Developer special: CM interviews the clients

Urban & Civic is building 5,000 homes and 3m sq ft of business space at Alconbury Weald in Cambridgeshire

The diversity champion

Why Urban & Civic likes working with regional contractors and house builders across its wide-ranging portfolio.

Developers don’t come much more diverse than Urban & Civic, which combines its strategic land banks on four key sites
that can supply 20,000 new homes over the next decade with a range of commercial and mixed-use schemes which are delivered with shorter timescales.

The strategic sites will also see the construction of more than 3m sq ft of business space, at least 11 primary and three secondary schools.

Richard Hepworth, director of project management at Urban & Civic, describes the business model as “unique” and says: “We don’t have 100% concentration in any one sector.”

Urban & Civic is currently contracted on 17 separate building and infrastructure contracts across seven of its development sites which it is progressing in parallel with works on its strategic sites. Hepworth heads the 11-strong project management team which delivers all of Urban & Civic’s developments and procures designers and contractors, often on framework contracts.

Four further sites are due to be developed in 2017, ranging from a 300-unit apartment scheme in Manchester, a leisure and retail scheme in north Yorkshire and a large leisure development in the West Midlands. Urban & Civic expects to procure around £60m-£80m of construction during 2017, of which half is estimated to be infrastructure related.

Urban & Civic operates a different model from house builders for the strategic land sites by working as a master developer. This involves decontaminating the land and preparing the development platform for house builders as a serviced plot, drawing up a masterplan and installing highways and utilities infrastructure, inclusive of all planning and technical approvals.

The planning approvals obtained by Urban & Civic establish the design code, mix and quantum to set the framework for residential developers to work within. Most deals have been done with regional house builders in 150-200 unit parcels.

Alconbury Weald, acquired by Urban & Civic in 2009, is the largest and the most advanced of the strategic sites. This is a former Cambridgeshire Cold War airfield and is currently under development with outline planning consent for 5,000 new homes and an Enterprise Zone with 3m sq ft of business space. Two commercial office buildings have been completed, one is under construction and a further four are due on site before the end of 2017.

At Rugby, the former BT long-wave transmission centre is under development as a strategic extension to the town for 6,200 new homes. A third site is the development of the former barracks and airfield just north of Cambridge as part of a new strategic settlement at Waterbeach, where an outline planning application is being prepared. Finally, the strategic extension to Newark is under development with the first house builder application in for planning.

In terms of the market, Hepworth says he has observed more nervousness since Brexit with contractors seeking to ensure workload. “We are concerned about shortages of trades contractors like concrete, cladding and M&E specialists,” he says. “It’s forced us to look carefully at design in terms of second tier contractors and who is available.”

Contractors are selected on a mixture of tendered and negotiated frameworks. Of the last 23 contracts let 10 were secured by either single-stage or two-stage tendering, three by direct single source negotiation and 10 negotiated from existing frameworks.

“We like to partner with regional contractors on both infrastructure and building contracts. As such we have agreements in place with contractors such as Jacksons and Breheny on the civil engineering works and RG Carter and Stepnell on building works. However, we recognise this is not always practical.”

Hepworth says that when Urban & Civic selects contractors it’s not as interested in their use of technology or BIM prowess. “It’s about honesty and transparency, understanding what we’re about and how we can build the delivery ethos with our design and construction partners.”

The regeneration specialist

Residential developer First Base is about to get a lot busier with its involvement in Silvertown Quays.

First Base is a key partner in the £5bn redevelopment of Silvertown

First base is a name we’re going to be hearing more of. The London-based residential developer is not only aiming to take its special brand of high-quality mixed-use schemes outside of the capital, it’s also stepping into the major league as one of the key partners and driver of the £5bn regeneration of Silvertown Quays in east London.

This is a 10-12-year project to build out an estimated 50 commercial buildings and 3,000 new homes, parks, schools and health facilities.

The development team, called the Silvertown Partnership, comprises First Base, Chelsfield, and Australian firm Macquarie Capital. First Base is providing the development management services.

First Base has been procuring between £20m and £40m worth of construction work a year for projects worth in the £30m-£50m range – and there are three of these currently in the pipeline. But this volume of work will rise significantly in the near future as the first £500m phase of the 62-acre Silvertown regeneration project gets underway. Infrastructure work on the three-year first phase is expected to start in 2018 – with construction of homes and commercial elements a year later.

The first phase will comprise 850 units and include restoration of Millennium Mills, an art deco former flour mill last used in the 1980s.

First Base could opt for greater use of offsite construction on the development. Phil wade, operations director says: “For the first phase we’re looking at a number of innovative techniques, including modular construction with cross-laminated timber, or pre-cast concrete. We want to cut down the wastage and interface on site. We are also considering building homes with bathrooms and kitchens already fitted.”

A newcomer to the PRS market, Legal & General, is investing millions in the construction of a new offsite factory to build thousands of new homes offsite itself. Wade says First Base may consider that, but would also look at suppliers. L&G is “making everyone in the sector sit up and take notice”, he says.

