STUDIO FOCUS: A sustainable growth and diversification strategy at our Düsseldorf studio

As the world begins the process of emerging from the COVID-19 pandemic, we will be taking a look at how Chapman Taylor’s international studios are responding to changed outlooks, changed market requirements and changed approaches to how we work as they adjust to the “new normal”. Next to be profiled in the series is our Düsseldorf studio, which is transitioning to a hybrid “Smart Working” scheme, and which is responding to a changing German market by growing its presence in more sectors. Director Ruprecht Melder looks here at the current nature of the German economy and the long-term strategy of our German business as it considers new opportunities for growth and diversification.

Meeting the challenges presented by the COVID-19 emergency

We began working from home in March 2020 as the COVID-19 pandemic took hold in Germany and there was a dip in our productivity for a month or so. However, as we fully adjusted, productivity bounced back and our working arrangements were relatively smooth after that, including when we reopened more fully in late summer and had to revert to working from home at the end of the year.

At the peak of the pandemic in Germany, in November and December 2020, 70% of our studio team were working from home; now, however, 70% are working in the studio. We have found that most people prefer working in the studio environment and are happy to be back. As we move forward, we will be transitioning to a process of Smart Working, with people working three or four days a week in the studio and one or two from home if that is their preference and it is suitable for them.

Germany’s economy is in recovery from the pandemic, with 1.5% growth in July 2021, which is a good sign, but there is a lag in relation to the construction sector – none of our many on-site projects stopped during the pandemic, but we now feel the effects of the pandemic slowing the sector down.

There are two reasons for this: the cost of construction is increasing due to the scarcity or unavailability of many materials, such as timber and copper, and businesses are renting fewer properties because of the uncertainty in the market. However, we believe that the uncertainty affecting the rental market will diminish relatively quickly as the economy continues to recover and that this will help to stimulate demand for new space.

Responding to the changed market

The retail sector has slowed down quite sharply, although the trend had already been in place for some time before the pandemic. We have one new-build shopping centre on site (Dreiländer Galerie in Weil-am-Rhein), but we do not expect any more in Germany after that – shopping centre refurbishment and high streets will be the focus from now on.

We have several retail enhancement projects under way across Germany at the moment, although some are on hold because of a reluctance to commit to new lettings on the part of retailers. Shopping centre owners are keenly aware that they need to radically rethink their spaces, as physical retail space requirements shrink, to ensure their long-term survival. Most of our projects in this area involve the introduction of alternative uses at the upper levels, such as hotels, residential and offices – the mix varies according to the context and the specific social and market requirements of the locality.

Physical retail will continue to be an important component of our high streets, although with more of an emphasis on independent shops and new types of experience. We are also looking at some new-build retail parks in Eastern Europe; the retail park sector is resilient and growing, with a strong new emphasis on creating a lifestyle destination for all generations.

Residential and mixed-use projects are increasing in number, and we are very busy in both sectors. We presently have three residential projects on site, or soon to be, including at Schanzäckerstrasse in Nuremberg and Schuckertstrasse and Hornschuch Campus in Fürth. An additional residential project is at concept stage and we have just been contacted by a potential client to look at another. Residential designs will form an increasingly large proportion of what we do in the coming years.

We are also at the concept stage for a very exciting new mixed-use project which will regenerate a major German city centre, and also for a scheme which will repurpose a prominent former department store for a new era in another German city. Urban regeneration will be a key sector for us in the coming years, as we follow up the success of our award-winning City Plaza scheme at Wuppertal.

In addition to our existing office projects, such as at Proeslerstrasse in Nuremberg and BOB.Düsseldorf Airport City, we have two new office projects at working drawings stage. We are also busy on a major cinema project as part of the new, 419,000 m² urban district at Westfield Hamburg-Überseequartier in Hamburg – leisure experiences are a crucial component of our mixed-use schemes, urban regeneration projects and retail asset enhancement designs.

Exploring options for sustainable expansion

It is more important than ever for Chapman Taylor to be diverse in its sector capabilities in Germany because no one sector is particularly dominant at the moment. The economic growth that Germany is beginning to see is due to an increase in domestic consumption, but also due to public sector investment in the likes of schools, universities, hospitals and other services – this is an interesting sector for us and one in which we are exploring the possibility of a long-term presence.

Over the past seven years, our Düsseldorf team has grown from 30 to 42 people; the studio has now reached full capacity and we do not wish to exceed our current team size. We are instead investigating options for opening a second studio elsewhere in Germany, which will allow us to expand the German business in terms of numbers and sector capabilities. When that happens, however, it must be an organic process.

Chapman Taylor has traditionally expanded its presence internationally on the back of major projects, which provide the momentum, cashflow and motive for establishing a sustainable new studio location. It will be this which determines the types of sector we consider, and the skill sets that we will require.

We are interested, for example, in the healthcare sector, but we will not simply employ people with the requisite skills and wait for a project to come along – it must be the other way around. We will expand on the basis of our existing strengths, such as offices, mixed-use schemes and retail enhancement projects, and then use that as a firm basis from which to explore other options.

It is this measured and sustainable approach which will form the basis for our eventual successful expansion, and which will provide us with the tools we need to flourish in the post-pandemic era.