What is hindering your market at the moment?

Understandably, we are seeing our clients tighten their belts in respect of investment into their assets. Whilst the markets continue to be challenging, our clients are being more selective about how they improve their assets and the CapEx they are willing to commit to enhance their holdings. With increasing vacancy rates, particularly for high street retail, our clients are facing larger overheads due to funding void service charges and utilities. The impact of capped service charges in a world where maintenance and utility costs have increased also affects their net income and therefore ability to reinvest. Business plans developed whilst interest rates were much lower are now more challenging to deliver, and clients are having to pick and choose the opportunities they believe offer the best return on investment.

What opportunities are you seeing in your market at the moment?

As investors look more closely at how their portfolios are performing, the basic functions carried out by property managers are becoming even more important, such as timely rent collection, service charge reconciliations and tenant engagement.

 

Whilst the investment market remains sluggish, clients have become more focussed on asset and property management matters and are taking the time to review their appointed agents. As a result, we are seeing an opportunity to pick up new mandates, where current agents are not performing as expected.

Our robust approach to the fundamentals of property management is clearly demonstrable to prospective clients and consequently, we have seen an increase in new instructions over the last 18-months. In addition, having a very broad client base, including institutional investors, property companies, developers and private wealth businesses ensures we have opportunities during the peaks and troughs of investment cycles, due to differing objectives and investment strategies.

What’s the biggest change you have seen in your sector throughout your career?

There are many, but the main one has been the specialisms created in Property Management over the years. When I started my career in 1995, property management was viewed as the poor relation of the industry, low margin, mundane and quite frankly boring! As Property Managers we performed all the day-to-day functions, including procurement (often relying on the yellow pages to find a suitable contractor for an urgent jobs) contract management, inspections, Health & Safety compliance, arrears management and tenant liaison.

As time moved on, the industry introduced Facilities Managers to deliver the onsite aspects of PM/FM and Accounts teams broadened their scope to include credit controllers and service charge accountants. Fast forward a few decades, and we now have specialist teams dedicated to ESG, customer experience, technology, health & safety, energy management and procurement.

This specialisation has allowed property mangers to focus their time and energy on working to achieve our clients’ objectives to maximise returns from assets, and overseeing exceptional service delivery to our occupiers. We have continued to develop our skills, to be able to offer our clients the best solutions in a constantly changing world, whether that involves improving BREEAM in use ratings, ESG credentials, development consultancy for new schemes or offering front of house services in managed buildings.

The stability of revenues from property management proved invaluable during the economic slowdowns and recessions throughout the 1990’s and it is now finally recognised for its value to our clients and our colleagues.

In seeking feedback from one of our clients recently, they advised that as their property managers, “we rely on you to work with us and we see you as integral to our performance.” The role of the property manager has clearly evolved and has become much more valuable to our clients over the last 30-years. In many instances, we know more about their assets than they do !

What are your predictions for the next 12-18 months, in your sector?

Predicting specific trends in commercial property management is challenging due to the dynamic nature of the industry and the unpredictability of external factors.

Focus on health and safety:​ The COVID-19 pandemic has heightened awareness of health and safety in the workplace. Property managers will need to continue to prioritise implementing and maintaining rigorous health and safety protocols to ensure the well-being of tenants and visitors

Sustainability initiatives: There will be a continued emphasis on sustainability and green building practices in commercial property management. The need for implementing energy-saving measures, promoting waste reduction, and seeking green certifications to attract environmentally conscious tenants will continue and will be a focus for all investors moving forwards.

Focus on Occupier Experience:​ Enhancing tenant experiences will remain a priority for commercial property managers. This will include offering personalised services, creating inviting common areas, and organising community-building events to foster a sense of belonging and wellbeing amongst occupiers.

Resilience Planning:​ Property managers will increasingly focus on resilience, planning to mitigate risks associated with natural disasters, cybersecurity threats, and other disruptions. This involves implementing robust contingency plans and investing in resilient infrastructure. The COVID-19 pandemic highlighted the importance of contingency planning so that businesses can continue to operate when challenging factors take place outside of their control. We will continue to be agile and forward thinking to navigate the evolving landscape and effectively meet the needs of clients, tenants, and stakeholders.

What advice would you give your younger self when you first started your career in property?

Don’t worry so much, it will all be OK if you continue to do your best! Believe in yourself, keep pushing forward and seize opportunities when they arise.

