Bowing to demand: landlords respond to flexible workspace trend28 February 2019The trend towards flexible leasing shows no signs of abating as the average lease length across London continues to fall and the average period to the first break clause now at a record low of just 3.2 years. The trend suggests occupiers are increasingly focussed on wider events such as Brexit, as well as the need to build contingency into lease commitments, albeit at increased financial cost.It is no secret that the monthly cost of a co-working space can be 2-3 times that of a conventional lease, but the removal of upfront security deposits and fit out costs - along with the easy exit options afforded by serviced office models- are proving more than enough to woo tenants in droves.At the other end of the spectrum, there remains a market for newly refurbished, Category A specification space, although mostly in the 5,000 sq ft+ bracket. On smaller unfitted units landlords are experiencing longer void periods, but there will always be exceptions to the rule and established businesses are more likely to take a conventional lease and undertake their own bespoke fit out.But what about the middle ground? While almost every business would jump at the chance to reduce its upfront capital expenditure, not all companies want or suit a co-working environment. Yet the need to remain agile is making firms sensitive to the commitment of 5 or 10 year leases.For the majority of enterprises seeking to relocate, the desire is to complete the legal process and move as quickly as possible. Factoring in half a year (or more) for lengthy tenders, interior design conversations and fit outs just doesn’t really fit the model for many modern firms.Responding to the shift towards flexible workspace, some pro-active landlords are seizing the opportunity to bridge the gap between the extremes of CAT A and co-working, with the prospect of not only retaining an audience, but of reducing voids and shortening rent-free periods given at the start of a lease.There are now a growing number of case studies to support the benefit of recycling existing fit outs and undertaking new ones on a speculative basis. A prime example of the former is 77 Kingsway where we had two units to offer: the fifth floor refurbished to a CAT A specification, and the first floor with the previous tenant’s fit out in situ. While the fifth floor was let to an architectural practice looking to put their own stamp on the space, the first floor received a light touch refurbishment and the addition of some new furniture. The rents achieved on the floors were aligned, but the cost of refreshing the existing fit out on the first floor was around a quarter of the cost of returning the fifth to Category A. Along with the reduced void and rent free period on the first floor, this reflected a great result for the landlord.In the main, landlords are far better placed than tenants to undertake a fit out, both in practical terms and in securing lower costs. Delivering plug’n’play spaces removes the demand for lengthy rent-free periods and allows tenants to move in immediately. While it does force the Landlord to second-guess how a prospective tenant might want to design their space, the fitting out costs are covered by a combination of shorter rent-free periods and a small rental premium of around £5-10 per sq ft. Equally favouring both landlord and tenant, it's a win-win situation for everyone.
Wellness in the workplace: food for thought26 February 2019As part of the ongoing commitment to wellness in the workplace at the Colliers City Office, nutritionist Jade Barkett of Avococo Jade chatted to the team about the importance of nutrition for workplace productivity and day-to-day wellbeing.Avococo Jade provides personalised nutrition advice and genetic testing. But with a previous career in equity research at an investment bank, founder Jade also has first-hand experience of trying to marry a healthy eating routine with a busy working day.So how can we incorporate sustainable simple eating practices into our daily lives?Jade advised on the benefits of the vital vitamins necessary to boost our energy levels, focus and productivity. We all know the importance of Vitamin C, but our brain often pushes for the easier sugary snacks such as biscuits, sweets or chocolates. Instead, Jade suggested making healthier fruits more available and visible in the office, forcing us to think before we eat and most likely choose the healthier option. A simple fruit bowl in the office is a great starting point!Interestingly, coffee is on the recommended nutrition list for improving cognitive function and fuelling productivity. However, given that caffeine has a half-life of 6 hours the recommendation was to keep the intake to the mornings: a late afternoon shot would still be in someone's system by bedtime.Getting enough sleep was another key recommendation from Jade. Disrupted sleep patterns leave people feeling unrested, fuelling the desire to take in more caffeine (or bad sugars) throughout the day. This spikes energy levels and can lead to enhanced anxiety, which is an area of concern when working in a high-pressured environment that requires concise and accurate decisions.Cravings sometimes can’t be stopped, so what’s the alternative? Jade had two great suggestions: drop a cacao cube into some hot water, or put a teaspoon of turmeric into hot oat milk which has a higher protein content than regular milk – this gets released slowly for a continual release of energy, ultimately combating those afternoon dips.Finally, while maintaining nutritional value in the office is important, it also needs to be transferred to our home environment: after a long day, the temptation can be to go for a ready-made option. Jade's healthy was to steam vegetables, instead of boiling or roasting, to retain their healthy goodness. She even suggested making a “cuppa” from the water used to steam the veg!All in all, we really appreciated the advice and look forward (hopefully) to putting these recommendations into practice.
