Property and Construction
January 24, 2017
Amos Tversky and Daniel Kahneman introduced the concept of Loss Aversion in 1984, highlighting people’s tendency to strongly prefer avoiding losses to acquiring gains. Most studies suggest that losses are twice as powerful, psychologically, as gains. Lose £100 and we will feel a remorse that easily outweighs winning £100. In a similar fashion we find it very hard to see future positives when confronted with short term loses. We understand easily what we have lost but cannot imagine what there is to be gained. Furthermore, as Frederic Bastiat wrote in an 1850 paper, “That Which is Seen, and That Which is Not Seen”, man has a tendency to “pursue a small present good, which will be followed by a great evil to come, rather than a great good to come, at the risk of a small present evil”. Put these together and it is no wonder that, by and large, the future of work, corporate real estate and the workplace is so widely misunderstood.
January 23, 2017
Visitors to Barcelona may still see Jean Nouvel’s iconic, phallic Agbar Tower as a welcome sight on the city’s skyline, but the building is less loved by its owners and tenants according to a report in Spanish newspaper El Pais. Inaugurated in 2005, the 34-storey skyscraper has been sold twice in three years as tenants have vacated and plans drawn up to either refurbish it or turn it into a hotel. The latest plan from new owners Merlin Properties is to spend €13 million on a refurbishment that will include a multi-occupier space for companies working in Barcelona’s thriving tech sector, centred on the Innovation District that is home to the Torre Agbar. The refurb aims to deal with the most common complaints from previous tenants which, according to the report, include a dysfunctional doughnut shaped layout, poor sightlines, inappropriate location, small windows with no view, inadequate shutters and an unwillingness to work in a building with such an overwhelming brand identity. Image: Ralf Roletschek
January 13, 2017
Although the world’s major corporate real estate occupiers retain a focus on managing the costs of their workplace when it comes to making the big decisions, there is a growing emphasis on offsetting this against issues such as staff recruitment and retention. That is the key finding of a new report from Cushman & Wakefield into the priorities and decision making of large corporate occupiers. It claims that firms are now far more focused on striking the right balance between goals that are often in direct opposition to one another. The study, produced in partnership with CoreNet Global, was based on interviews with 266 occupiers, three quarters of whom have more than 25 offices worldwide. The survey examined not only how location and workplace strategy are viewed as corporate value drivers, but also CRE’s alignment with business strategy.
January 4, 2017
A new survey commissioned by relocation firm Saunders 1865 claims that fears of a mass exodus of UK businesses in the wake of the Brexit vote are unfounded. Its study of 100 UK based multinationals with up to 350,000 employees found that none are planning to relocate their main operations overseas as a result of Brexit. Respondents included banks, consulting firms, technology companies and other organisations with a global presence. The study concludes that this indicates that the UK remains an appealing location within which to base international business. Saunders 1865’s CEO, Tony Coe said, “While anecdotal evidence from corporate clients suggested that the reports of a post-Brexit exodus by companies were overblown, we were frankly shocked that we didn’t receive a single response indicating that a move out of the UK was even being considered.”
January 1, 2017
WeWork is the weather vane for a new era in which property is increasingly consumed as a service. The company has issued a statement looking back over its achievements during the past year. It’s a tale told in numbers so makes interesting reading. The firm claims it has added 58 new spaces and now offers over 110 locations open around the world for its 80,000 members. It has opened spaces in 18 new cities including Berlin (Berlin), Beer Sheva, Seoul, Mexico City, Shanghai, Hong Kong, Montreal, Philadelphia, Atlanta, Denver and Sydney. Perhaps most tellingly, it has extended its client reach to include firms such as Microsoft, HSBC, Bacardi and Samsung. There’ll be lots of people offering up lists at this time of year detailing key workplace trends. Few will be as instructive as the numbers coming out of WeWork and the wider coworking movement.
December 20, 2016
A rise in the cost of renting commercial property in Bristol is being driven by increased demand from TMT, professional and energy occupiers looking for office space in the city, with take up levels of Bristol city centre offices predicted to reach 800,000 sq ft (74,322 sq m) in 2016. This is 50 percent above the five year average of 533,000 sq ft (49,517 sq m), according to Savills. This influx has resulted in a significant decrease in the supply of city centre Grade A stock, with levels currently at 117,116 sq ft (10,880 sq m). In order to cope with the demand landlords, particularly those with TMT tenants are refurbishing their offices, with the refurbishment/redevelopment pipeline at an estimated 300,000 sq ft (27,871 sq m). Savills notes that as a result of increased demand rental growth has been seen in both Grade A and B stock in Bristol. Refurbished office space is now reaching rents of £27 per sq ft (£291 per sq m) in Grade B stock, just below the headline rent of £28.50 per sq ft (£307 per sq m). It is predicted that in 2017 rents on Grade A space will reach and exceed £30 per sq ft (£323 per sq m).
