The market is more and more shifting towards professional customers — large companies with relevant competencies and resources

Dmitry Vishnyakov, Managing Director of Pridex — about the key changes in the field of fit-out, how to improve the construction efficiency and the industry prospects in 2023.

Obviously, the market is changing — both in terms of demand for our services and in terms of skills and resources needed to implement projects.

One of the biggest challenges for us remains securing supplies of materials and equipment, and in particular working with parallel imports. In the current environment, many projects that have been under construction for quite a long time have become in some sense hostages to foreign solutions. They have already integrated certain utilities and systems that involve the use of products from a particular manufacturer, which are no longer available because of sanctions, at least through the distributors that everyone is used to working with.

In a situation where replacement with a similar solution is not possible, it is necessary to promptly find alternative means of delivery. Searching partners, building new logistics routes, ensuring the proper quality of the products brought and its warranty service (since we provide a guarantee on all our projects for one year after the delivery), all of these form a separate valid function that we are actively developing at the moment.

In general, the market retains the same trend increasing since the beginning of the year; the demand for quality offices comes mainly from large Russian businesses and companies with state participation.

In the first case, it is primarily the players who were able to adapt to the current situation, to occupy the vacated niches and buy out the assets of the left foreign competitors. Now they are actively expanding their staff and, therefore, need new office spaces. Among the most demanded industries are IT and telecommunications, the financial sector, construction, logistics, transport, and other industries.

As for the state companies, they have long needed to strengthen their HR-brand, to create better conditions for attracting and retaining qualified personnel. Now this need caused modernization of office properties they own and construction of new headquarters, etc. First of all, these are companies engaged in phase-out of imports, as well as mining.

There are two key areas. The first is to increase the efficiency of construction with digital tools. First of all, we are talking about information modeling. We have already accumulated a large number of cases using BIM-design, and we can say that by eliminating collisions at the initial phase of the fit-out project one can reduce costs by 4−5%.

In addition, we implement the principles of lean construction at our sites, aimed at increasing productivity and personnel involvement directly at the construction site, improving control over the movement of materials and equipment and the overall acceleration of construction. Digitalization also plays a key role here. For instance, we recently completed a project to introduce wearable devices at one of our large facilities in St. Petersburg, where 1,000 workers were equipped with smart watches to monitor their daily physical activity.

It works as follows: using data on the movement intensity and some other parameters obtained from the watch, a specially developed AI-model determines what an employee is doing at a particular time. This allows us to calculate the rate of activity or so-called "useful work" for each job. Based on that, we introduced a reward system for workers who exceed the average indicators, and as a result, in six months we were able to increase productivity by more than 15%.

It is still too early to talk about some fundamentally new areas in which Russian companies have been able to significantly increase their position, I think that we can return to this issue no sooner than the end of the next year. Nevertheless, those manufacturers who had already been developing in the country for a long time before the current events, have demonstrated high competitiveness and now got new growth opportunities. They include manufacturers of lighting equipment, custom-made products, complex metal products, glass (in particular glass partitions), cable products.

As for the friendly countries, there is a growing share of decorative and facing materials from Turkey, as well as natural stone, porcelain stoneware and other floor coverings from India in the finishing segment. In the segment of engineering equipment, the role of Asian suppliers is increasing. For example, up to 80% of all ventilation equipment is currently imported from China.

The main problem for the office segment is still high-tech products: multimedia, IT equipment, automation systems and equipment for the smart office. In spite of the cooperation with friendly countries in this area, the search for an equivalent quality solution is still a complex and very resource-consuming process.

I think that in the short term, we will see a trend to simplify projects, it is obvious that customers are not willing to sacrifice time and cost for a brand and will focus on the solutions for implementation of which it will be possible to deliver all the necessary materials and equipment.

We also expect the further increase in demand for service offices. This is because the current logistical difficulties make full-scale fit-out projects less affordable for small and medium-sized companies because of the increased time and financial risks.

In addition, the shortage of certain elements of finishing and interior design makes business owners reconsider their priorities in choosing a workspace. For some, the opportunity to move into an office with ready-made infrastructure, furniture, etc. becomes a more expedient way out than investing their own time and resources in repairs.

All this allows us to conclude that next year operators of flexible office networks will become more prominent consumers of fit-out services in the overall demand structure. Thus, the market is more and more shifting towards "professional customers", service offices and large companies with relevant competencies and resources.