Land Securitiesâ Colette OâShea is about to take over the presidency of the British Council for Offices. And she has a thing or two to say about how parts of the development industry have lost sight of the most important people - the occupiers of the buildings themselves
Since her appointment as London development director at Land Securities in 2006, Colette OâShea has been one of the most powerful clients in construction. Now promoted to managing director of London for the ÂŁ12bn property giant, she is overseeing the delivery of a ÂŁ1.5bn programme of development, all to be complete before the end of 2016, by some of the industryâs elite contractors
â including Mace, Skanska and Lend Lease.
Not content with that challenge, OâShea will this summer take on the presidency of the British Council for Offices (BCO). As the pace of the economic recovery quickens with office development activity at its highest level since 2008, she is set on using this platform to ask the development industry some tough questions about its focus on its ultimate client â the firms who occupy its buildings.
OâShea and Land Securities set out a very clear view of the kind of accommodation post-recession occupiers are looking for. But sheâs not sure the industry as a whole can honestly say it develops and builds on the basis of an in-depth understanding of its customers. In London, this apparent lack of focus is being exacerbated by the heating up of the construction market, which itself is causing rising prices, safety concerns
and an unsettling level of staff movement. So how is Land Securities approaching this, and what lessons does construction need to learn from other industries?
Land Securities was virtually the first major developer to return to the market post recession, restarting work on a wave of projects in 2010, including its most high-profile, 20 Fenchurch Street, better known as the Walkie Talkie.
Essex-born OâShea is clearly pretty pleased with this decision, which will see the developer complete a range of schemes over the next couple of years as the lettings market heats up. âWeâre in a good place in London. Everything is pretty much playing out as weâd anticipated,â she says.
Just two of Land Securitiesâ pipeline of projects are yet to have a contractor appointed â although OâShea says the firm is close to decisions on these, the 90,000ft2 Oriana retail scheme and 95,000ft2 20 Eastbourne Terrace office project.
Beyond 2016 it has no development pipeline and is pretty much out of the market for new opportunities: âWeâre not buying at the moment because itâs a very hot investment market. Thereâs a real demand for development land, [but] thereâs only a finite amount of product,â says OâShea. âThere are a lot of people piling in to it at the minute and weâre not going to compete at the levels that weâre seeing.â
This leaves her with little procurement to undertake right now, something else sheâs pleased about. âWe have seen rents rising, but in parallel we have seen construction costs rising. Itâs a collision of the residential strain and the commercial strain on the construction industry. Thatâs becoming an increasing challenge. And I think some of the big contractors, their order books are almost full.â
Hence her focus is shifting from procurement to delivery of projects. âWeâre not sitting here twiddling our thumbs,â she says.
The right price
Land Securities made a conscious decision to procure its current pipeline of work â including mega schemes such as its ÂŁ384m Nova Victoria project in Victoria, London â in the teeth of the recession using single stage fixed-price competitive tendering. This allowed it to secure low prices from contractors. But it is undertaking remaining procurements in a very different fashion, using two stage tendering with an element of negotiation, despite this providing challenges for it as a listed company.
âAs a Plc you need to be tendering absolutely everything but that just doesnât fit with the market as we see it today,â says OâShea. âSo itâs trying to work out how can we merge the Plc needs with giving someone the certainty that theyâll get the job, provided we can come to the right price. So effectively youâre negotiating the price. Because what is putting people off at the moment is competitive tendering.â
Indeed the market is now so hot in the central London geography that she works in, that she foresees a return to construction management, despite the pricing risk for clients. She says: âIf I had a project now and we were looking to procure it, then I suspect CM would be one of the routes weâd be considering, but itâs obviously more risky for us [in terms of price].â
However work is procured, it is clear OâShea thinks the qualities she needs from contractors are all too rare. âWhat you want is the businesses that are able to merge really traditional contracting with modern technology. Which is actually a really difficult thing to do.