It is easy to say but much harder to implement this advice. However, things do have a habit of working themselves out. When I graduated in 1993, job opportunities were scare due to the early 1990’s recession, with each role attracting thousands of applicants. I offered to work for local practices for no salary so I could gain experience to achieve my APC. After a move to London for 12-months working for the Valuation Office and then securing a graduate role in Bristol in 1995, I was back on track to gain my APC.

30-year later, I’m now Head of Office with 53 staff, 15 business lines and revenues of £7.5 million. At times it’s been a struggle, especially when trying to balance family life with two children, however it has been worth it and I’m so pleased I didn’t give up in the early days when it was tough going.

What’s your greatest work achievement?

A small but significant achievement which stands out for me was in relation to a client referral I received as a senior surveyor many years ago. I was managing a small office building on behalf of a PropCo in Bristol and fostered an excellent working relationship with the client. This client was asked by an old university friend of his, who happened to be head of property at a large supermarket chain, for recommendations for good property managers in the region. He recommended me, and as a result we won a significant portfolio of properties in the South West and Wales, which we went on to manage for over 10 years. The instruction expanded to include lease advisory and building consultancy work. From small acorns, great oaks grow! This experience was a valuable learning curve, and reinforced the importance of always delivering consistent highlevel client service, regardless of the scale or size of the instruction. You never know what opportunities it might lead to.

What could have the biggest impact on the property industry in the next 10 years?

Artificial intelligence (AI), which is already having a transformative effect is likely to have the biggest impact on the property industry, including working practices, over the next decade. AI harnesses the potential to revolutionise property management and the property industry as we know it, by identifying inefficiencies and suggesting improvements, streamlining operations and optimising the use of resources.

Over the next decade, we anticipate the cost of AI technologies to decrease significantly leading to an exponential increase in their application.. AI will ultimately enable property professionals to become more efficient, mitigate risks, discover new opportunities and, provide enhanced value-added services to their clients.

We are already witnessing AI performing functions on the property accounting side of the business, saving both time and resources, and optimising building systems, to improve energy efficiency and sustainability credentials. While there is still much progress to be made in fully leveraging AI in property management, it will become essential for maintaining margins and delivering effective solutions to client

​ What is hindering your market at the moment?

Understandably, we are seeing our clients tighten their belts in respect of investment into their assets. Whilst the markets continue to be challenging, our clients are being more selective about how they improve their assets and the CapEx they are willing to commit to enhance their holdings. With increasing vacancy rates, particularly for high street retail, our clients are facing larger overheads due to funding void service charges and utilities. The impact of capped service charges in a world where maintenance and utility costs have increased also affects their net income and therefore ability to reinvest. Business plans developed whilst interest rates were much lower are now more challenging to deliver, and clients are having to pick and choose the opportunities they believe offer the best return on investment.

​ What opportunities are you seeing in your market at the moment?

As investors look more closely at how their portfolios are performing, the basic functions carried out by property managers are becoming even more important, such as timely rent collection, service charge reconciliations and tenant engagement.

Whilst the investment market remains sluggish, clients have become more focussed on asset and property management matters and are taking the time to review their appointed agents. As a result, we are seeing an opportunity to pick up new mandates, where current agents are not performing as expected.

Our robust approach to the fundamentals of property management is clearly demonstrable to prospective clients and consequently, we have seen an increase in new instructions over the last 18-months. In addition, having a very broad client base, including institutional investors, property companies, developers and private wealth businesses ensures we have opportunities during the peaks and troughs of investment cycles, due to differing objectives and investment strategies.

​ What’s the biggest change you have seen in your sector throughout your career?

There are many, but the main one has been the specialisms created in Property Management over the years. When I started my career in 1995, property management was viewed as the poor relation of the industry, low margin, mundane and quite frankly boring! As Property Managers we performed all the day-to-day functions, including procurement (often relying on the yellow pages to find a suitable contractor for an urgent jobs) contract management, inspections, Health & Safety compliance, arrears management and tenant liaison.

As time moved on, the industry introduced Facilities Managers to deliver the onsite aspects of PM/FM and Accounts teams broadened their scope to include credit controllers and service charge accountants. Fast forward a few decades, and we now have specialist teams dedicated to ESG, customer experience, technology, health & safety, energy management and procurement.

This specialisation has allowed property mangers to focus their time and energy on working to achieve our clients’ objectives to maximise returns from assets, and overseeing exceptional service delivery to our occupiers. We have continued to develop our skills, to be able to offer our clients the best solutions in a constantly changing world, whether that involves improving BREEAM in use ratings, ESG credentials, development consultancy for new schemes or offering front of house services in managed buildings.

