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PBC Managing Director, Paul Philips, shares his thoughts on 2022 and his insights on where the property sector is heading over the next 12 months.
What external factors have had the biggest impact upon PBC and its business this year?
“Over the last year, we have seen economic and political pressures both on a domestic and global scale. The tail end of Covid-19 pandemic, Russia’s war with Ukraine through the year, and a lack of UK political stability during the last quarter has given rise to volatility in many markets, with energy price and interest rate rises, and continuing public sector pay disputes, leading to strikes impacting UK business.
Our latest Cost Consultancy Lead Times and Cost Commentary reports an increase in construction output across three consecutive months from July to September, with an increase in new orders, less material shortages and improved supply chain performances beating market expectations. In fact, the UK Construction Industry was the only main sector of the economy that expanded in recent months.
This was mainly due to unfinished work and a strong pipeline, principally related to the private commercial, infrastructure and housing projects.
However, the above reported growth in Q3 came ahead of the Government’s disastrous mini budget, which significantly impacted the UK economy, resulting in a forecasted fall in construction output for the year ahead, coupled with a tight labour market and a slowdown in real estate investment and finance.
What key trends have you seen this year and what do you think has driven them?
Labour shortages, high vacancy rates and recruitment difficulties have remained a constant obstacle to growth for construction companies and consultancy businesses, and this looks set to continue into Q1 2023 while the construction project pipeline is strong. However, this is likely to change as wages struggle to keep up with the cost of living and we see more redundancies.
The Global Cop 26 and 27 Summits, and the UK drive for Net Zero, has been a key trend this year, with most of our clients being focused on ESG and improving the green ratings for their properties. Investors have been leaning towards green building loans, and our property clients have been keen to understand the strategy and pathway to achieving Net Zero carbon for their property portfolios and the use of more renewable products and materials. Indeed, the construction industry has been promoting decarbonising construction projects. However, the lack of Government recognition of the sector’s abilities, and associated funding, has made the target of achieving Net Zero in construction by 2030 a slim prospect.
Post pandemic flexible working is another trend we have seen this year, with many businesses, including PBC, offering staff more flexible working arrangements between office and home, with productivity being maintained. In conjunction with this we have seen changes in the way businesses occupy their space, with a shift towards the serviced office market, with more emphasis on breakout areas, collaboration spaces and noise proof phone booths for Zoom and Teams calls.
What major achievements has PBC recorded in the past year?
Rising inflation, higher interest rates and energy costs have been the key economic barometer this year. However, notwithstanding these pressures since the start of the year, PBC saw an upswing in new property investments and development finance transactions and an increase in new project starts. Our profile in the market has increased due to the quality of our service, giving rise to repeat business from our clients, and also from more effective marketing and promotional activities. A mix of showcase features, case studies, and an improved social media campaign, has further helped to drive growth over the past year.
The demand for our extensive range of Professional and Construction Consultancy Services has remained both strong and diverse, with healthy activity in the commercial, industrial and logistics and residential sectors. The average size of our instructions continues to grow across all departments and saw an upturn in 2022.
Our Projects Team has delivered a £74 million commercial office development in Southwark for a world leading advertising company and will also be handing over a new 150,000 sq. ft. distribution facility extension in Colchester for a major book publisher, with a BREEAM “very good” certification.
Our Cost Consultancy division has recently secured a 66,000 sq. ft. comprehensive CAT B office fit out in the City for a major insurance company and has completed QS services on the refurbishment of a 50,000 sq. ft. industrial unit in Milton Keynes for a leading institutional fund, incorporating many sustainability upgrade features. Both our PM and QS teams are also busy project and cost managing an extensive CAT A+ office refurbishment project at the former Terence Conran HQ at Shad Thames in SE1.
Meanwhile the larger Building Consultancy team has carried out over 25 pre-acquisition Technical Due Diligence (TDD) surveys for property investors, including an industrial park in Essex, a multi-storey office building in the City, two hotels and Judges Lodging’s in the heart of historic Lincoln and another hotel situated on a clifftop overlooking the Lizard in Cornwall.