For the first phase at Silvertown £100m of infrastructure will be built, including a new £20m bridge linking the site to the new Custom House station on the Elizabeth line. Overall, 35% of homes across the development will be affordable, though the first phase will be around 21%. First Base prides itself on designing homes to be tenure blind, says Wade.

Another hallmark of First Base is use of top drawer architects and Silvertown Quays is no exception, where the project’s design panel reads like an architectural who’s who: Herzog & de Meuron; Rogers Stirk Harbour + Partners; David Chipperfield; and AHMM to name some.

Away from Silvertown, First Base has three more projects in the pipeline. Wandall Terrace in Earlsfield, south-west London, is a scheme of around 130 units awaiting planning consent. Another on Tower Bridge Road consists of apartments, a short stay hotel and commercial units, also in for planning. And in its first foray out of London, the redevelopment of Anston House in Brighton, which has been abandoned for more than 25 years, received planning consent before Christmas.

Wade says First Base is looking to develop in other towns and cities where housing demand is high, including Cambridge, Oxford and Reading.

First Base has traditionally used a two-stage approach to select contractors, which have usually been the biggest players. However, given a number have racked up problems with residential, Wade says he is now turning to the next tier down with the likes of McLaren, Willmott Dixon, Ardmore and Graham in favour.

For the first phase of Silvertown, First Base will be looking to start the selection process mid-year. “We don’t select on cheapest price. It’s more about their experiences and the team put forward and whether the culture fit feels right.

“I like people to be honest and if there is a problem tell us about it, rather than burying their heads in the hands.”

“We want people coming to us with innovation. We like contractors where their people find solutions.”

“I’m impressed by new technology and BIM is a really useful tool. I think it’s been good that government has made it mandatory. But for us, its use has not yet been a criteria of our selection.”

Wade says that First Base procures usually through two stage tender, putting no more than four on a tender list and then awarding contracts under the JCT major works D&B.

Like other developers interviewed, Wade says there has been little impact as yet from Brexit, either from buyers or suppliers. “There’s clearly been a few wobbles in the prime London market, but we build in the £600-£800 sq ft market, not the £1,500 sq ft bracket. On the cost side, contractors are still being choosy, though we expect costs to go up because of the volume of imported materials.

“I am worried about the skills gap. I don’t know how we’re going to build the 250,000 homes need a year we need.”

The refurbishment pioneer

Funky, creative offices are all in a day’s work for Resolution Property.

Resolution’s Alphabeta building includes a cycle route

Kitting out offices to appeal to millennials and providing a healthy and fun working environment for staff may be catching on, but Resolution Property can claim to be one of the pace setters.

“I think we are the market leader in considering the occupier needs in a different way,” says Adam Goldin. The chartered surveyor joined Resolution as head of UK investment in August 2016 after eight years with Delancey.

“It’s no longer about the CEO’s parking space but about wellbeing and attractiveness to talent,” he adds. Typically, offices developed by Resolution include gyms, artisan cafes and pizza bars, and at its highly successful Alphabeta scheme in Shoreditch cyclists can ride straight in on the ground floor.

Resolution has acquired, developed, financed and disposed of more than €2.6bn of assets in Europe across all sectors since its establishment in 1998, and managed more than 20 million sq ft of property, predominantly in the office, retail, residential and mixed-use sectors. In the UK construction spend is between £50m and £100m a year – mostly in London, but there are have also been projects outside the capital, including Manchester and Bristol.

Projects tend to be in the £10m-£20m bracket. Goldin dubs their development approach “upcycling defurbishment” – stripping back outdated offices, often in emerging creative quarters, and turning them in to funky and high-quality working environments.

“In terms of Brexit we’ve not seen a significant fall in prices coming in from contractors, but there seems to be more appetite,” says Goldin. He also points to the likely cost increases from materials and labour which could make viability of projects an issue.

“From our perspective, we’re very measured and not afraid of changing direction to suit the risk, but as a refurbishment and extension specialist, we see some of what we do as counter-cyclical. So, I’d say we’re cautiously proceeding.”

Goldin is leading on London projects including the delivery of a new masterplan for the 560,000 sq ft Thomas More Square office campus in London E1 – now rebranded as Moretown – with confirmation of a prelet to Gensler, the world’s largest architecture, design, planning and consulting practice.

Other projects include the 93,000 sq ft Black Lion House office development in Whitechapel and the Old Gramophone Works mixed-use scheme in Notting Hill.

In terms of what Resolution looks for in its contracting chain, Goldin says there are no hard-and-fast rules in terms of procurement. Instead it tends to be via a mixture of negotiated contracts and two-stage tenders. For projects up to £10m Resolution gravitates to family run firms — “where they take great pride in their reputation and where their interests align with ours.”

The use of BIM is not crucial to selection, however. “We’re always open to new ideas and certainly want contractors to bring solutions. But there has got to be time/cost benefit,” says Goldin.