Inside out

The interiors sector has become more sophisticated in recent years, in answer to occupiers’ demands for higher standards. Marc Lopatin examines the trends. Marc Lopatin is property writer for the Mail on Sunday.

For many years the property industry has been accused of treating interior design as little more than an afterthought. The deafening mantra of location, location, location has traditionally drowned out calls for what occupiers might actually expect from new premises.

But there can be no denying things have changed for the better over the last decade following the crash of the early Nineties. While developers are loathe to admit the customer is always right, they are at least coming to terms with a more tenant-led market.

In truth, many property companies and lenders have had little choice. Banks and other institutional lenders have learnt the lessons of the last crash by refusing to finance numerous speculative developments. This has had a profound impact on the office market, particularly in central London, where oversupply of new space has not been a problem in years. This is because, in order to secure funding, developers have been forced to first attract occupiers to pre-let large developments.

It is the pre-let market of the past four years that has largely redefined the relationship between landlord and tenant. Companies like BAT Industries, Andersen Consulting, Goldman Sachs and Simmons & Simmons have all pre-let major office schemes in London.

The advantages of pre-letting are obvious. Occupiers are able to negotiate a discounted rent in return for kick-starting the development. And, more importantly, they can play a central role in how the building is constructed and ultimately fitted out.

This is a far cry from the one-off speculative developments of Broadgate and Canary Wharf which bankrupted Eighties property legends such as Stuart Lipton, Godfrey Bradman and Paul Reichmann. During this era occupiers frequently accused landlords of developing the lowest common denominator of building to catch any old corporate, while landlords would bemoan the fact that occupiers didn’t seem to know the specifications their business required.

This contrasts with today’s offices, which reflect a much greater understanding of tenant needs. In Scotland, for example, there are developers which specialise in constructing purpose-built call centres.

The property industry may have taken its time getting its act together, but interior design is much higher up the agenda. Working practices such as hot desking, the demand for more energy efficient surroundings and the ever increasing role of information technology, have all had a profound impact on how buildings are developed.

But, as landlord and tenant are brought closer together at an earlier stage, the question of who pays for what has been muddied. A number of arguments have developed between pre-let occupiers and developers over who should pay for certain elements of interior design. Traditionally, landlords regarded this as the sole responsibility of the tenant. Agents say the issue is really dependent on supply and demand. Mark Warner, head of building consultancy at Richard Ellis says: “If there is a shortage of space then the landlord is under no pressure to offer extra incentives or contribute towards a fitout. But when there is competition for occupiers a landlord may lure a tenant by contributing to the costs of fitting out.”

In other sectors, such as retail and leisure, occupiers tend to drive harder bargains with landlords. Developers which build anything from a retail warehouse to a shopping mall are increasingly sensitive to the image each retailer wants to project. Retail agents say these fundaments have as much to do with the external envelope of a building as the interior itself. But most in the property industry agree that, by the nature of their business, retailers and leisure operators are used to opening new premises on a frequent basis and drive the hardest bargains.

Interior design is a more formidable process for office users which may refurbish existing space or relocate to new premises once every decade. Property agents, architects, and design and build contractors are mindful of this and are battling to be first on board to help companies decide. Consequently, agents are finding that their traditional role of property advisor is being increasingly threatened.

As a result of this, says Warner, companies are frequently being duped by design and build contractors which overcharge for fitting out or refurbishing space. “Some design and build companies are getting on board first and making a very healthy profit which we would not allow our clients agree to,” says Warner.

He says over-charging can run into hundreds of thousands of pounds. The argument goes that using agents to advise on taking space will subject contractors to strict pricing parameters and allow occupiers to drive the best deal.

But, to retain occupiers as clients, property agents are trying to create one-stop shops to advise tenants, and, for that matter, landlords, on any property issue. A number of former partnerships including Richard Ellis and Jones Lang Wootton are now fully incorporated global players following take-overs and mergers with American real estate giants.

Jane Lewis talks to the clients about their views and finds that branding is now one of the key issues facing the interiors sector.

