Building differently: how modern methods of construction are shaping Bywater’s future
At Bywater, we’ve always believed that how we build is just as important as what we build. As the property sector evolves, we’re embracing modern methods of construction (MMC) to deliver spaces that are not only beautiful and functional, but also sustainable, efficient and future-ready.
Why modern methods matter
MMC enables us to reduce embodied carbon, improve build quality, and accelerate delivery. From mass timber construction off-site fabrication, to panelised and component standardisation, these techniques allow us to create buildings that are better for the planet. But not only that! They are better for the people who create them and this is a possible solve for the construction industry skill and talent retention concerns.
We are the only industry that builds the factory at the same time as the product, adding complexity and cost. The more we can do in controlled environments, the more likely we are to attract and retain young workers and apprentices (we have all been to a building sites, they are not very pleasant).
Paradise SE11: a timber-led pioneer
We’re seeing strong demand from occupiers for low-carbon workspaces, and timber-led developments as they continue to resonate with businesses that prioritise sustainability and wellbeing.
Paradise is a standout example of our commitment to innovation. This mass timber office development in London is designed to foster creativity and collaboration by connecting with its occupants, while dramatically reducing carbon emissions. Its tactile, warm, and deeply connected to its community – proof that sustainability and design excellence can go hand in hand.
Golden Lane: retrofit with purpose
At Golden Lane, we’re transforming an existing structure through a deep retrofit that prioritises carbon reduction and architectural integrity. It’s a project that reflects our belief in reimagining rather than replacing and preserving character in a “don’t fix what isn’t broken” approach while delivering modern performance
Adapting to new demands
As work patterns shift, so do our buildings. We’re designing spaces that support hybrid working, offer flexible lease models, and encourage communal, collaborative environments. And we’re expanding our portfolio into co-living, a sector with high demand and limited supply, where our values around sustainability and placemaking are just as relevant.
Looking ahead
Modern construction isn’t just about materials, it’s about mindset. At Bywater, we’re committed to building spaces, supporting the industry and reflecting the values of the people who make and use them: sustainable, adaptable, and inspiring.
We’re proud of what we’ve built…. and even more excited about what’s next.
How can rental homes help with the cost-of-living crisis?
Housing is the economic challenge of our generation. The cost of putting down roots has outpaced incomes for decades. In the UK, more young adults than ever are living with their parents well into their 30s. My wife and I, who are both working and have no kids, had to leave London to take our first step onto the housing ladder, and even then, our daily commute costs £37 and two hours of lost time. So even a compromise from a location perspective comes at a cost.
This isn’t just a UK story. My sister lives in Berlin, where rent controls have frozen supply, distorted the market and ultimately driven up rents and reduced housing quality. The symptoms vary, but the fundamentals are the same: too few homes, built too slowly. Internationally, policymakers often debate rent caps, additional taxes and potential subsidies, but the real solutions lie in how we design, deliver and operate homes. It’s important to remember that affordability isn’t just about rent or house prices, it’s about energy costs, transport costs, opportunity costs (time) and cost to the planet.
Here are my, possibly ambitious, solutions:
Build more and faster – supply creates choice, competition and stability. Complex planning and legislation in the UK has caused uncertainty for developers and investors. Uncertainty is the enemy of economic growth. We need a clearer route through to planning and legislative approvals (i.e. less late-stage viability reviews and building safety regulator ambiguity) and a mindset that treats housing as essential infrastructure. Profit shouldn’t be a dirty word; it funds growth, innovation and quality. Developers and landlords leaving the sector and/or the country is a loss we can’t afford as a nation.
Sharing is caring – we need to use space more intelligently. Sharing space isn’t a compromise; it’s smart. Co-living, student housing and Build to Rent models show how shared kitchens, gyms and workspaces can deliver better living at lower cost, with less energy and water use. It’s more sustainable, more sociable and should be more affordable if done at scale. The principle of multiple residents sharing certain facilities and amenities has to be more cost-efficient than each resident having their own individual spaces that are used infrequently.
