“We prioritise quality, and services are a part of that. We do anything we can in our construction work to offer the best. A good quality product will sell for more than an inferior product that may or may not be around the corner from your development. We have developments aimed for different price ranges, but we always strive to offer the highest quality development within those constraints.”
Insightive.tv: Can we begin by discussing national or international trends that you see are affecting your business?
Marco: Brexit springs to mind. I think the uncertainty around this has increased the importance of providing versatile office space. We have investors and funds that are interested in our spaces, and I think they have that versatility in mind. Currently, where we have the option to cut up units to make them smaller or let out a single floor at a time, we have incorporated that thinking into our developments to allow them to be easily converted where needed.
A lot of developers I speak with are worried about what is going to happen in the market. It is important that banks keep lending to small businesses across the board — there is no better way to start a recession than for the banks to stop lending.
Because we are entering into a period of uncertainty, we need to be aware of the pitfall that may occur. As developers, we always try and maximise our site value by maximising our planning potential. With Brexit around the corner, it is even more important to think about maximising sites by maximising the planning potential. Location is another important planning factor with uncertainty. It is important to be near transport links, SE1 has always been a favourite of mine. The main change with the international situation is the increased importance of being careful. Risk must be calculated.
Insightive.tv: Are there any other measures you have put in place in preparation for this period of uncertainty?
Marco: We have not leveraged our assets as heavily. This is something that we have learned lessons about from the past and I think a lot of the industry is thinking similarly. We are taking less debt, and try not to gear red. This is something that has been less of a concern in the past, but becomes a crucial responsibility in times of uncertainty. We do a lot of business with RBS, and they understand the financial requirements of businesses in our sector and their support and guidance has undoubtedly aided our growth and development. We have a great relationship with them and find them very helpful and approachable and are always available when we need to contact them.
I think, however, that we have entered a period of calm within the whole processes. Certain investors were blocked from pulling their money out of commercial funds and the markets have settled down following the immediate turmoil of the decision. In the back of my mind, I am worried about what will happen when Article 50 is finally triggered, and Brexit fully comes about. I think it would be beneficial to finalise the agreements as soon as possible.
Positively, however, developers are still building — we are still building — and there is demand for both rented and commercial property. We are still getting a lot of interest in our developments and we are still making sales.
Insightive.tv: Turning to your properties themselves, what sort of services do you offer within your commercial estate?
Marco: We tend to stress versatile spaces with reception areas on the ground floor. We now have provisions for bike storage — something I think is increasingly important. We also take into account the planning of the building — high ceilings and light spaces. We try and make sure to get as much light as possible.
We prioritise quality, and services are a part of that. We do anything we can in our construction work to offer the best. A good quality product will sell for more than an inferior product that may or may not be around the corner from your development. We have developments aimed for different price ranges, but we always strive to offer the highest quality development within those constraints.
Insightive.tv: What are your thoughts on co-working and service offices?
Marco: This is an interesting development that we are investigating. It is really the most versatile office environment imaginable. We are currently looking at another development in SE1 for this purpose, and we have investors that have expressed interest in the flexibility of such a space and how it could be achieved in the building — separate floors and lifts. Particularly in London, there is growing consumer demand for this type of flexibility, along with all types of office flexibility.
In my experience, office space is at an all-time high. A few years ago, there was something of an oversupply in office space that has now evened out, but this has led to high demand and something of a shortage of office space, particularly to buy. A lot of the office space we have built recently has gone immediately.
For example, a scheme we are considering at the moment was initially planning for mixed use — renting and commercial. But we looked at the space and found it is more viable to make it all commercial. A few years ago you would have never dreamed that to be the case. But now, in London, things are changing, and office space is becoming more valuable. So changing renting schemes to commercial is not unheard of, and we are a prime example of that.
I think this is one of several reasons co-work spaces are increasing in popularity, but it also means that there isn’t a large incentive for developers like ourselves to plunge into that new market — our tradition market is still profitable. We may lease space to co-work operations, but offering and servicing co-work space ourselves in not something we are planning on doing in the immediate future. Although, it is something we have thought about.
Insightive.tv: How do you think the market could improve in the future to benefit development?
Marco: I think that the current planning process, either residential or commercial, is a bit of a minefield. It would be helpful if boroughs would work more closely with developers to approve planning permissions. If the processes were quicker and more efficient, I think a lot more buildings would be constructed. As developers, a lot of us feel that getting planning permission can be costly and time-consuming. Sometimes we are working on a site for three or four years, and that is detrimental to everyone. Moving to a system that makes this easier for all parties involved would increase the number of properties in the market.
Marco Williams has been Director of North Star 2000 since 1995. He oversaw the company’s expansion and modernisation, bringing a detail oriented focus to maintaining the developers diversified and quality centric market position. With two decades of chief leadership experience within the sector, Marco is expanding North Star 2000’s hold in the market. We spoke with Marco to gain insight into the future of property development and how long and short term international developments will impact the business strategy of North Star 2000.
North Star 2000 is a property development firm founded in 1987. Engaged in both the renovation and construction sectors, North Star 2000 has built a reputation for high-class, quality construction. Their portfolio ranges from single-lot housing to large development and conversion projects — focused in London and the Southeast.
Part of THE FUTURE OF COMMERCIAL PROPERTY series
Trends, Challenges, and Opportunities An Inside View