âItâs about people who just know building, who can envisage how the thing fits together in their head. Thatâs a very special skill. They understand the site; they live and breathe it. When you meld that with cutting edge technology then youâve got a very powerful combination, [but] I think thatâs where people struggle.â
She wonât say which firms she thinks offer this, though she says she can be judged by her record â in recent years Land Securities has offered its prize London jobs to Mace, Skanska, Sir Robert McAlpine and Lend Lease â though 20 Fenchurch St is being built by Canary Wharf Contractors as Land Securities is partnering with Canary Wharf Group on the development.
A certain quality
The difficulty in finding people with the right skills is not limited to builders, though, with the resurgence in the market creating instability as consultants start to vie for the most talented staff. âWeâre back to a place where anybody that is talented within the construction development sector is in demand. Particularly in the construction industry weâre seeing a lot of shifting between the various businesses.
âWhat that brings as a client is a lot of instability and uncertainty, so thatâs a risk. Itâs very unsettling because youâre reliant on your teams â whether theyâre internal or external â you want the same people round the table. And itâs all putting pressure on the cost base.â
This feeds in to her wider view of the development industry as a whole not always focusing on its customers. OâShea speaks articulately and confidently and while you would not describe her as outspoken, she is evidently not frightened of challenging her peers in the development industry to do better.
She says: âOne of our customers said to me the other day âwho are the architects designing for â themselves or us?ââ
Itâs a problem OâShea clearly believes can be applied to architects widely. âI think it absolutely is a fair criticism,â she says.
But where does a focus on buildingsâ occupiers take the industry? OâShea says the demand, emerging from recession, is still for cost-effective space. But that doesnât mean low-spec or cheap â quite the opposite â it means optimising the building for maximum possible occupancy and productivity.
âWhat office occupiers are looking at is the cost per head, so then it comes back to the efficiency point,â she says. âIf youâve got 20,000ft2 of space, how many people can occupy that space? And actually if you want to optimise that, you do need really high-spec. You canât cut back if you want to achieve high densities. Itâs everything from the lifting capacity of the building, to the air handling, to IT infrastructure.
âWeâre responding to a world where our expectation, that the cost per head would be going down because people would be working from home, actually doesnât work. We do want to come in and occupy space, but that space will be used differently.â
She cites both Land Securitiesâ own Walkie Talkie, and Derwentâs stripped back âWhite Collar Factoryâ concept in Old Street as instances where the industry has thought hard about specific usersâ needs. But this doesnât always happen.
Keep the customer satisfied
âIf we as an industry donât think about our customer at all times within every segment of it, we wonât have a sustainable model. There are many other industries that havenât kept tabs on what their customers have done and theyâve gone. You look at some of manufacturing, where they are looking and understanding what their customer wants daily. From the widgets, to the colours â constant customer feedback that is informing their product.
âI am a customer of a contractor, but the ultimate customer of both contractor and Land Securities is the end user, and so itâs about the industry remembering that, so that theyâve always got the end user in mind when theyâre building out.â
She seems to have a particular concern here around architects, adding this advice is âreally relevant for the design industryâ.
Indeed, for her, the current debate over the planned proliferation of tall buildings in London is more a question about the design quality of the proposed towers than their height or specific location.
âLondonâs success has been its ability to have historic buildings sitting among beautiful modern buildings. If youâre working around listed buildings, that absolutely should and must be respected, and viewing corridors are important and should be respected. I donât think weâd be where we are today if our policies around heritage werenât working.
âI wonder whether the biggest challenge is the design quality challenge â how do you ensure that every building is absolutely of the best quality for whatever its use is?â
OâShea will have a year at the BCO to develop this theme, after being formally announced as president at the organisationâs annual general meeting in July. The construction industry would be well advised to listen.
BCO conference
The BCO conference takes place in Birmingham on 14-16 May. For more information or to book a place go to www.bco.org.uk. șĂÉ«ÏÈÉúTV is a media partner for the event.
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