Location, location, location – my commute costs nearly £9,000 a year and ten hours of my week. Living closer to work, schools, and amenities saves time, money and stress. Modern rental buildings can internalise many of the costs people currently pay externally, with on-site gyms, co-working spaces, and even nurseries.
Energy saving measures- it’s become one of the largest household expenses and one we can directly influence in our developments. Passivhaus principles, heat pumps and solar panels are better understood by the general public and are fast becoming an expectation in new developments. Better buildings protect both wallets and the planet.
Speed matters – every extra month on site adds cost to a development, which is ultimately passed on to renters and buyers. In a viability-constrained market, any impact on the cost of development does not come off the developer’s bottom line; it unfortunately goes onto the future residents’ bills. Or even worse, the project doesn’t happen. Low-rise timber systems and factory-built building elements can cut time, reduce risk and bring homes to market faster. This reduces site costs, labour costs, the overall cost of construction, and total finance costs. This is not just to the benefit of developers, but importantly to the benefit of residents’ wallets.
Developers and landlords cannot single-handedly solve the cost-of-living crisis, but they can be a valuable part of the solution. It will be materially helped by building more, designing better and backing the people who can deliver. Public perception in the UK of the real estate and development industry needs to shift. We are not the root of our housing challenges; we are the solution.
How to Avoid Climate Disaster
I’m currently reading Bill Gates’ How to Avoid a Climate Disaster. Even within the first few pages there are two very clear illustrations of the magnitude of the problem and the moral responsibility our industry has to help resolve it.
Firstly, while Covid 19 has seen a brief respite from CO2 and equivalent emissions, Gates estimates that in real terms this will likely amount to a temporary 5% drop. In other words, the current average of 51bn tons per annum would drop to 48bn tons.
Bear in mind here that the goal is ZERO.
Gates reflects on the scale of changes we will need to make if the last 12-month ‘epic of endurance and privation’, to quote the Prime Minister recently, have only moved the needle by 5%. As he says simply and powerfully at the outset: “51 billion and zero are the only two numbers you need to focus on”.
The second illustration – which also serves to demonstrate just how difficult the first one will be to achieve – is that, as the world continues to urbanise, we are on track to double the global building stock by 2060.
As he puts it, that’s another New York City, every month, for the next 40 years.
As developers we should relish that prospect. But perhaps living near the sea heightens my sense of urgency. This scale of development fills me with apprehension, but it also fires a determination to be a part of the solution.
While I am convinced that our solutions need to be radical, I’m equally clear that the future does not lie in some retreat from construction and development. We can debate the value of the ‘office’, the future of retail, or even the very nature of urban life post covid, but if the experience of being isolated in our homes for a year has taught us anything, it’s the fundamental importance of human sociability and our innate need to congregate in places to support that. Buildings, in other words. It’s why we first inhabited caves.
And, if it’s accepted that private investment has a critical role to play in the solution, then so do the much-maligned developers. Our role is to connect the innovators to sources of capital – the ideas to the money if you like – and take the calculated risks that excite those often-cautious institutional investors who have the power to effect large-scale change.
Alongside Gates’ book I’ve been reading a powerful novel about the Great War (hardly a light-hearted respite!). Analogies with war are overused (the ‘war on Covid’?) and typically designed to frame our own experiences in the form of similarly heroic struggle and stoic suffering (straight from the PM’s playbook). For the characters in the novel, and I suspect more generally, the war experience is framed more by feelings of responsibility and guilt; responsibility for our actions, guilt over the consequences.
If we want to avoid that sense of guilt when we are asked by future generations what we did ‘in the Great Climate War’, then those in our generation empowered to lead change need to start taking real responsibility now. My next two blog articles will describe the lead that Bywater is taking to continue fulfilling our responsibilities. First by making a binding commitment to put more than just profit at the heart of what we do through starting the journey to become a certified BCorp, and secondly, in pursuing radical alternatives to achieve net zero carbon buildings.
