Commercial Property is Evolving, so What?
There have been many articles and comments recently about “the death of the office”, “the death of High Street retail” and “the death of shopping centres”! – lots of death and negativity about property.
Property is one of the most amazing asset classes – it supports directly and indirectly millions, if not billions of people worldwide. We live in it, we shop in it, we work in it, we celebrate in it, we get our bodies checked and operated on in it, we eat in it, we drink in it or on it (open air also). As Twain once said: “buy (British) land (Securities) – they’re not making it any more.”
WHAT DID PROPERTY EVER DO FOR US?
In terms of employment – there are numerous ways to make money in property – Agency – retail, leisure, office, industrial, investment, hotels, residential, student, medical. Then there are the advisors – rating, surveying, valuing, dilapidations, rent review, lease renewal, party wall. The list is almost endless.
Then there are the developers, one of whom Tony Pidgley of Berkeley Group passed on very recently. These people / companies see 15-20 years into the future. Tony Pidgley was working on schemes and areas 30 years before they became fashionable. His company built thousands of homes. A boy from a travelling family who could barely read or write – became one of this country’s most successful businessmen – via Property.
Don’t forget the designers and architects who design every single development and the financiers – the latter fund the developments to be built, to let to the tenants, or sold to the purchasers who are represented by their advisors and sold back to the institutions/investors by the agents who are funded by the financiers who are funded by the growth in value – valued by the valuers who rely on the agents to let or sell the property to the end user – you and I (look them up)! Our lives are intertwined with property and sometimes we don’t even realise it.
Take a cup of coffee – apparently it takes 30 people just to get the cup of coffee in your hand – the grower of the coffee beans, the picker, the harvester, the dryer, the grinder, the packager, the transporter etc..
Your home – it was built by a developer, who was financed (out of finance or cash from another business), sold or rented to you by an agent who has an office or shop paying a rent, mortgaged, valued, rated and one day sold on.
The cinema – found, bought, developed, funded, furnished – just so you could buy a ticket to watch a film and eat popcorn.
In 1976, Brent Cross shopping centre opened, the first out of town shopping “Mall” in the UK. In the USA, these were and still are commonplace. At the time it was said to signal the “death”, that word again, of the High Street. Today, it is the shopping centre that is under threat, from the Internet that also killed the High Street. As the line in the song Video Killed the Radio Star goes: “Rewritten by machine on new technology”.
Except I believe neither the High Street nor the shopping centre nor the office are dead, far from it – they may be on life support and yes, in some cases the beeps are getting longer and chances slimer, but there is a deep-rooted need for shops, shopping centres and offices.
THE POWER TO REGENERATE
The Westfield Centre totally regenerated Bradford. I have been to Bradford on several occasions. The shopping centre sits in the heart of an area neglected when the industrial heartland died (that word again!) – and what has happened to those amazing industrial buildings in the heart of the North? They have become offices housing thousands of employees. Now offices are under threat, they will probably become residential – the circle turns again.
The Trafford Centre regenerated Manchester – rock & roll – ahead of its time. Its developer John Whittaker has recently had real problems with Intu, yet is also trying to regenerate Liverpool Docks. Trinity in Leeds turned run-down high streets into a thriving shopping Centre. Docklands turned bombed out London into a Financial District, unlike any other in Europe – creating the Jubilee Line and Docklands Light Railway. Tottenham Hotspur FC (my football team), Arsenal, Manchester City, Chelsea + numerous others – all built stadiums creating employment, a better environment and progress. Everton has planning permission to build a stadium on… Liverpool Docks.
All around this one word – Property. All of these developments have been affected these past 12 weeks – all are examples of the many things property provides.
INDUSTRIAL & MEDICAL IN DEMAND
Today and over the past 12 weeks, industrial and medical have become the hot asset. There is a lack of supply and major demand. I’m sure one day, these too will be under threat – from what and how, who knows, but they are the business to be in today. With Residential, of course, we have a lack of supply and high demand.
LOCAL COUNCILS AND DEVELOPERS NEED TO COLLABORATE
10 years ago, we were involved in a major project on behalf of one of the major banks. With thanks to Tony Lorenz who brought me in on the project, I had to visit 150 towns across the UK, sometimes 5 in a day. It was exhausting and exhilarating. The High Street was dying (enough of this word) then, yet I realised from the interest we had, that if the rent and location were right, tenants were interested. It is up to local councils and developers to once again work together, to understand how tech and property can support and regenerate a High Street that people want to visit and spend money in and – now is the time. There are plenty of individual retailers and leisure operators out there who need a High Street presence.
The councils and developers that do it the best, will come out of the current crisis the best. My own childhood was spent in Vivian Avenue, Hendon. Several shops have clung on there for 40+ years – the rest of that high street was affected by Brent Cross. Barnet Council need to find a way that both Brent Cross Shopping Centre and the local High Street can work in tandem.
Property is once again evolving – the truth is, it has always evolved and will continue to do so. It is up to us as advisors to realise where we are in the cycle, make the most of the opportunities that will be offered and embrace the tech that will support our industry.