Water Problems for Commercial Property

Copyright: David Lawson - published Property Week May 2006

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Getting around central London could be a nightmare over the next few months as forecasters predict another blistering summer. Drivers’ temperatures will be raised even further by a rash of road works but other cities should not gloat, as they could soon face similar disruption.   It might seem strange in these rain-soaked islands that water is becoming critical and suppliers are desperately replacing leaking pipes. Restrictions are already in force across much of the south-east, which is facing the worst drought for a century. Other regions could follow after a baking summer and another dry winter.

   Finding more water will not be easy – or cheap. A new Welsh Assembly would never allow the flooding of valleys that kept the Midlands alive in the last century, while one engineer only half-jokingly estimated that piping from Scotland to the gasping south-east would make water as expensive as Scotch.  For the moment, conservation is paramount. Pipes laid more than a century ago now leak more than a third of their load. Central London is suffering more than most after being battered by the Blitz, massive disturbance from redevelopment and traffic unimaginable to Victorians who laid the network.

  So Thames Water is taking a lead, replacing 1,000 miles of cast iron with plastic over the next few years. Even if central London escapes the worst of the drought, landlords should keep a careful eye out for warnings about interruptions to supplies affecting taps, toilets and cooling as pipes are switched. Managers will also need to check electrical systems, as they were commonly earthed to water pipes until the Sixties and will no longer be viable.

   But commercial property faces more significant long-term challenges. Current restrictions are aimed at domestic uses such as garden hosepipes but it is possible that developers and landlords could be hit if the crisis deepens.  ‘Commercial property has never been restricted by drought controls, but that does not mean it could never happen,’ says James Dodds, head of environmental consultants JDIH.   Investors should be ‘future-proofing’ buildings by looking at water conservation measures in the same way as they consider energy efficiency. 

  New building regulations are already putting pressure on housebuilders but some leading commercial developers are making their own provisions. Most new office blocks make some use of ‘grey’ water systems which recycle waste for other uses. Gazeley has created a new warehouse model which will cut water almost in half  by harvesting rain from the roof and installing measures such as low-flush toilets, spray taps and timed controls. This will add 50p/sq ft to conventional building costs on a 400,000 sq ft development but there are ways smaller schemes and refurbs without such economies of scale can ease the burden.  Accelerated capital allowances allow all spending on approved water-saving technology to be written off in one year, just like green energy techniques.

   Victorians often drilled below their buildings to find alternative supplies. At one time Abbey National promoted the Sherlock Holmes link with its old HQ in London’s Baker Street by bottling water from a 630ft well, with the detective’s profile on the label.  Options are more limited today. Water is available deep below places like central Birmingham and London but regulators are reluctant to grant extraction licenses in case resources are further depleted, says Dodds. Even those granted are restricted to modest amounts.

   Water UK, the suppliers’ pressure group, denies critics claims that water shortages will prevent government plans for swathes of new homes across the south-east.  ‘We have a statutory duty to supply water,’ says spokesman Barrie Clarke.  ‘But developers must learn to accept that we cannot magic up supplies overnight.’

  Thames Water is not relying only on mains renewal. A new reservoir has been pencilled in near Abingdon, serving not just London but growth areas around Swindon and Oxford.  It also proposes a multi-million-pound desalination plant which will clean river water and help supply hard-pressed east London.Yet a reservoir will take 15 years to work through the planning system and construct. The proposed desalination plant may not get past the public inquiry which opens this month [MAY].  London Mayor Ken Livingstone feels it will consume too much energy, although Thames water insists it will only be used at times of crisis.  

  In the meantime, landlords will need to keep an eye on the headlines. When supplies run low, water companies go through three warning stages. The first, banning non-essential activities like garden hosepipes has already hit large areas of the south-east. A drought order will be next, preventing activities such as washing of buildings. The final stage is most worrying, when standpipes and water tankers appear on the streets. Regulators refuse to rule out that buildings like office blocks may have to close as taps and toilets run dry.  That could finally send out the message that secure water supplies will be as important to occupiers as reliable energy in the future.