29 June 2018

Three Twitter “takeaways” from the ULI UK Annual Conference

For those not lucky enough to attend the Urban Land Institute UK Annual Conference on 5 June, here are 3 take-away observations from the “New Occupiers Panel” (delivered together with “live” tweets from the day).

1. Tenants as customers, Landlords as service providers

The panel placed plenty of emphasis on “space as a service” (SAAS) as a trend (particularly in the office market). With the impact of new entrants such as WeWork and ever-evolving technological innovation, tenants (or rather “customers”) increasingly expect more from their landlords. Arguably, we are seeing a shift in the office market from a product based to service-led approach, with a greater focus on the end user experience. What is the underlying reason? Without doubt, the battle for corporate occupiers to recruit and retain “talent” is a key driver.

Moreover, it is not just new market entrants who are leading the charge. In June 2018, Robin Budenberg, the Crown Estate’s Chairman, said: “We have begun to pivot the business away from a traditional bricks-and-mortar approach towards a more customer-focused, services-based model, so we are preparing to take advantage of the trends that are transforming how people want to work, live and socialise in the future”.

2. Will real estate learn tech before tech learns real estate?

It is a fascinating question, raised by Antony Slumbers (CEO, Estate Today and ‘Innovation Evangelist’) on the panel. Arguably, the race is well underway. Larger established tech companies, continue to stretch their tentacles into different sectors. Why not real estate development? Amazon has acquired Whole Foods. Alibaba is developing/ buying bricks-and-mortar stores. Google’s Sidewalk Labs is constructing a “digital city” in Toronto, creating a new neighbourhood based on “forward-thinking urban design and new digital technology”. Facebook is building its own “village” outside San Francisco, creating a new neighbourhood in response to Silicon Valley’s housing crisis. Linking to the SAAS point above, the panel suggested that other tech firms may follow examples such as Google/ Facebook and take development into their own hands if they cannot get what they want from the property industry.

3. Wellbeing in the workplace

Again linked again to the SAAS point above, the panel discussed healthy working environments, and the emergence of “wellbeing” as a theme capturing more attention in the industry. Despina Katsikakis (international partner and head of occupier business performance at Cushman & Wakefield) suggested “a third of absenteeism is down to poor air quality, and soon our phones will tell us about air quality. People will demand better.” We now have EPC, BREAAM, Wiredscore ratings which provide information about the efficiencies of a building. The panel queried whether we will see further uptake of ratings such as the Well standard (see for example Landid and Brockton Capital’s Porter Building in Slough). From personal experience, it is clear that investors are paying increasing attention to factors such as air pollution levels. Is wellbeing on a wider level set to play a more prominent role in real estate decision making?

Edward Glass is an associate in our Commercial Real Estate team.

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