QR codes: rebooting retail20 February 2019How seemingly out-dated technology is now transforming the way retailers configure their stores and shoppers pay for goods.It’s been 25 years since QR (Quick Response) codes were first introduced to the world - the scannable graphics that have featured on virtually everything from boarding passes, magazines and food products to social media - connecting users to video content, websites and product information. Arguably born ahead of its time, the technology quickly gained a somewhat poor reputation amongst users when it was initially introduced, with reports of links to inactive websites or frustrations at additional download requirements.Fast forward to today, and the QR code is enjoying a definite resurgence, with 2018 research from GlobalWebIndex indicating that twice as many respondents in Europe and North America scanned a QR code in Q3 2018 compared with Q3 2015. The driver behind its revival lies within its adoption by social media/payment giants WeChat, SnapChat and AliPay, as well as new found ease of use following the launch of Apple’s iOS 11, which incorporates a native QR code reader built into the camera.The retail industry in particular has embraced the use of smartphone scanning, with fashion brands and QR codes proving to be a match made in heaven. Fashion retailer Zara recently added QR codes to their clothing labels, providing a direct link online to order or obtain information on sizes, colours and manufacturing. During their January sale campaign, QR codes adorned Zara shop fronts enabled consumers to link to sale items ready for order online without the need to enter the shop. Taking this one step further, the brand unveiled its new-look digital store concept at Westfield Stratford City last year, where amongst other features, a robotic arm collects and organises packages, and delivers products in seconds following the scanning of a personal QR code.In the international grocery sector, retailers have taken to combining elements of online and offline shopping to create the ultimate seamless in-store experience. Chinese e-commerce giant Alibaba has done just this in their Hema store concept, with customers able to scan QR codes on food products to get information, including the exact date items were harvested, sourced and delivered. As a result of its popularity, Alibaba is rapidly expanding Hema throughout China. Amazon’s latest entrance into the grocery market ‘Amazon Go’ also relies on the use of a personalised QR profile to register users on entry/exit. On the European side, Sainsbury’s recently trialed their first till-free lane in Clapham, London, where QR codes are used to facilitate the payment of goods.Retail, while being about experience, is also all about margins and any development in technology that reduces the cost of physical retailing is an important one for operators. The integration of QR codes both streamlines the shopper’s in-store experience and reduces the retailer’s overheads with fewer people required to staff a store.The term ‘quick response’ now lives up to its name, and with Google Pay, Barclays PingIt and many others developing QR payment systems, it seems likely that we will see the widespread adoption of this payment method across the UK.The convergence of physical and digital worlds is continuing apace and we expect the integration of QR codes to play a major role in disrupting the way we interact in-store, online and in more informal retail environments.Author:Georgie GriffithsSurveyor Retail Capital Markets
Should Bank junction be pedestrianised?14 February 2019Anyone who regularly walks around the Bank area must have noticed the drop in car numbers over the last few months. The trial restriction on road traffic through Bank junction has made a noticeable impact on both the level of noise and accidents, resulting in the City of London’s recent approval of pedestrianising the junction over the next few years.It's been a real pleasure being on foot in this part of the City since September, away from the usual experience of perilous skits across the street through long lines of traffic, or the ever-present threat of toppling from the kerb into the path of oncoming vehicles. And with more entrances to Bank station opening up and with increased numbers of pedestrians using both the station and narrow pavements, things clearly need to change.So could Bank junction go the way of nearby Old Street Roundabout? The City's northern gateway is set for a major transformation that will turn the iconic, manic and occasionally lethal gyratory into a new and