Green Leases for Green Buildings
Blog by Daniel Mead, Head of Asset Management at Bywater Properties
“Anyone who follows our recent activities at Bywater will know that we have been busy with our development project, Paradise SE11 in Vauxhall, and have been on the acquisition trail in London and in Manchester, acquiring new opportunities for us to create best in class, low carbon workspaces for the future. We are also busy managing and leasing our existing buildings and I’ll be sharing some insight into this over the next few months here on our thoughts page.
I have spent some time over the last few weeks checking progress of our asset management and leasing activities from a sustainability perspective. Green Leases is a hot topic once again on LinkedIn and CPD sessions across the UK this month, and is a great place for me to start!
Net Zero Carbon in Real Estate
As a response to the global climate emergency, the UK Government is committed to reaching Net Zero Carbon by 2050.
The real estate sector contributes 40% of all global Carbon emissions and we believe passionately that the solutions to our challenges as an industry lie in championing design and innovation; refurbishing where we can, building responsibly using low Carbon techniques where we can’t and always seeking expertise and excellence in everything we do.
At Bywater Properties, our whole team feels a sense of urgency around our responsibility helping to address the climate emergency.
The challenge facing the real estate sector in a nutshell is divided between Embodied and Operational Carbon and how these elements combine to make the Life Cycle Carbon emissions of projects.
We are already successfully approaching the Embodied Carbon challenge through the use of low carbon construction methods at all of our projects. At Paradise SE11 for example, we are using Mass Timber (CLT and Glulam) as a major part of the construction of a 62,500 sq ft office building to help achieve ground breaking Carbon results for new development.
Operational Carbon and Green Leases
As part of our Life Cycle Carbon strategy we have focused on making improvements in the way in which we approach reducing the Operational Carbon of our buildings.
We were an early adopter of Green Lease clauses, first at McLellan Works in Glasgow with Addleshaw Goddard where we refurbished and re-let the building during 2021-22 and then also more recently in pre-leasing drafting that we have been working on with Neil Sagoo and Scott Burn at Maples Teesdale LLP for our Paradise project.
The recent release of the Better Buildings Partnership Green Lease Toolkit was a welcome announcement as it gave us the opportunity to reflect on our own Green Lease work and review the progress that we have made.
It has been encouraging to learn that we match or surpass the benchmarks set out in the BBP Toolkit across our documents. There have however been lessons learnt, both in the comparison to the Toolkit and also in our own experience from using our documents.
Bywater Green Lease – BBP Tool Kit Benchmarking
The BBP Tool Kit has proven helpful as guidance for future work and in benchmarking the work that we have done to date.
I have used the table below as a simple checklist to match how our precedent documents fare against the BBP lease clauses and the light – dark green strength of each clause. Work in Progress is highlighted where we need to make improvements.
Bywater, BBP Green Lease Tool Kit Check List
I have been particularly pleased with the strength of our sustainability and in use clauses which promote energy use and recycling by the landlord team and amongst our tenants and also our equivalent of the the BBP Sustainability Group clause.
Green Lease – Service Delivery
Starting with a precedent Green Lease and agreeing one with your tenant is one thing, however its more important to deliver on the clauses set out in the documents!
The Greengage session centred around educating our tenants on the Net Carbon Zero challenge we are facing together and made suggestions on how they can help with recycling and energy use management on site.
Some of the conversations and negotiations that our leasing team – Fergus Maclennan, Meg Beattie, Caroline Coulter and Hannah Moore – have had have been challenging, occurring where some of the clauses have been viewed as “non-standard” by occupier teams. Whilst we haven’t had to choose between our environmental credentials and a tenant yet we have come close.
One key lesson learnt has been that we now front load the new green clauses at a much earlier stage clearly in our Heads of Terms to ensure that tenants and their legal teams have sight of these and can raise questions or concerns at the earliest opportunity, rather than during the heat of latter stage negotiations when patience is wearing thin and time is running out.
In terms of other lessons learnt, the BBP toolkit has helped highlight future improvements that we can make to our documents including the provision of a Social Impact Co-operation clause and extensions to Dispute Resolution clauses, areas that we haven’t prioritised to date.