The stability of revenues from property management proved invaluable during the economic slowdowns and recessions throughout the 1990’s and it is now finally recognised for its value to our clients and our colleagues.

In seeking feedback from one of our clients recently, they advised that as their property managers, “we rely on you to work with us and we see you as integral to our performance.” The role of the property manager has clearly evolved and has become much more valuable to our clients over the last 30-years. In many instances, we know more about their assets than they do !

What are your predictions for the next 12-18 months, in your sector?

Predicting specific trends in commercial property management is challenging due to the dynamic nature of the industry and the unpredictability of external factors.

Focus on health and safety: The COVID-19 pandemic has heightened awareness of health and safety in the workplace. Property managers will need to continue to prioritise implementing and maintaining rigorous health and safety protocols to ensure the well-being of tenants and visitors

Sustainability initiatives: There will be a continued emphasis on sustainability and green building practices in commercial property management. The need for implementing energy-saving measures, promoting waste reduction, and seeking green certifications to attract environmentally conscious tenants will continue and will be a focus for all investors moving forwards.

Focus on Occupier Experience: Enhancing tenant experiences will remain a priority for commercial property managers. This will include offering personalised services, creating inviting common areas, and organising community-building events to foster a sense of belonging and wellbeing amongst occupiers.

Resilience Planning:​ Property managers will increasingly focus on resilience, planning to mitigate risks associated with natural disasters, cybersecurity threats, and other disruptions. This involves implementing robust contingency plans and investing in resilient infrastructure. The COVID-19 pandemic highlighted the importance of contingency planning so that businesses can continue to operate when challenging factors take place outside of their control. We will continue to be agile and forward thinking to navigate the evolving landscape and effectively meet the needs of clients, tenants, and stakeholders.

What advice would you give your younger self when you first started your career in property?

Don’t worry so much, it will all be OK if you continue to do your best! Believe in yourself, keep pushing forward and seize opportunities when they arise.

It is easy to say but much harder to implement this advice. However, things do have a habit of working themselves out. When I graduated in 1993, job opportunities were scare due to the early 1990’s recession, with each role attracting thousands of applicants. I offered to work for local practices for no salary so I could gain experience to achieve my APC. After a move to London for 12-months working for the Valuation Office and then securing a graduate role in Bristol in 1995, I was back on track to gain my APC.

30-year later, I’m now Head of Office with 53 staff, 15 business lines and revenues of £7.5 million. At times it’s been a struggle, especially when trying to balance family life with two children, however it has been worth it and I’m so pleased I didn’t give up in the early days when it was tough going.

What’s your greatest work achievement?

A small but significant achievement which stands out for me was in relation to a client referral I received as a senior surveyor many years ago. I was managing a small office building on behalf of a PropCo in Bristol and fostered an excellent working relationship with the client. This client was asked by an old university friend of his, who happened to be head of property at a large supermarket chain, for recommendations for good property managers in the region. He recommended me, and as a result we won a significant portfolio of properties in the South West and Wales, which we went on to manage for over 10 years. The instruction expanded to include lease advisory and building consultancy work. From small acorns, great oaks grow! This experience was a valuable learning curve, and reinforced the importance of always delivering consistent highlevel client service, regardless of the scale or size of the instruction. You never know what opportunities it might lead to.

What could have the biggest impact on the property industry in the next 10 years?

Artificial intelligence (AI), which is already having a transformative effect is likely to have the biggest impact on the property industry, including working practices, over the next decade. AI harnesses the potential to revolutionise property management and the property industry as we know it, by identifying inefficiencies and suggesting improvements, streamlining operations and optimising the use of resources.

Over the next decade, we anticipate the cost of AI technologies to decrease significantly leading to an exponential increase in their application.. AI will ultimately enable property professionals to become more efficient, mitigate risks, discover new opportunities and, provide enhanced value-added services to their clients.

We are already witnessing AI performing functions on the property accounting side of the business, saving both time and resources, and optimising building systems, to improve energy efficiency and sustainability credentials. While there is still much progress to be made in fully leveraging AI in property management, it will become essential for maintaining margins and delivering effective solutions to client

The changing demographic within the UK has resulted in a situation where, for the first time, there are more people of pensionable age than there are children under the age of sixteen. This, coupled with the aging workforce in the construction industry, both within the contracting and consultancy markets, means that it is an alarming time for the industry. Satisfying labour workforces and recruitment demands has become a very real and pertinent issue for both contractors and consultancies.

