Communication is key as commercial property industry fights the coronavirus crisis
The coronavirus pandemic has affected every part of business, especially after the UK lockdown was announced on 23 March.
In the first of a series of features, we take a look at how different sectors are coping with with the measures brought in by the UK Government. In the first of a two-part article, we look at how the commercial property sector in the East Midlands is faring.
Bradgate Estates is a family-owned property development company that specialises in student and PRS blocks.
The company has built and sold over £90m worth of property over the last four years, consisting of Private Rented Sector and student blocks in Russell Group university cities such as Leicester, Nottingham and Sheffield.
Joseph Levy, managing director, said: The investment side of our business has been put on ice, with £100m of pipeline projects paused until at least September – and maybe beyond.
“The developments that are currently in construction are continuing, if maybe a little slower than before. But we are proud of our contractor, J A Ball and his team, who are continuing to stay on site until the supply chain or the Government dictates otherwise. But we are under no illusion that delayed completion will be inevitable.
“We have circa 350 flats in the city [Leicester] and a large part of my business is being a landlord to both students and residential tenants. This is the sector of the business that has been affected the most.
“We are trying to make sure our tenants feel as safe as possible, so we have a brave team of dedicated cleaners who constantly patrol all of our properties, ensuring that all the communal areas are continuously disinfected.
“Our student tenants are also a concern as we are expecting a fall in rent, particularly from overseas students.”
Richard Sutton, managing director of commercial property agent NG Chartered Surveyors, has grown his business on being accessible to clients, something, which for the moment, has been taken away in a
physical sense. He said: “At the moment it’s hard to say how this is affecting our business. Of course, we have been impacted, like all in our sector, but, as yet to what extent, it’s hard to say.
“Our technology, remote working protocol and the quality of our team has made us as if not more resilient and adaptable than other firms.”
“We’re using remote working platforms, keeping in contact via teams and zoom and continuing to deliver the service needed by our clients, above all we are still here for the them.”
Haroon Shaikh, director at Obstrat, which offices, residential, retail and leisure space In Leicester, says his firm has stopped work on one of its landmark schemes in Leicester.
He said: “We have temporarily paused construction works at Universal Business Park on Humberstone Lane. Although the UK Government have not suspended construction, the health and safety of our workers and supply chain is our primary concern during these unprecedented times. We fully support the recommendations to stay home, protect the NHS and save lives.
“With MIPIM 2020 postponed we have had to reschedule meetings and travel arrangements, we look forward to continuing to support Team Leicester when it returns.
But what is the East Midlands property sector doing to try and minimise the disruption brought about by the coronaviurus outbreak.
Stephen Pratt is Group land director at Godwin Developments, and works across both the East and West Midlands. He says that keeping communication flowing is key.
“We are deploying technology to keep us all talking, growing and developing relationships, and winning business,” he said.
“In fact, we are encouraging all our staff to interact via video conference using Microsoft Teams rather than emails and messages, and we are working successfully across platforms with landowners, national and regional agents, planners and all other stakeholders.”
Levy said: “Like most sensible businesses, we are taking every step we can to minimise the loss of profit during this disruption. And to do this we must be flexible to change, adapt to the ever-changing situation as it unfolds and look for opportunities that may arise out of adversity.
“An example being, we now unexpectedly have 250 empty flats for the next three months and we have developed many great ideas which will both fill them and help the community.
“The effects will be minimised if we all help each other were we can.”
With physical contact all but put on hold then it wouldn’t take a great leap of imagination to assume that many property deals have been put on hold.
Wayne Oakes, director at engineering consultancy Dice, is refreshingly candid when he is asked if any deals he was working have fallen through since the lockdown was announced.
He said: “In short, yes. A significant portion of our private work with developers has been placed on hold, along with schemes and projects in and around the retail and leisure sectors.
“The retail sector has been on life support for a long time and we have grave concerns that COVID-19 could cause British high streets to decline even further as more people become reliant on online food shopping and on-demand orders via retailers like Amazon.”
However, said Oakes, even though we have seen some schemes placed on hold, there are still some areas of positivity – most notably in the public sector where there appears to be added resilience and a desire to proceed as planned.
He added: “We’ve also held numerous discussions with longstanding clients regarding innovative procurement measures. We cannot reveal too much of course, but we’re excited at the prospect of altering our working pattern and procurement routes with certain clientele, so there are definitely still opportunities there if you are prepared to innovate.”
Simon Gardiner, managing director at Peter James Homes, told us his company is in a “fortune” position.
He said: “No deals have fallen through. We were in a fortunate position having just completed our 48 housing scheme in Bestwood Village with two larger sites in the design/procurement phase. Our sites have been paid for and consequently with do not have issues on this front.”
Fellow housebuilder, Ian Hodgkinson, said he is thankful to his legal team: “We haven’t lost any deals and finances are still in place, there has been a remarkable effort by our legal team and our clients to move the deals on. I expect that this is just in case funding is impacted due to the coronavirus.
“Architects and design teams have also been active with regards to still bringing opportunities to us – most people are being positive at the moment.”
Pratt says his firm is still actively looking for opportunities. “We are actively seeking to hear from landowners and agents who may have brown or greenfield land for development. Because we work across the entire property lifecycle – from site identification and acquisition through to development and asset management – we are in the best position to advise on the optimum outcome for their assets in the current climate. In addition, we are pleased that all deals that we secured prior to the lockdown are still progressing well and on schedule.”
In the next part of this feature, we’ll look to the future and ask: how will the crisis change the property industry?