December 14, 2016
London commercial property has managed to weather the Brexit storm with a late surge of City deals over the past three weeks set to see Central London take-up in line with its long-term average level of 10 million sq ft in 2016. According to the latest figures from JLL, despite take-up in Central London being subdued in the lead-up to and immediate aftermath of the referendum, City take-up has surged during the last quarter, and is expected to reach 5.3 million sq ft by year end, just 6 percent below the long term average. This is offset by strong take-up in East London, where the recent deal to the GPU at Canary Wharf propelled take-up to 8 percent above its long term average level. The most notable deals of 2016 included – The Government Property Unit (GPUK) took 542,000 sq ft at 20 Cabot Square, E14 which was a sub-lease from Barclays; Apple pre-let 500,000 sq ft at Battersea Power Station, SW8 and will be paying a rent in the high £50 per sq ft; Thompson Reuters acquired 315,362 sq ft at 5 Canada Square, E14, paying a rent of £40 per sq ft; 33 Central, EC4 was pre-let to Wells Fargo who took the entire building, totalling 227,689 sq ft and New Look pre-leasing 127,096 sq ft at R7 Handyside Street, N1C for £77.50 per sq ft.
December 13, 2016
The culture within which we work determines how effective, successful, fulfilled and well we are in both our professional and personal lives. The organisations for which we work – on whatever basis that might be – the physical surroundings they create, and the other places in which we choose to work are now woven into the fabric of our lives as never before. The technological immersion that allows us to work in new ways also means that each day becomes a series of experiences. Because we are free to work wherever and whenever we choose, we are increasingly able to determine the nature of those experiences. For those who design and manage offices this represents both a great opportunity and an unprecedented series of challenges.
December 9, 2016
Major companies including Barclays and Vodafone were among more than 40 leading businesses, universities and business networks which pledged their support and backed the promotion of the Northern Powerhouse economy during a ’partnership’ conference held in Liverpool yesterday (8 December 2016). The North has over one million businesses, seven international airports and four of the world’s top universities, the conference heard. Its economy was worth £304 billion in 2014, similar to the whole of Belgium, while last year employment growth in the North East was the fastest in the UK. To help support the initiative a new dedicated Northern Powerhouse website has been launched to share the latest news, views and opportunities for established businesses and new investors. In addition, a Northern Powerhouse Partnership Programme aims to encourage businesses to focus on the key strengths and areas of development across the North – from connectivity to transport, skills to science and from culture to devolution. more…
December 7, 2016
The unexpected political events of 2016 will lead to a rise in caution and risk aversion among real estate investors in 2017, making secure income streams more highly prized among core investors globally. This is expected to benefit the UK market, where high levels of transparency and stable legal structures make real estate a safety play, according to a report from real estate advisor Savills. The firm unveiled its predictions for UK real estate at its annual cross-sector briefing this week, taking a detailed look at the commercial property, residential and agricultural markets. The overall story for UK real estate is one of slower growth. In the commercial market, average total returns on UK property investments are likely to be approximately 5.6 percent per annum during 2017-2021, with a 1.6 percent five year capital growth forecast for office values and a 4.4 percent growth forecast for office income returns. The report claims that there will be a fall of around 30 to 40 percent overall, and possibly up to 50 percent in Central London.
December 6, 2016
The UK Cabinet Office has today announced the location of a new Government Hub at Canary Wharf, as the government prepares to move around 5,700 full time civil and public servants from offices in Whitehall to East London. The government will take the whole building, owned by Canary Wharf Group, at 10 South Colonnade, Canary Wharf, covering 50,354 sqm, on a 15 year lease (to end in 2032). The move, which will be completed by the end of 2018, supports the modernisation of the Civil Service outlined by the new Workplace Plan on July 12. The Government Property Unit, (GPU), as part of its remit to drive savings across the government estate, is overseeing the deal with Barclays for the new hub. The Government claims the hubs will benefit the public sector by ensuring the future workforce is where it needs to be, in strategic locations with great public transport connections, local amenities and offering a modern working environment. Relocating civil and public servants from existing, often fragmented office locations, to modern, cross-departmental workplaces will make the most of emerging working practices and technology is part of that drive, it claims.
November 26, 2016
In this week’s Newsletter; Ian Ellison says there are no silver bullets for workspace design, but it’s worth the effort; Justin Miller explores the workplace implications of seasonal affective disorder (SAD); and Jeff Flanagan explains why workplace design and management teams should look towards consumer-facing industries for inspiration. Asia set to lead the world in the uptake of artificial intelligence in the workplace; Staples announces tomorrow’s workplace design winners; and UK Government to invest properly in the next generation of technological infrastructure. One in seven UK employees now commute over two hours each day; Millennials reject the gig economy; Autumn statement could adversely affect London’s tech firms; and global report finds that flexible working is a necessity for younger workers. Download our new Briefing, produced in partnership with Boss Design on the link between culture and workplace strategy and design; visit our new events page, follow us on Twitter and join our LinkedIn Group to discuss these and other stories.