Brands are playing an increasingly important role in interior design. Whether it’s a high street retail chain, a coffee bar or space planning for a merchant bank, the branding of interiors has become crucial. Retailers are looking for ever more creative solutions and are more aware of how leisure interplays with the shopping experience. They are taking a holistic approach and want a whole package from interiors to packaging – often from the same consultancy.

The market remains buoyant, despite talk of doom and gloom, and most groups are busier than ever as clients look to them for strategic solutions – whether it’s differentiation on the high street or creating more productive working environments. “We have yet to see any massive slow-down. Budgets are more or less committed for the next few months,” says Richard Watson, director at Global Design Register.

Servicing consumers is an increasingly important part of the designer’s brief. “Everyone’s focused on service. What’s predominant in all our work is the service proposition,” says Howard Saunders, creative director at Rawls & Co. He adds, clients are also looking to their consultancies to come up with solutions which work harder and “break the genre”.

The office sector has become more brand aware, says BDG McColl director Alex Redgrave. And boundaries are blurring as approaches to retail solutions become more appropriate for workplace environments. “We’re seeing retail branding of office interiors and we’re doing more work with our retail teams,” he adds.

What clients want

“They’re looking for creativity but they also want an easy life,” says Watson. That means solutions that can be implemented without problems, and concepts which work commercially. While few clients commissioning interiors operate rosters, several prefer developing long-term relationships with one specific consultancy to ensure consistency and encourage a shorthand between client and designer.

When bathroom specialist CP Hart was looking for a consultancy to create a new showroom concept the search was not an easy one. “We wanted a group which had great empathy for what we are about and what we wanted to create in terms of experience. A good track record is important, and how it can interpret our ideas,” says managing director Steve Maguire.

“We look for a really intuitive understanding of the brand – first and foremost. And how well it understands our customers and what we’re trying to achieve with our shops” says Martin Lee, marketing manager at Waterstone’s. “You more or less assume that a well known design group has the right technical skills – what separates them is that connection.”

Waterstone’s Glasgow store has just won a Design Effectiveness Award for interiors by BDG McColl, with which Lee has an on-going relationship. Although, he adds, he uses a mix of designers and architects to inject “variety”.

“Our relationship with Rawls & Co is very important and we’ve used it for a few years now,” says Lucy Powell, project manager at Trailfinders. “A lot of our projects have a very tight time element and you have to have a good relationship to ensure you can overcome any problems. Both sides have to understand how each party works. Rawls & Co has the confidence to know how I react if there are problems with the contractors.” She adds: “It is not just a design group. It seems to cover everything and is open-minded towards what we want.”

Peter Wilde, general manager of non-food at CWS, stresses being able to come up with inspired ideas, despite a tight budget, was crucial for a new concept within the CWS stores. Conran Design Group was selected from a shortlist of around five consultancies. “CDG initially conjured up for me high cost and blue sky ideas but it’s a company you can sit down with and talk to. We were looking for a consultancy which was creative within a tight budget. While the consultancy is very creative it has also been conscious of the cost constraints and worked with us on that. What it has delivered has more than met our expectations,” says Wilde.

Working to budgets is also crucial to The Tulcan Group, whose Sock Shop subsidiary was shortlisted in the Design Effectiveness Awards for a scheme by Diefenbach Elkins Davies Baron. Tulcan Group chairman Peter Ridsdale has worked with the consultancy in the past which is why it was commissioned for the Sock Shop project. “We wanted a group which was retail oriented – the high street is so competitive – and people we believed would be able to achieve the task we set them in the shortest possible time. There were also budget limitations and we knew DEDB could work to budgets,” says Richard Aquilina, international franchise controller at Tulcan Group. He adds: “We wanted flexibility, the ability to communicate on a regular basis, an understanding of our requirements and a group which would come up with the right solution.” The Tulcan Group also wanted a consultancy which could carry out packaging design in-house to tie in with the new store concept. “We wanted to promote Sock Shop more as a brand than a retail concept.”