Future Improvements
As use of Green Leases becomes more prevalent across the real estate industry and landlords and tenants become more comfortable with them, we expect that our combined ability as an industry to consistently agree clauses at the “Dark Green” end of the BBP Tool Kit spectrum will improve.
This will be crucial in ensuring behaviours in operation of buildings by the landlord and tenant improve as the darker the green the clause, the more legally, and potentially financially, “biting” the consequences of non-compliance will become.
In terms of the financial side of Green Leases we have been exploring this at Bywater. As a complimentary project we are trialing a Bywater Green Pledge between parties designed to extend a combined commitment to delivering Carbon savings in our buildings beyond the development and refurbishment and leasing transaction stages.
The Bywater Green Pledge is voluntary to begin with and sits alongside our Green Lease, encouraging the adoption of sustainable behaviours. The Pledge recognises that there are varied parties involved in achieving our 2050 Net Zero Carbon commitment. We are currently trialing the Green Pledge and will provide an update on our progress in a future edition of this series”.
Workspaces for Generation AI
The new wave of occupiers that are creating AI technologies – and those that are working with the AI products they create – have a longer list of workspace requirements than the industries that have gone before them.
So how can we at Bywater Properties prepare for this new wave and position our workspace refurbishment and development projects accordingly?
Impact of AI Technology on Workspace Demand
What impact will AI technology have on underlying office demand? If AI is going to make all of our jobs more efficient, and in some cases superfluous as many believe, then will we even need offices in the future?
In some locations, real estate experts predict that real estate demand will actually increase as AI technology develops.
Charles Clinton, CEO & co-founder of real estate investing platform Equity Multiple, believes a multiplier effect may result from investment in firms the likes of OpenAI and Anthropic, based on experience from the US.
“These firms will create a blast radius of demand in real estate markets. Smaller firms will pop up to benefit from the talent that the larger firms draw and to create ancillary value-add services on top of the fundamental AI progress delivered by larger firms.
An influx of highly compensated employees will create demand for coworking space, coffee shops and yoga studios, creating demand for flex office space, retail, mixed-use space as well as multifamily. We saw the same thing happen with Microsoft’s impact on the Greater Seattle area, and Google’s impact on Silicon Valley and the South Bay.”
Similar patterns are being seen in the UK in locations such as Kings Cross in London, around Google’s Deep Mind Lab and ahead of the opening of their 650,000 sq ft campus building next year, where affiliates and those that want to position themselves to win contracts in their supply chain are co-locating.
The UK as a Global AI Super-hub
The UK is now a global Artificial Intelligence superpower – being home to the 3rd highest number of AI companies and private capital investment in AI in the world.
Within the UK, London is the focus for AI investment and is a global hub in its own regard with Oxford, Cambridge, Reading and Manchester also attracting increasing attention from the industry.
A number of the world’s biggest AI companies, including Open AI and Anthropic, have chosen London as the base for their first international offices. Microsoft recently announced a new AI hub in London, and one of the leaders in the field, Google DeepMind was also founded over a decade ago in London and is now well established at Kings Cross.
AI companies are attracted to London by access to its deep, experienced labour pool (in turn attracted by London’s cultural influence and access to best in class amenity), its global transport and communication technology links and the stable legal and corporate environment that it offers.
What do AI and Tech Occupiers Want?
Its easy to oversimplify the answer by using the age old real estate mantra of Location, Location, Location – however this is true. AI and tech occupiers want the best location because that’s what their employees and their investors want.
In London, locations closest to Tube or Overground stations and nearest to the amenities that their talent pool wants outside of work will win the first review of sites.
In a recent article, Molly Goodliffe, Senior Consultant for JLL Work Dynamics wrote that “London is renowned for its universities, leading to a deep data science talent pool, as a buzzing multi-cultural city, it also attracts people from around the entire world, who want to live and work there.”
Proximity to entertainment, food and beverage options and open and green spaces is also important.
Whilst location is key, there are a number of other factors that we as developers can cater for in the race to secure the biggest AI and tech businesses with the most aggressive growth plans as out tenants.