Recruiting people into the industry is not a new challenge, but the changing demographic of the country is exacerbating the problem, requiring immediate attention. ​

Challenges caused by the construction skills shortage

It is essential to view these challenges within the broader context of the changing modern world, including increased flexible working, EU worker policy, the implementation of modern construction methods, and the efficiencies being driven through these technologies.

However, in the short to medium term, the aging workforce is straining the labour supply, leading to increasing labour costs. Wages have risen by 6% from a shortage of skilled tradespeople.

This is putting upward pressure on outturn construction costs as clients and developers strive to make their schemes viable. ​ Contractors are grappling with inflation, supply chain disruption, and a diminishing supply of workers to choose from as costs increase. Some contractors have even been forced to cease trading due to these challenges. All this has been too much for some contractors and we have seen some notable companies cease trading.

In terms of growth, the UK will look to construction to kickstart the economy in Q3 2023 and beyond. However, the drain of resources will put sustained growth at risk and make it difficult to meet the aforementioned numbers over the next few years.

Construction has historically leaned on workers from the European Union to satisfy this demand but according to the ONS, between 2020 and 2017 there was a 42% decline in the number of EU workers, compared to just a 4% drop from that of UK workers.

It remains to be seen what the effect of the ‘Back to Work’ budget will have on the industry after the government has relaxed migration requirements for key workers and whether this will mitigate some of this decline.

What are some of the schemes trying to help?

The government is trying to do its bit by the introduction of schemes to flood the younger end of the industry with the next generation. One such initiative is the introduction of the T Level in construction. This new technical qualification can be pursued after GCSEs and is the equivalent of 3 A Levels. Schemes like this can be used in collaboration with companies to meet their resourcing requirements and prepare the apprentices for the workplace. The courses are two years long and include nine weeks minimum working with an employer as an industry placement.

Although similar to apprenticeships, T levels will be more classroom-based, and give young people a route to academic achievement in a technical role.

In addition to the T level, there is the Construction Skills Fund, funded by the CITB, which aims to set up training hubs across the country. The funding supports live projects, providing to onsite experience to nearly 20,000 participants. Major contractors Wilmott Dixon, Balfour Beatty, and Morgan Sindall are just some of the major players in this scheme and have directly hired individuals for various roles.

Opportunities to help mitigate the skills shortage ​

The skills shortage is also impacting the consultancy sector of the industry. There is still a large proportion of the workforce that is aging, and the industry needs to do more to attract young talent.

The consultancy workforce has still seen the effects of Brexit and Covid 19; the exodus of EU workers and ‘big resignation’ of the older workforce after the pandemic. This is compounded by the globalisation of the construction industry and the attractiveness of international markets such as Australia, New Zealand, and USA in drawing talent away from UK consultants.

To address this, the Colliers Bristol Project and Building Consultancy team are actively contributing to rebalancing the scales by having over 25% of the team composed of apprentices. Two of them are pursuing their education at the University College of Estate Management, while the other two are enrolled in the local University of the West of England. ​

Additionally, there are a further two apprentices within the Bristol office that are part of the larger Colliers ‘Emerging Talent’ programme’. ​

Applicants are being encouraged for the next intake in 2024 and applications will open in autumn 2024.

In conclusion, there is a growing recognition within the industry of the challenges we currently face, particularly in the short to medium term, concerning the skills shortage. Initiatives like the government's T level and CITB Construction Skills Fund serve as positive starting points. However, it is now the responsibility of companies to drive their own programs, such as Colliers' Emerging Talent, to address these challenges.

The industry must adopt a cohesive and collaborative approach to: Attract skilled workers already working elsewhere in the industry

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The changing demographic within the UK has resulted in a situation where, for the first time, there are more people of pensionable age than there are children under the age of 16. This, coupled with the aging workforce in the construction industry, both within the contracting and consultancy markets, means that it is an alarming time for the industry. Satisfying labour workforces and recruitment demands has become a very real and pertinent issue for both contractors and consultancies.

These are the numbers that the UK construction industry is faced with currently.

Recruiting people into the industry is not a new challenge, but the changing demographic of the country is exacerbating the problem, requiring immediate attention. ​

Challenges caused by the construction skills shortage

It is essential to view these challenges within the broader context of the changing modern world, including increased flexible working, EU worker policy, the implementation of modern construction methods, and the efficiencies being driven through these technologies.

However, in the short to medium term, the aging workforce is straining the labour supply, leading to increasing labour costs. Wages have risen by six per cent due to a shortage of skilled tradespeople.

