The Best Is Yet To Come… Stay Positive
And, so we are now in week 8 of COVID-19 Lockdown. Social media has gone into overdrive about when lockdown will end.
Last Sunday’s announcement from the government implies a slow unlocking.
There have been too many lives lost, too many families devastated by this virus. 30,000 deaths affect’s 30,000 families, relatives, friends, employers, colleagues. May we find a vaccine soon, or at the very least something to delay the affect. In 1957, Maurice Hilleman fostered that year’s vaccine single handed within 4 months.
Cashflow has reduced yet family time has gone up. We have seen more of our families in these 8 weeks than some see in a lifetime of work.
It would be a knee-jerk reaction to predict the future of the office after these 8 weeks. Headlines such as “The Death of the Office” and “Working from Home is the New Norm” are not exactly fun to read when your business is, well, occupational property!
We as a firm have always said, we are a people business in property. As an industry, we see trends, recovery, downturns and upturns quicker than anyone. We see company accounts, leases; lots of things come across our desks that should mean property should be ahead of market trends which should mean our product is adaptable.
Personally, I do not feel it is the death of commercial property. This is the rebirth – and about time too!
You don’t need to be a genius to have worked out that our use of offices will change. We will work from home more (stating the obvious); our work-life balance prior to COVID-19 was already changing and it will continue to do so. However, it is a massive leap of faith to suddenly switch from office working to being home based, and still expect teams to work effectively. In some areas, this may work far better. It will of course remove major costs from an organisation, savings which can be put into the business. Working from home in the long run may turn out to be more inefficient – we shall see.
We have had the following two conversations with occupiers over these past weeks:
- Do we need less space as a result of COVID-19?
- Do we need more space to cope with social distancing?
So, what improvements could be made?
- Serviced Offices – these are not as flexible as sold – a tenant cannot assign or sub-let their licence. A tenant can only exit their licence either at the end of their licence or, by negotiation with the Landlord.
- Adapt – hopefully buildings and refurbishments will become more adaptable. Nash House, St George Street is an example. You can choose your fit out, see the Heads of Terms and imagine the floor; this approach should be replicated and bettered. Oh, by the way, the building let quicker than most!
- Connectivity & Fibre – a developer will spend millions to have the right marble, carpet and paint, yet not spend tens of thousands ensuring the building is connected so a tenant simply plugs and plays. It is senseless. A wayleave causes more stress than a divorce (apparently!).
- Marketing – I wish I had a pound for every time I saw a poor brochure, poor set of property details, poor website, poor refurbishment etc. Let’s make 2020 the year as an industry, our marketing becomes fit for 2025.
WHAT LIES AHEAD?
Some anticipate that a glut of commercial property will hit the market??! If so, what should be done about it? Very simple. Reduce the supply to match the demand! How? We need more residential properties. So now there is an opportunity to convert more central London offices to residential than ever before. This can provide much-needed housing to a city of 9 million people.
Between 2000-2005, 3-5 million sq. ft of offices were converted to residential. It helped the commercial property market. All uses should be considered, Medical, D2, Leisure – councils should and can be supportive – especially in historically fringe locations such as Old Street/Clerkenwell/Hammersmith. How about turning large industrial warehouses into restaurants short term to allow for social distancing? All ideas can now be looked at.
If necessary, local councils should pay developers to knock office buildings down, creating parks or public spaces. Robert Moses did this in New York to create the current freeway road system. Why not do it here to create urban parks? The flipside – in Marylebone, we have lost Moxon Street Car Park in return for another high-end residential development. This could have been turned into a green space (Moxon Square!?!) increasing the value of the residential properties around it.
In a way, post-COVID-19, we are starting with a blank canvas. In just 8 weeks, our lives have been transformed, no one really knows what lies ahead. How we choose to re-shape the future is up to us. It is both exciting and scary. If property does not evolve (change significantly), as tenant advisors we believe an amazing opportunity will have been missed.
LET’S BE POSITIVE…
The Best is Yet to Come