So what else do AI and tech occupiers want?
They want to Attract and Retain Talent
As well as the location of the workspace, what the talent finds when it gets there is incredibly important in ensuring they (1) make the trip to the office in the first place and (2) that they want to return on a daily basis rather than work from home.
Hubble recently published an overview of notable companies workplace strategies, with the majority (including a number of tech firms) now favouring a full or hybrid back to workspace approach.
How can we play our part to help companies encourage talent back to the workspace?
Wellness Amenity Provide fitness and wellbeing facilities over and above basic gym facilities, such as saunas or studio spaces for PT, yoga and other classes.
Engagement
Encourage employee engagement with their workplace. For example Square Mile Farms is working closely with occupiers and developers to provide fresh produce and educate about vertical farming and sustainable lifestyles.
Purpose
Deloitte’s 2024 survey delves into Gen Z and millennial perceptions on global transformations and workplace evolution. It highlights the importance of work-life balance, purpose at work, values-driven decision-making and more. Employers must focus on creating a purpose-driven workplace.
Companies (and therefore real estate owners and developers) must harness the power of purpose, leading to increased employee engagement, a strong sense of belonging, and therefore, high employee retention.
Those working with companies with a clear sense of purpose will feel more invested in their role in the organisation and can dedicate more time and energy to their work.
They want Supporting Building Technologies
Smart Buildings Smart building technology that improves employees experience in a building by simplifying access for them and their guests or even simplifies their lifestyle by helping with lunch orders is well covered and established as an offering.
Smart buildings can also help foster an employee’s sense of purpose within a building by sharing data on practices like energy use and recycling and help to encourage good behaviour across all users.
Bywater is working with Cureoscity across our developments on our building app technology, leading with Paradise SE11.
Building Specification The extent to which AI and tech businesses require enhanced base building specification over and above standard office users is also something we are increasingly considering in initial design development stages of our projects.
For example the inclusion of and sizing of risers and M&E to support AI and tech users, the ability to allow for security provisions for server rooms and provision for self contained Edge Computing capabilities are all areas that we are exploring and becoming more comfortable with.
They want Green Buildings
It wouldn’t be a Bywater LinkedIn post without a reference to low carbon development and refurbishment of workspaces!
The energy intensive processes employed across the AI industry are likely to mean that its carbon impact will be huge in the future. The generation of just one AI model for example can emit nearly five times the lifetime emissions of an average car.
If we can provide buildings for AI and tech occupiers that help them mitigate their carbon impact then our buildings should be more attractive to them in the future. Whether by promoting energy efficiency and sustainable behaviour in our green leases or building apps, or with the use of sustainable materials and furnishings and low carbon materials such as mass timber we can help occupiers to limit the embodied carbon impact of their workspaces.
At our Paradise SE11 project the use of mass timber in construction helps the 62,500 sq ft office development achieve lifecycle carbon emissions of 491kg CO2 sqm from completion in 2025 which will beat the RIBA 2030 target of 750kg by 35%, 5 years early.
They want Flexibility
Do AI and tech companies want to commit to spaces they might outgrow when they are in aggressive development stages?
How do we underwrite a letting to the hottest start-up when they have burnt through all of their seed capital and are working on the next series of their funding?
What if they wont commit to long leases and have no covenant strength to keep our investors happy?
In short, we need to be more flexible when engaging with these occupiers if we are to attract them, and need to help them with their transition from their start-up space, whether it be in their garage or local serviced office, to our modern workspace developments.
Offering shorter flexible lease terms, fitted space options and simplified lease agreements as well as potential “swing” or growth space within buildings could help this transition. Our challenge is to make this approach stack up financially with our shareholders, lenders and valuers.
If we can curate tenant mix within our buildings to balance the flexibility we need to offer and the income risk this creates with longer lettings to more established occupiers from other sectors then this may help. The more established occupiers benefit in turn from proximity to growth enterprises and the atmosphere and business opportunities that this could create.
In a nutshell then it’s all about the best location and having a good mix of tenants in our buildings if they are to be a success.
