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Over the five years that Deloitte has been running the Belfast Crane Surveys, the picture it has created has very much been of a city that has real momentum.
The growth in the office market has been faster than ever seen before and we welcomed a raft of hotel developments in step with rising visitor numbers to the city. Ulster University and Queen’s University have invested heavily, the student population has in turn risen rapidly and the push for more residential development has been gaining support. High street retail has struggled over that time, however this is reflective of changing consumer habits globally.
When we published the fifth annual Belfast Crane Survey in February, the assumption might have been that the positive momentum would have been derailed and that construction and development activity would fall off a cliff in 2020 as a result of the coronavirus pandemic.
But, looking at the 23 schemes started or under construction, if I was asked the question ‘did the pandemic change everything for development in Belfast as it did in so many parts of our lives’ the answer is probably yes, and no.
While activity was certainly down on previous years, there continued to be a number of major projects underway and even starting during the year, suggesting a degree of resilience in the long-term view of Belfast.
The overall figures in the 2020 survey were held up by office developments – with 11 schemes representing 1.3 million square ft started or underway during the year – the largest amount of new space since we started the survey.
That two-thirds of that space is still not let is perhaps not surprising given we are still in the middle of a pandemic and the role of the office in working life is being reassessed (and while employers and employees currently have a restricted choice as to where they work because of lockdown restrictions).
Many developers are pressing on with their new office projects, confident that the office still has a major role to play in a new world where working from home a number of days a week is expected to become more regular. However, it seems likely that how we use offices and how they are configured will change because of COVID-19.
We expect physical office space to remain a key element in the future of work alongside increased working from home. The dominant working hypothesis is that office workers will be increasingly expected to use offices for specific purposes, such as creative collaboration, face-to-face training, agile working in multi-disciplinary teams, team-building, onboarding new joiners and other events that are best undertaken in person.
Deloitte’s own survey of homeworkers found that almost half miss the social interaction of their workplaces, a third feel physical workspaces lend themselves better to collaboration and a quarter can network more easily in the office.
And while many people have managed a whole year of working from home it is not to everyone’s liking and has created new challenges for employee wellbeing. Setting aside the practical issue that many homes were not built to double as workplaces – whether due to space or infrastructure challenges - a lot of people have realised they derived comfort and stability from the predictability and rhythm of going into the office, as well as the clear boundaries that leaving the office set for the end of the working day and home life.
If, as expected, a lot of organisations allow for more hybrid working, with workers perhaps only in the office two or three days a week, there are a number of implications. Fewer office returners potentially means less demand for space. That could see rents come down – a positive for early stage and smaller businesses but not great for owners and investors, with potential knock-on effects for a fall in public transport revenues and rates revenues for the Council. It would also potentially make life harder for retail and restaurants already hit hard through the various lockdowns. This may be countered by greater opportunities for businesses in the suburbs and surrounding towns if those working from home spend more money locally, but again, that remains to be seen.
Of course, all of this is conjecture at the moment and until we see how the economy and life in general bounces back as restrictions ease. Most economists and analysts are hoping for a bounce in the second half of the year and hopefully that happens. But it seems clear long-term questions about how and where we work will be high on the agenda for employers of all sizes right across the city.
Kick starting residential development in Belfast city centre remains a long-term challenge and our survey showed a very quiet year.
The build to rent sector has yet to really take off in Belfast, despite being very popular in other cities, and that has limited city centre living. While the various student accommodation sites developed in recent years means we have a larger number of people living in the city centre, more accommodation is going to have to be built if we want these young people to stay in Belfast when they are young professionals.
The pandemic has in many ways affirmed thinking around the need for a greener, healthier city with better spaces for playing, walking, cycling and more outdoor spaces for socialising. The great challenge of city centre living is how to create communities and neighbourhoods within the wider city, so that people feel connected. The idea of the 15-minute city, where everything you need should be within 15 minutes of your home, is a great concept and a big challenge.
Getting this right, however, should help the city centre be a more sustainable, liveable space. It should also support efforts to move the city towards its carbon net zero target and it’s encouraging to see Belfast City Council setting targets for natural space in the next decade.
Just as organisations have been challenged by COVID-19 and are seeking to hold on to the key lessons forced upon them by the pandemic and the enforced transformation to how they operate, the same must be hoped for cities.
While the disruption of the last year will likely lead to some pain points in the short term, it is to be hoped that in the medium and longer term, it has given us insights that will help transform Belfast – and other cities – for the better.
Read more about this year’s findings here.
Colin Mounstephen has almost 20 years experience working at Deloitte having initially worked in social housing, and now primarily working in the Public Sector across strategic and operational projects. His expertise lies in the Regeneration, Tourism, and Security and Justice sectors.