BT operates a list of approved suppliers from which Lesley Wilson, new channel development manager at BT, sourced five design groups to come up with proposals for a BT Connection Centre to showcase products. “In terms of understanding the target market, creative approach and environment I was aiming at, Cobalt was ahead of everybody else. I had a lot of confidence in Cobalt’s project management approach and the personalities involved. I was also looking for evidence that it could handle a big client and would be able to deliver the project on time,” says Wilson.

Room for improvement

One of clients’ biggest gripes is being presented with concepts which won’t translate into reality, and design groups which try to foist inappropriate ideas on to clients. They want reassurance that consultancies will be able to deliver on time and to budget. Justifying investment in design is also crucial.

“If people try to tell you what’s best for you it’s difficult to accept. If you work with a design consultancy which lays down the law that’s really dead end,” says Ros Hines, brand manager at Waterstone’s.

This is also a bugbear for Powell: “With some design groups it’s hard to get them to bend and re-adjust things. You are destroying someone’s work to a certain extent and they can feel insulted, but it’s just another point of view. You want a happy conclusion on both sides and unfortunately some groups aren’t like that.”

For Maguire, some consultancies let themselves down at the selection stage. When he was looking for a design group he discovered an unwelcome “laziness and sloppiness”. He explains: “We asked potential consultancies what they knew about us, and very few of them had done any proper research. Design groups should always be looking to be one step ahead of the client and challenge us – there is a tendency for us to have to drive a project.” ©

Aquilina stresses it is essential for consultancies to have a thorough understanding of their clients’ needs and to “know” them well. “You rely very heavily on the design consultancy that you’ve commissioned to come up with the right solution,” he says.

Lee agrees: “What often goes wrong is that you don’t feel like you’re gelling properly with your design group because it doesn’t understand you. If, at the pitch stage, you have an group that understands you, you’re half way there because you’re both looking down the same end of the telescope.”

Wilson says having a commercial approach is crucial for a client like BT. “It’s a very important part of an interior design project that the consultancies understand their clients’ business objectives so design has to deliver and doesn’t just become design for design’s sake. Design groups have to be really good at understanding how they can help clients achieve business and revenue objectives. Clients are getting harder about wanting a commercial return on their investment,” he adds.

Simon Hill-Norton, new business director at Whittard (see case study), says the chief thing that has worried him in the past about interior designers is that: “I’m never convinced they’ll be very practical – they may come up with fantastic ideas but they aren’t always very good at implementing them.”

Fees

Depending on the project, clients are usually prepared to pay market rates for interiors projects but there are always cases where both sides haggle. Clients want value for money and quotes without hidden extras, while design groups sometimes feel their services are undervalued compared to total project costs. But there is less cut-throat competition than in other areas of design.

“We were pleased with the results and felt the fees were quite acceptable for the task performed,” says Aquilina.

“I wouldn’t have picked Cobalt if I felt its fees were not realistic. With many consultancies I get value for money out of them, above and beyond their exact design fees,” says Wilson. Powell is also happy with the fees she pays: “There are times when it goes beyond the realms of duty and that pays off.”

There is a consensus that some consultancies charge inflated fees and concern that scales can fluctuate. “If the design costs are too high you’re never going to do a trial or get new concepts on the high street,” claims Hill-Norton.

Carte Blanche partner Su Davies (see case study) complains that while she had no problem working with Watered, other clients can “undervalue the time it takes to produce quality work”. She adds it can be difficult getting the right balance between value for money and “actually being paid for your value and intellect. People expect to pay high fees to lawyers and accountants but don’t have the same views when it comes to architects and designers.”

Future trends

Watson is sceptical about an imminent downturn in demand from retailers. “Retailers see design as critical, which is perhaps linked to the fact that they have to spend a lot of money on it.” However, he predicts more consolidation among interiors groups – particularly those specialising in retail. “I would expect a few more mergers and acquisitions – it provides both safety against potential recession and a greater range of services and cross referrals,” he says.