altogether more civilised public piazza.Pedestrians and cyclists will certainly favour a shift in priorities away from cars and onto people – shared spaces like Lennard Street in Shoreditch have shown how workable this is – and we can see the delight in a carefree amble through one of London's most extraordinary collections of heritage buildings, free to stop and admire them without the risk of injury.The makeup of the City is changing like never before, with places like The Ned, Puttshack and Bloomberg Arcade bringing new types of places and spaces, so could this extend to a more - dare we say it - European-style pavement culture?An increase in pedestrian traffic could well have a positive impact on the hundreds of coffee shops, cafes, restaurants and retailers, but they will have concerns over access for supplies. Experience tells us that simply expecting all deliveries to happen before 6am doesn't work for every business, but perhaps an answer lies in how they will do it at 22 Bishopsgate. This 61-storey skyscraper hosts multiple food and leisure operations, all of whose supplies are handled by a single fulfilment centre just outside the M25 and amalgamated into a pair of daily delivery trucks.There is also public transport to consider, with numerous bus routes and plenty of taxis currently passing through. Whether the junction could or needs to be liberated from every type of vehicle remains to be seen, but if buses and cabs were the only traffic during the day, then we are looking at a remarkable new future for one of the City's busiest intersections.It's worth noting that there is a campaign, principally from the taxi trade, to have the scheme significantly changed or abandoned, citing a generally detrimental impact on City business from the exclusion of cabs and that many businesses are against it. In truth, there has been very little reaction from the business community.It should also be said that the idea of darting about the City in cabs is somewhat dashed by the reality of the traffic, with even the shortest journeys often beatable by walking - so pedestrianisation wins on the wellbeing front. And with the arrival of Crossrail at Moorgate, journeys through the middle of London are already set for a major boost.Whichever side of the argument somebody takes, the benefits of lighter traffic, fewer accidents and better air quality are universal, so we look forward to seeing the next phase of plans around mid 2019 that could signal a new era for Bank junction that works for everyone.
Pachamama heads east: Peruvian inspired restaurant opens in Shoreditch12 February 2019Given how deeply rooted Pachamama is as a Londoner’s favourite in the capital’s Peruvian dining scene, it seems somewhat implausible that not only did the Creative Restaurant Group’s first Pachamama only open in 2014, but that the Shoreditch opening brings the London total to only three.The Colliers Tenant Representation team were contacted by Pachamama last year to source a suitable location for the restaurant’s eastern expansion, and the team’s foraging unearthed an opportunity in Shoreditch at Ironwood Works, a warehouse building that was mid-refurbishment but had yet to go to market.Developed by Aitch Group to a design by Hut Architects, Ironwood Works is a classic Shoreditch building, with a brick façade and huge industrial windows with a dual frontage onto both Great Eastern Street and Willow Street. It’s a location that gives Pachamama East a highly visible position at the very heart of the Shoreditch Triangle.The restaurant extends to just over 2,500ft2 and is a two-storey space across the ground and lower ground floors, with dramatic ceiling heights exceeding 4m at street level and 3.4m on the lower floor. Pachamama took the unit in shell and core condition before enacting a fit out by its design partner Inter Developments Consultants.Fittingly for its eastern opening, the Shoreditch Pachamama has augmented its menu by adding Asian influences, with bubble-tea cocktails and Sichuan fried chicken sitting alongside the restaurant’s signature pisco sours and ceviches.Upstairs at Ironwood Works are five floors of beautifully crafted office space: three from the original warehouse and two more from a new extension and roof terrace, where developers Aitch Group have taken occupation.The opening of Pachamama East puts the restaurant in exceptional company, with the Shoreditch dining scene now home to some of the most fashionable, exclusive and finest options for eating out in London, including Nobu, St John’s Cheese & Wine, Lyle’s, Clove Club, Andina and L’Anima.