This is putting upward pressure on outturn construction costs as clients and developers strive to make their schemes viable. ​ Contractors are grappling with inflation, supply chain disruption, and a diminishing supply of workers to choose from as costs increase. Some contractors have even been forced to cease trading due to these challenges. All this has been too much for some contractors and we have seen some notable companies cease trading.

In terms of growth, the UK will look to construction to kickstart the economy in Q3 2023 and beyond. However, the drain of resources will put sustained growth at risk and make it difficult to meet the aforementioned numbers over the next few years. ​

Construction has historically leaned on workers from the European Union to satisfy this demand but according to the ONS, between 2017 and 2020 there was a 42 per cent decline in the number of EU workers, compared to just a four per cent drop from that of UK workers.

It remains to be seen what the effect of the ‘Back to Work’ budget will have on the industry after the government has relaxed migration requirements for key workers and whether this will mitigate some of this decline.

 

What are some of the schemes trying to help?

The government is trying to do its bit by the introduction of schemes to flood the younger end of the industry with the next generation. One such initiative is the introduction of the T Level in construction. This new technical qualification can be pursued after GCSEs and is the equivalent of three A Levels. Schemes like this can be used in collaboration with companies to meet their resourcing requirements and prepare the apprentices for the workplace. The courses are two years long and include nine weeks minimum working with an employer as an industry placement.

Although similar to apprenticeships, T levels will be more classroom-based, and give young people a route to academic achievement in a technical role.

In addition to the T level, there is the Construction Skills Fund, funded by the CITB, which aims to set up training hubs across the country. The funding supports live projects, providing to onsite experience to nearly 20,000 participants. Major contractors Wilmott Dixon, Balfour Beatty, and Morgan Sindall are just some of the major players in this scheme and have directly hired individuals for various roles.

Opportunities to help mitigate the skills shortage ​

The skills shortage is also impacting the consultancy section of the industry. There is still a large proportion of the workforce that is aging, and the industry needs to do more to attract young talent.

The consultancy workforce has also seen the effects of Brexit and Covid 19; the exodus of EU workers and ‘big resignation’ of the older workforce after the pandemic. This is compounded by the globalisation of the construction industry and the attractiveness of international markets such as Australia, New Zealand, and USA in drawing talent away from UK consultants.

To address this, the Colliers Bristol Project & Building Consultancy team are actively contributing to rebalancing the scales by having more than 25 per cent ​ of the team composed of apprentices. Two of them are pursuing their education at the University College of Estate Management, while the other two are enrolled in the local University of the West of England. ​

Additionally, there are a further two apprentices within the Bristol office that are part of the larger Colliers Emerging Talent programme. ​

Applicants are being encouraged for the next intake and applications will open in autumn 2024.

In conclusion, there is a growing recognition within the industry of the challenges we currently face, particularly in the short to medium term, concerning the skills shortage. Initiatives like the government's T level and CITB Construction Skills Fund serve as positive starting points. However, it is now the responsibility of companies to drive their own programs, such as Colliers' Emerging Talent, to address these challenges.

The industry must adopt a cohesive and collaborative approach to:

Attract skilled workers​ alreadyworking else where in the industry

Attract people​ back to the industry that have now left

Shortening qualification periods​ through intense training​ to meet demand quicker

Improving​ the retention of staff​ within the industry

Striving to increase productivity​ through innovation​

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Alex Vacher​
Director
Cost Management alex.vacher@colliers.com

Alex is ​ Director and Chartered Quantity Surveyor with over 10 years of industry experience in Cost Management and Quantity Surveying.

Alex is passionate about delivering excellent commercial advice for our clients for them to obtain best value. His focus is on how he can apply commercial acumen to add value for our clients through all stages of the project.

As the head of the Cost Management team at our Bristol office, Alex assumes the responsibility of leading a highly skilled and dedicated team, ensuring the delivery of outstanding results for our esteemed clientele.

 

Alex Vacher​
Director | Cost Management

Alex is ​ director and Chartered Quantity Surveyor with over 10 years of industry experience in Cost Management and Quantity Surveying.

Alex is passionate about delivering excellent commercial advice for our clients for them to obtain best value. His focus is on how he can apply commercial acumen to add value for our clients through all stages of the project.

As the head of the Cost Management team at our Bristol office, Alex assumes the responsibility of leading a highly skilled and dedicated team, ensuring the delivery of outstanding results for our esteemed clientele.