Commercial targets

We find out why the shockwave predicted to hit the UK commercial property sector post referendum, hasn’t materialized and what opportunities it offers glass processors. 

Pre-referendum investment in new commercial buildings – office, retail and industrial – was predicted to hit growth of seven per cent in 2016, becoming the fastest growing area of construction  this year (Experian Construction Growth Forecasts). Immediately after it, predictions took a decidedly downward turn.

The Brexit vote delivered a seismic shock which brought transactional activity in many cases to a juddering halt. The much heralded run on the retail funds was headline news for several months but after initially ‘running-to-the-hills’,  institutional and private investors are back and so is the commercial sector.

Yes, big pension funds are reported to be proceeding with more caution, hedging their bets while they wait for the format of the UK’s settlement with the EU to become more concrete. But the slack in the market as far as it exists, has according to analysts been picked up by overseas investors.

Recent reports suggesting that the fall in the value of Sterling, has in fact increased market appeal to those with investment funds in other currencies.

A recent poll amongst investment management company JLL’s global investor client base to gauge sentiment into UK commercial property post the European Union referendum result, found that the majority of overseas investors believe that the fall in sterling since Brexit has created opportunities to invest in the UK’s commercial property sector.

Overall some 72% believe that investment openings have increased while 27% of those surveyed said that it was an immediate opportunity, with 45% agreeing but planning to wait.

“As long as the UK retains some form of access to the single market, long term forecasts for the commercial property sector remain positive post-2017”, says Joe Hague, Managing Director, Promac Group. “Compared to some of the markets around the world in the post-Brexit Trump era, the UK in fact starts to look like something of a safe bet.

“That means that as a market, it continues to represent opportunities for glass processors. Things are a little more difficult to call with certainty in the immediate term but if you look at longer term trends, prospects are actually very good”, he continues.

Research into the market for commercial glazing suggests that between 2012 and 2014 the market grew by 29% in installed value terms. The volume increase over the two year period was 10% (Palmer).

“Much of this growth in volume terms came from the public and education sectors, which accounted for 61% of the total market in 2014. This is an area with long lead times and is insulated from any short term loss of confidence i.e. projects commissioned for two or three-years ahead are still going ahead, regardless of any loss of confidence amongst institutional investors this year”, continues Joe.

According to Palmer, the most significant individual area of growth was, however, the private sector, and in particular, offices which shot up 59% in installed value terms and by 35% in volume terms over the two year period.

Although made pre-Brexit Palmer’s forecast was for the continuation of this trend through to 2019, contributing to total growth at 39% by 2020. Education was also forecast to see growth of 22% over the five year period on the back of increasing private funding of the school building programme through PF2 and privately funded investments by the Universities sector. Retail was also forecast to see growth of 14%.

“These are forecasts made pre-Brexit but unless the economy takes a real long term tumble, the demand for glass in the commercial sector is going to remain high in the longer term”, says Joe. “That’s driving growth, particularly for laminates given the areas of growth identified.”

Promac Group is exclusive supply partner for Forel’s Vertical Cutting Line for laminate. Capable of processing sheets of up to 6000mm x 3300mm, it gives processors scope to manufacture large units, which define many commercial properties.

Having come ‘into its own’ with the increased use of laminated glass, particularly in the commercial but also residential sectors, the Forel Vertical Laminate Cutting Line,  turns the horizontal cutting process into the vertical, reducing machinery footprint, whilst delivering increased productivity and performance, also reducing manpower equivalents and handling.

The cut-to-size accuracy of the line is to within +/-  0.2mm / linear meter , while the square cut is guaranteed by the revolutionary cutting bridge that tilt via fixed axis +/- 15 mm automatically adjusting for glass out-of-squareness.

Keeping glass in the vertical plane throughout the cutting process, also reduces tension of the applied load on the glass sheet and with it, the risk of breakage. The fact that it can also be operated by a single operative is another major advantage and one which has set the tone towards increasing automation in glass processing and IGU manufacture.

“Keeping glass vertically delivers advantages that increase performance by reducing handling and manpower processes”. Joe continues: “Glass stock is almost always transported and delivered vertically so removing the need to drop huge glass sheets into the horizontal plane removes process but maximizes the potential area between the factory floor and its ceiling.”

This thinking is evident in Forel’s newly launched sorting system. The highly innovative line solution for cut glass delivers new efficiencies and improved product flow throughout the factory or individual lines by automatically collecting, sorting and then racking cut glass, optimising production.

This not only eliminates manual handling but also delivers a step change in efficiency, thanks to a quality scanning system that identifies glass surface defects immediately after washing. Preventing poor quality glass from being processed up stream improves overall performance.

“This is a potentially big saving” continues Joe, “if there is a surface defect, it is identified before you lose time at the top of the process. The Sorting System is also very flexible. It’s modular so it is adaptable and can be designed to meet the specific requirements of the individual customer.”

He concludes: “Growth across the commercial sector is driving the specification for laminated glass, work that is defined by unit size and larger applications. Greater volumes ultimately require extra capacity and the Forel Vertical laminate glass cutting line provides all of the key ingredients that justify investment.”

For more information log on at www.promac.co.uk  or call 01788 577 577.