Seeing beyond the statistics5 February 2019To fully understand what’s happening in today’s London office market, you have to look beyond the headline statistics regarding supply and demand.Around 15% of recent take-up can be attributed to the new wave of flexible space/co-working providers which immediately seek to re-let space on the open market. Accordingly, the headline take-up figures are misleading. In fact, our analysis of the active flexible space providers in London indicates that there may be as much as 4.6m sq ft of ‘let’ space which is actually vacant and being re-marketed.Bearing this in mind, it is even more remarkable that the underlying ‘real’ market is performing so well. Even if you add back the flexible availability, the overall vacancy rate remains below the 15-year average and has done since 2011. A continued dearth of supply of new and refurbished space has contributed to these relatively low levels of vacancy, and we should get a better feel for the market’s direction of travel this year as a further 2m sq ft of flexible space is set to come on stream.Overall, the London office market appears in remarkably good shape considering the strong headwinds the UK economy is experiencing. However, despite new supply issues, it remains delicately balanced with any contraction in demand likely to have progressive ramifications for re-letting of conventional office space and the occupancy levels across London’s operational flex office centres. The latter has benefitted from the climate of uncertainty and occupier caution about signing up for longer commitments and reluctance to commit extra capital to real estate functions.The gap between co-working and a flexible, managed office offering is narrowing steadily, with REITS and funds alike not just waking up to competition from flex, but actively seeking to counter, be it with vehicles of their own or a quantum shift in attitudes to ‘flexible leasing’ strategies. ‘Sticky tenants’ are invaluable to landlords seeking to minimise voids and recycle space successfully. 2019 may not be a year of reckoning for the sector but it is likely to have an irreversible impact upon leasing strategies for years to come.
One way, or another: self-contained Clerkenwell office for sale or to let1 February 2019Clerkenwell's showroom district provides a constant stream of design and creative inspiration when wandering past the giant windows of fashion and furniture retailers like Vitra, Knoll, Boss Design and Kholer.On Goswell Road, one of the streets that forms the central crosspoint to this part of the city fringe, the sweeping corner facade of the Zaha Hadid Design gallery sits directly next to the entrance of number 99, a building where Colliers are marketing a self-contained ground floor office space.The unit's interior mixes a mildly industrial aesthetic with creative office design, where 3.5 metre ceiling heights and large casement windows form the core canvas.The floorplate of 2,075ft2 is laid out to include a large open plan workspace, separate meeting area, modern kitchen and demised WCs, with a backdrop of Victorian radiators, painted concrete floors and lighting on exposed conduit.The unusual option to buy or to rent creates a widening of the regular audience, from businesses seeking a straightforward lease, to those nabbing the chance to own their own workplace, to investors expanding their rental portfolios in London's creative quarter.Alongside the contingent of showrooms, design studios and creative enterprises, the local street scene is enlivened with a vast choice of places to eat and drink at any time of day, from coffee to cocktails at breakfast or bedtime.The nearby street food market at Whitecross Street is a firm favourite with people working in the neighborhood, where food trucks and stalls mete out dishes from around the world in a vibrant and aromatic atmosphere. Also nearby, equally as busy but somewhat more sedentary, the gastro boulevard at The Bower hosts some of Londoners’ favourite names from the city's contemporary dining scene.The future is also bright in this corner of the world with two imminent developments about to transform the local connectivity.About half a mile east of Goswell Road, Old Street Roundabout is set for a major change of direction when the busy gateway to Shoreditch switches its allegiance from cars to pedestrians and becomes an open public piazza.Nearby Farringdon station, meanwhile, will become a major London transport interchange at the end of 2019 when the Elizabeth Lines opens with the completion of Phase One of Crossrail.We are quoting a rent of £45 per ft2 for the office, or a sale price of £1,825,000 + VAT.
