Tuesday 25th Oct 2016 - Logistics Manager

Satisfying the tenant

Typically, tenants have to put up with floor slabs that crack and break up because they are not designed to suit their specific needs. They accept that the roof of their building may leak, and they manage to manoeuvre their lorries in yards that are too small or poorly configured, with turning circles that are the bare minimum. Why?

The root cause is found in the market for property. Developers build to suit the property investment market first and foremost: they attract a tenant, design and build the building and then sell the package – a fully let building on an ‘institutional’ lease – to a property investor; perhaps a pension fund.

There is a perception that the investment institutions have a book of rules, in which their minimum requirements are set out indelibly, and without the flexibility to accept anything that falls outside their rigid parameters.

For years there has been a grain of truth in this. The construction industry has traditionally been organised on partisan lines: the client and design team on one side of the table and contractors and subcontractors on the other with each side having its own objectives.

Victorian procurement methods, characterised by disputes, broken relationships, overrun programmes and poor buildings, became the accepted way, forming our reputation as the world’s most expensive and conflict-ridden industry. The property market has parallels; the relationship between a developer and the tenant is temporary, as is the developer’s contact with the investment landlord.

Whilst temporary alignments may form, the developer moves on once his needs have been fulfilled, and likewise, the investor very often sells on the freehold interest to another institution after a few short years. Their main interest is the income stream, not the long-term operational requirements of the tenant.

Added to this unpalatable mix is the ‘pattern book’ approach adopted by many design and build contractors – the mainstay of the construction industry, especially in the industrial and distribution sectors. Many of these companies stick to what they know and build what they consider to be tried and tested – so we see floor slabs built to meaningless uniformly distributed loading standards without reference to dynamic loads, racking point loads, suitability of joints. We have valley gutters without weir overflows, which constantly leak when the outlets block, or in storm situations. Eaves heights are often too low, or higher than actually needed.

Building functionality

These factors create a need for compromise on the tenant’s part and it is usually the case that this costs it money, either in adaptation of the completed building or in running costs.

The issues outlined are real, but ultimately, the root cause of the problem is that tenants are simply not demanding enough. As a rule, they are the one constant factor in a building’s life: the developers’ interests are quickly satisfied, institutions rarely own a building for more than a few years before trading it on and the contractors’ involvement is of course limited to the few months of design and construction. In a commercial world where the customer is king, tenants of commercial property are fourth in line to the throne!

Wouldn’t it be to mutual benefit for the Developer and the future occupant to ensure that the building is functionally appropriate to the tenant’s business needs? Would the funding bodies and institutional landlords welcome a more cooperative approach to building projects?

Given that a partnering approach might result in a better quality of building, more able to stand up to the rigours of commercial operations, and a happier tenant, perhaps it would be in the best interests of the investor to engender team spirit and encourage developers to satisfy the tenant’s needs as the first and foremost priority.

These key steps should be followed to ensure the construction industry provides suitable buildings to meet actual, rather than perceived, requirements:

lOccupants: When a tenant starts to look for a building, they must identify its key functional requirements and ensure that advisors focus the minds of competing developers on their needs. Appoint a project manager to drive the construction phase, set the key building performance parameters and then work with the developers and fit-out specialists to ensure that the required standards are achieved.

l Developers: remember, a happy tenant is a good tenant! This will help you to move your property onto the investment market. So try to find out about your prospective tenant’s key needs – for example, do not simply offer a meaningless 37.5 kn/sq m floor loading capacity, take the time to understand how the building will be used and focus your designers’ on meeting that requirement. Ensure that you do not allow your contractors to adopt a pattern book specification package. Bespoke your building as much as it is possible to do so!

lInvestors: relax the unwritten rules about ‘institutional standards’ and within reason take steps to encourage developers to tailor buildings to tenants’ functional needs. Accept that a homogenous product is not achievable, and the most important factor is having a satisfied tenant who is happy with the building. n

Keith Richards is a project manager and head of Project & Development Services at Jones Lang LaSalle’s Leeds office. Tel: 0113 244 6440.