What is hindering your market at the moment?

The ability to secure finance, fluctuating interest rates, and shifting risk profiles are key challenges. In the wake of a challenging macro-economic environment and ongoing economic instability, many lenders have tightened their criteria, with heightened risk profiles due to income volatility. Some lenders have adopted a cautious approach to financing, reflecting this in higher pricing. Despite these obstacles, borrowers are actively refinancing their existing debt as they evaluate the financial viability of their portfolios. However, with interest rates now being cut and inflation on the rise, borrowers and investors will need to closely monitor these trends as they reassess and diversify their assets in this evolving landscape.

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

Permitted development rights (PDRs) enable individuals and developers to make changes to buildings or land without the requirement to apply for or obtain planning permission from the Local Planning Authority. On 13th February 2024, a new consultation went live suggesting several changes. One of these amends proposed the conversion of certain commercial buildings to flats or single detached dwellings without having to go through the planning process. This in turn will provide greater flexibility to investors looking to repurpose their existing stock and prompt them to seek out new opportunities.

How would you summarise/characterise your sector over the past 12-18 months?

The sector has been marked by a dynamic and busy period, especially in the first half of the year, with numerous valuations completed for secured lending, accounts purposes, and development funding. While the lead-up to the election brought some initial uncertainties, the market remained active and resilient.

In September 2022, there was considerable ambiguity surrounding interest rates following the mini budget, which led to a slump in bond prices and rising yields, increasing pressure on the UK economy. Despite these challenges, we observed a steady increase in the volume of instructions from a diverse range of clients, indicating strong underlying demand and confidence in the market.

What differentiates the service you offer to your clients, from your competitors?

Delivery! Someone once defined marketing as ‘anticipating, delivering, and satisfying a customer’s needs', and the service we provide accomplishes this at every level. The speed and diligence in which we respond to each individual client’s instruction, with open dialogue and execution through to the final report, truly sets us apart.

What has been the best piece of advice that you’ve been given during your career?

My father, a chartered surveyor, advised me to "be true to yourself, true to your client, and just do it." Building my network and making new connections has been essential for fostering early relationships and establishing long-term contacts in the industry. I recently joined a property netball networking team and attended RICS Matrics and Women in Property events, where I met others on similar paths.

Additionally, staying informed about current news and topical issues is essential for maintaining a competitive edge, particularly for those preparing for the Assessment of Professional Competence (APC).

What’s the best work decision you have ever made?

In high school, I aspired to pursue a career in the arts, ideally with a firm of auctioneers. I completed an undergraduate degree in Art History, followed by a Master of Arts at the prestigious Barber Institute of Fine Arts. However, I decided to change my career path to become a Chartered Surveyor, and I am sitting for my APC later this year.

In 2019, I enrolled in the UCEM Master’s course in Real Estate. I began my studies, and then 2020 arrived – what could go wrong! I spent lockdown working towards my master’s degree while simultaneously contributing to my family’s niche surveying practice, which had secured some significant contracts as many other firms had closed. This was a challenging year, but the invaluable experience has brought me to where I am today.

What’s your greatest work achievement?

I played a key role in organising and planning Dr Walter Boettcher’s (Colliers UK Head of Research) regional roadshow this year, building on the success of the previous year's event, which I also coordinated. The event was crucial for strengthening both new and existing client relationships and we hosted a diverse group of attendees, including bankers, asset managers, and legal executives. This year's theme, "Debt, Development, and Beyond," featured Dr Walter Boettcher discussing the timing of rate cuts over the next two years and their implications for UK commercial property investment.

What is hindering your market at the moment?

The ability to secure finance, fluctuating interest rates, and shifting risk profiles are key challenges. In the wake of a challenging macro-economic environment and ongoing economic instability, many lenders have tightened their criteria, with heightened risk profiles due to income volatility. Some lenders have adopted a cautious approach to financing, reflecting this in higher pricing. Despite these obstacles, borrowers are actively refinancing their existing debt as they evaluate the financial viability of their portfolios. However, with interest rates now being cut and inflation on the rise, borrowers and investors will need to closely monitor these trends as they reassess and diversify their assets in this evolving landscape.

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

Permitted development rights (PDRs) enable individuals and developers to make changes to buildings or land without the requirement to apply for or obtain planning permission from the Local Planning Authority. On 13th February 2024, a new consultation went live suggesting several changes. One of these amends proposed the conversion of certain commercial buildings to flats or single detached dwellings without having to go through the planning process. This in turn will provide greater flexibility to investors looking to repurpose their existing stock and prompt them to seek out new opportunities.

How would you summarise/characterise your sector over the past 12-18 months?

The sector has been marked by a dynamic and busy period, especially in the first half of the year, with numerous valuations completed for secured lending, accounts purposes, and development funding. While the lead-up to the election brought some initial uncertainties, the market remained active and resilient.

In September 2022, there was considerable ambiguity surrounding interest rates following the mini budget, which led to a slump in bond prices and rising yields, increasing pressure on the UK economy. Despite these challenges, we observed a steady increase in the volume of instructions from a diverse range of clients, indicating strong underlying demand and confidence in the market.

What differentiates the service you offer to your clients, from your competitors?

Delivery! Someone once defined marketing as ‘anticipating, delivering, and satisfying a customer’s needs', and the service we provide accomplishes this at every level. The speed and diligence in which we respond to each individual client’s instruction, with open dialogue and execution through to the final report, truly sets us apart.

What has been the best piece of advice that you’ve been given during your career?

My father, a chartered surveyor, advised me to "be true to yourself, true to your client, and just do it." Building my network and making new connections has been essential for fostering early relationships and establishing long-term contacts in the industry. I recently joined a property netball networking team and attended RICS Matrics and Women in Property events, where I met others on similar paths.

Additionally, staying informed about current news and topical issues is essential for maintaining a competitive edge, particularly for those preparing for the Assessment of Professional Competence (APC).

What’s the best work decision you have ever made?

In high school, I aspired to pursue a career in the arts, ideally with a firm of auctioneers. I completed an undergraduate degree in Art History, followed by a Master of Arts at the prestigious Barber Institute of Fine Arts. However, I decided to change my career path to become a Chartered Surveyor, and I am sitting for my APC later this year.

In 2019, I enrolled in the UCEM Master’s course in Real Estate. I began my studies, and then 2020 arrived – what could go wrong! I spent lockdown working towards my master’s degree while simultaneously contributing to my family’s niche surveying practice, which had secured some significant contracts as many other firms had closed. This was a challenging year, but the invaluable experience has brought me to where I am today.

What’s your greatest work achievement?

I played a key role in organising and planning Dr Walter Boettcher’s (Colliers UK Head of Research) regional roadshow this year, building on the success of the previous year's event, which I also coordinated. The event was crucial for strengthening both new and existing client relationships and we hosted a diverse group of attendees, including bankers, asset managers, and legal executives. This year's theme, "Debt, Development, and Beyond," featured Dr Walter Boettcher discussing the timing of rate cuts over the next two years and their implications for UK commercial property investment.

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.