Benchmarking for high-rise residential

Ameet Singh Heir
The more complex the product, the tougher the cost versus value exercise. High-rise residential developments need robust benchmarking data, if the financials are to stack up.

We’re seeing more and more high-rise buildings proposed and approved for construction in the UK, particularly in London, but also in the Midlands and Greater Manchester. Residential use dominates the mix, driven by strong competition for land, constrained urban sites, and ongoing demand for new housing across London and many regional cities[1]. Student accommodation providers are also turning to high-rise in some locations.

Building upwards obviously has density benefits for developers, but there are challenges in bringing projects to fruition. Planning restrictions, cost, space efficiency, wind and seismic considerations, structural safety, building materials and technical and logistical factors—there’s plenty to consider.

An evolving market

Many high-rise projects now target a new residential market, where institutionally funded products focus on good design, bespoke management and greater tenure mix and security. These offer an alternative to home ownership and traditional private rented stock and may include a range of amenity spaces. Gyms are commonplace, sometimes restaurants, bars and cafés, with private dining rooms, libraries, study areas and even music studios now appearing too.

Addressing the dilemma of which amenity spaces to provide requires a good understanding of the target market, and how to make comparisons when maximising net to gross floor ratio is a key financial driver. For successful community creation—and many schemes are part of specific placemaking initiatives—it may be possible to construct the amenity spaces for flexibility, with residents surveyed before final decisions are made on provision.

Establishing project viability with benchmarking

It’s crucial to focus on cost-efficient design from the earliest stages of project development.

The cost versus value proposition hinges on realistic decision-making, based on timely and accurate information. There should be no second-guessing: robust benchmarking processes should form the basis of project feasibility.

Our team typically considers the following:

  • cost per square metre
  • cost per unit
  • net to gross areas
  • number of units in gross internal floors area (floor area efficiency is a very useful early indicator)
  • wall to floor ratios
  • mix of unit types
  • optimal sizes of units
  • optimal room layouts, including furniture, for student accommodation
  • specifications for fixtures, fittings and finishes comparisons
  • net to gross floor ratios for amenity spaces
  • programme duration comparisons

Data driven decision-making

We capture data from a wide range of completed residential and student accommodation projects. This enables us to perform comparative analysis of cost and methodologies providing valuable information presented in accessible formats, to inform clients’ decision-making from the outset.

In addition, we produce an annual building cost guide, to help developers consider whether their product is a good fit and to identify potential synergies, conflicts and competitive products.

Of course, the application of benchmarking processes is only as good as the data captured—which is why our team members diligently use our insight benchmarking tool, creating an evidence-based resource which underpins all our work, helping residential clients achieve best value.

We are therefore well positioned to support clients in making informed decisions around planning, designing, funding, constructing, operating and maintaining assets, ultimately achieving best value. We understand the specific challenges associated with all types of residential developments, and our benchmarking expertise helps our clients evaluate their proposed developments.

 

[1] Dec 2018, AMA Research, Construction in the High-Rise Buildings Market Report - UK 2018-2025

 

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