as opposed to US costs and highlights several significant practical differences between the two construction cultures.
Exterior walls and internal specifications provide good examples of similar costs but very different methods. “Tilt-up construction for exterior walls, while common in the US, is not practised in the UK. Both British weather and building regulations forbid this practice.”
While the cost of interior partitions is very similar, the materials are very different. “In the US, interior partitions virtually always use gypsum board. In the UK gypsum board is considered a cheap product and is used mainly in housing construction. The UK uses masonry walls with plaster. In the US, to build a tenant wall (other than demising) out of solid-core concrete block is extraordinary,” says Hardie.
There is also a major difference in the cost of building a warehouse truck court. “In the US we would concrete the first 50ft or so and then heavy-duty asphalt the balance. In the UK, all of Gazeley’s have concrete over the entire 150ft run, with 12in of ballast under the concrete compared with 4in-6in in the US.”
Nevertheless, Hardie and Godfrey believe that the fusion of the two construction cultures will produce a highly competitive package.
They are in good company. As Gene McGovern, chairman of Bovis International, says, “If you could blend the UK system of construction with the North American approach to contracting, you would have a dynamite way of getting buildings built.”