As Jill McArdle, strategic business director of retail and leisure at BDG McColl points out, retailers and designers are having to work harder at reinforcing brand messages and brand differentiation. “The future is about being adept at reinforcing the brand message, enticing more customers into the store and creating emotional bonds – customers need to take away more from their visit than a jumper in a bag.”

She adds the challenge for designers is being able to understand “holistic brand communication” and how brand values can be translated into store experience. The same is true for leisure projects, with “clients being brand focused and understanding the power of retail with leisure, and leisure-based retail”.

Communicating the brand has also become an issue for office interiors, according to Redgrave. He believes clients need an integrated approach and set up Clever Space within BDG McColl almost a year ago which combines design and architecture with other skills such as management consultancy, workplace psychology and employee communications. “It means we can have more sensible and meaningful conversations with our clients,” says Redgrave. He sees the main demand for office interiors stemming from the services sector as well as global clients who want global solutions. “Our profession has to educate itself and get smarter. Clients are going to want more for their money,” he adds.

Saunders predicts greater collaboration between design disciplines and more alliances for specific projects. “There’s more openness and a maturity within the industry now.” m

Sector Report – Interiors

Whittard T-bar and Carte Blanche

‘I chose Carte Blanche for Whittard’s first tea bar because the group has the ability to be creative and also turn its ideas into reality,’ says Simon Hill-Norton, new business director at Whittard. The T-bar, launched last month in London, offers a new twist to high street coffee bars serving hot and iced flavoured teas and coffees and food.

Carte Blanche was initially asked to come up with a concept but Hill-Norton was so impressed with the way the group worked he widened the brief to include project management of the site.

‘I was looking for a track record specifically in restaurants and bars and an ability to implement the design,’ says Hill-Norton. ‘The most important thing is being able to rely completely on your design group. Carte Blanche was able to be tough with the contractor – as a client I knew my interests were very well represented. There was also extra comfort from the fact that Carte Blanche had worked with the contractor before.’

Su Davies, partner at Carte Blanche, says: ‘We’ve got a good working relationship with Whittard and are learning more and more about the business and product. Whittard is seen as a traditional coffee merchant so it was important to be contemporary and forward thinking in the way the products were promoted and presented.’

The end result is a tea bar which is modern but not clinical, explains Davies. ‘We’ve used natural stone and timber while the fabrics and lighting add warmth and comfort.’ Davies adds there were ‘clear lines of communication’ throughout the project, and, while it was a ‘democratic process, it was well controlled’, he adds.

Once the pilot T-bar has been trialled, Whittard plans to open up to ten new outlets next year.

Morgan and Kinnersley Kent

When Manchester’s Trafford Centre opened in September, fashion chain Morgan launched its new concept designed by Kinnersley Kent.

Themed on a fashion show, the interiors feature a raised maple-clad platform to resemble a catwalk and large mirror on the back wall, stainless steel and blasted glass finishes and reconstituted stone flooring. The store also includes Morgan’s first menswear range for the UK.

‘We had a look around to see who was leading the market in a commercial way,’ says Morgan retail director Stephen Shear of his search for a design consultancy. ‘We didn’t want a group which was either too way out or following the crowd too much.’

What impressed him about Kinnersley Kent was the fact that Glenn Kinnersley ‘not only has a design mind but a commercial mind – looking around there are some really good design groups, but they don’t always apply commercial realism’, says Shear. He adds: ‘It’s also important to have a rapport with the design team. They didn’t let their egos get in the way of the job. We got what we wanted at a price we wanted.’

Shear has since commissioned the group for a further two Morgan projects on the strength of its work at Trafford.

‘Retail design is much more considered and clients are much more nervous in case they change things for the worse despite the fact that most of them are trading quite well,’ says Glenn Kinnersley. He explains the Morgan concept was devised to ‘sharpen up its image – Morgan is very successful but it wanted to move the design along, not to fix something that’s broken but to make it crisper’.

Kinnersley adds that the relationship between Morgan and the consultancy works well because it is ‘very open and receptive and very hands-on which is how we like to work’.

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