In addition to these TDD surveys, our Building Consultancy team has continued to manage the delivery of a range of serviced office fit-out projects for operators and landlords, across the South-East of England, including “Flex space” offices for Great Portland Estates.
We continue to act for many blue-chip clients, including The Portman Estate, CLS Holdings Plc, Columbia Threadneedle Investments, Aviva Investors and Ballymore.
Our experience and expertise over the last 22 years in providing Project Monitoring Services to banks and other development funders, has enabled us to secure Independent Monitoring Surveyor roles on many exciting projects, including the £25 million conversion of Richmond Hospital to private and affordable residencies, a 57,000 sq. ft. development of new contemporary offices and light industrial space in Kings Cross and a £20 million, 298 unit build to rent office residential conversion scheme in Swindon.
All of PBC’s departments are growing in size and you are taking on more staff. Why is this?
PBC has grown this year, with two new building surveyors in our Building Consultancy Team, a Senior PM and Assistant PM added to our Projects Team and a new Senior QS joining our Costs Consultancy Team. We are also excited to be starting a new departmental “centre of excellence” for Development Monitoring, headed up by Mark Merritt BSc Hons MRICS MAPM, our new Director of Development Monitoring, who is joining us in January 2023.
Our graduates are aiming for their RICS APC in 2023 with our support and Ben Hallowell successfully passed his APC this year and became a member of the RICS
Our Director of Cost Consultancy Chris Jones MRICS was welcomed to the Board of PBC from 1st May during the year and in terms of company performance, 2021/22 was the best year we have had to date with 54% growth on the previous year and 23% over our budgeted profit. The Building Consultancy Team achieved a 30% increase on budgeted fee income, Cost Consultancy achieved a 38% increase, and the Projects Team achieved an 8% increase and their best performance to date.
Are there any trends amongst PBC’s commercial, industrial and residential clients that have emerged over the past year?
The last year has seen ESG and sustainability top of most clients’ corporate agenda, which has seen PBC focus on addressing energy efficiency and decarbonising carbon in construction. Across the business, we recognise the importance of introducing sustainable and renewable features into projects, including PV panels, air and ground source heat pumps, EV charging points, energy monitors, HVRF HVAC systems, end of journey commuter and cycle facilities and Net Zero pathway portfolio assessment. Advice on measures to improve the EPC rating of our clients’ buildings and property portfolios has also seen an increase.
From PBC’s own perspective, we achieved Carbon Neutral Plus Accreditation and certification in 2022
What are your plans for developing the business further in 2023 and are there any external factors or trends that you think will continue to affect the sector next year?
The year ahead looks both exciting and challenging and we remain cautiously optimistic. Our strong pipeline of new business opportunities across all departments, with potential for adding more new clients, is one of our key strengths going forward into 2023. The challenges, however, come from increased costs and the continued impact of the war in Ukraine across Europe, and the need for economic stability in the UK.
Whilst overall economic growth expectations remain subdued, there are some areas offering opportunities for property and construction consultancies. The drive towards Net Zero will undoubtedly give rise to more opportunities for advising clients on their proposed property purchases, existing portfolio upgrades and for managing client’s Net Zero pathway implementation projects.
Smart building technology is another growth area for construction, which is a must have for many larger property developers. Modern methods of construction, such as modular buildings and the greater use of close laminated timber, will also be more widely adopted across the industry.
Faced with further economic uncertainty and more financial pressures in 2023, clients should be taking early advice from their professional consultants to secure cost and programme resources for their projects. PBC is well placed to respond to our client’s demands as we continue to be a financially robust, with strong management and experience across our Building Consultancy, Project Management, Development Monitoring and Cost Consultancy Teams. Our motto is ‘to ensure the best outcome every time’ and we wholeheartedly believe that PBC achieves this for our clients.
If you weren’t the Managing Director of PBC, what job or challenge would you relish most?
After 22 years, I still get up every morning and look forward to the challenges of running PBC. Working alongside our amazing teams, our fantastic clients and the job itself makes it all worthwhile. However, anyone who knows me well knows that I am an avid rugby fan. There is, therefore, only one job that would entice me away from my role of Managing Director at PBC, and that is the England Rugby Union Manager’s job. I’m still waiting for the call!