Signed, sealed and delivered: a successful disposal of Deliveroo’s former HQ31 January 2019After a proactive marketing campaign that was successful in generating significant interest and multiple offers, Colliers has successfully let Deliveroo’s former offices at The Heal’s Building to Huntsworth plc, for occupation by the creative agency WRG.The Heal’s Building is a fine slice of art deco commercial architecture in the West End, with Grade A offices above the flagship stores of two of the most enduring names in UK furniture retail – Heal’s and Habitat.Deliveroo instructed Colliers in September last year to dispose of 10,500ft2 split across 3 units in what is now renowned as one of Central London’s iconic buildings. Due to continuous growth and the dynamic nature of Deliveroo, the business has relocated the remainder of its staff to its HQ in The River Building above Cannon Street station, where they now occupy c. 70,000ft2.The firm’s former home comprised of c. 7,700ft2 of creative office space with warehouse features that wouldn’t look out of place in Shoreditch, Old St or Farringdon. The accommodation afforded an incoming occupier the perfect opportunity to benefit from an existing fit-out with the ability to create their own fresh identity. With a further 2,800 sq ft being sub-tenanted to 2020, the option to expand into the second office made this offering second to none.WRG is the biggest of three companies that form The Creative Engagement Group, whose annual turnover is around £47million and whose parent company is Huntsworth plc, a global healthcare communications and public relations group with operations in 29 countries.The assignment to Huntsworth is a great result for Deliveroo whose liability up until the end of their lease in 2025 totalled £4.2million. It’s also a result for Huntsworth who procured beautifully fitted offices in a prime West End location. The deal was completed at the start of January.
FT building marks second South Bank acquisition for WPP30 January 2019After almost 30 years in Southwark, the Financial Times is moving back to its previous home, Bracken House on Cannon Street, in July 2019.The newspaper leaves behind its riverfront offices on 1 Southwark Bridge Road, an address that we have now acquired for the advertising agency WPP plc, funded by M&G Investments.Having already engineered a partnership between WPP and M&G on a 1960s office block just across the street (Rose Court at number 2 Southwark Bridge Road), it was clear to us that, when Pearson began quietly marketing the FT building, it would make the perfect location for WPP to amass sufficient space for its new headquarters.Both buildings were agreed with M&G acquiring the asset with WPP taking a simultaneous lease.Stripping out works are already underway at Rose Court, while a planning study has commenced on 1 Southwark Bridge Road with a full planning application expected within the next 12 months.When all works are finally complete, the two buildings are anticipated to deliver a total office accommodation of around 400,000ft2, with WPP taking occupation sometime in 2022.WPP plc is a British multinational advertising and public relations company and the world leader in communications services. The group employs over 130,000 people in 112 countries and its Clients include 369 of the Fortune Global 500, all 30 of the Dow Jones 30 and 71 of the NASDAQ 100.M&G has a British heritage going back to 1900 and including the launch of Europe’s first ever mutual fund in 1931. Acquired by Prudential in 1999, M&G today invests for over 7 million people in the UK through various avenues in including ISA, pension funds and property. 1 Southwark Bridge is destined to be held in M&G Long Income funds.
Final two floors let at 20 St Andrew Street, EC429 January 2019January saw the occupation of the final two floors at 20 St Andrew Street, a development by AXA Investment Managers and Morgan Capital. Colliers’ involvement with the building goes a back a while, to when we acted on the initial acquisition in 2015.Since then, the building has been transformed into a first class workplace and now comprises some 58,000ft2 over ten storeys with new terraces on levels 6 to 9. Visitors are welcomed with a sumptuous modern reception in the style of a boutique hotel lounge bar with large comfortable armchairs and chic geometric décor.The refurbishment has attracted tenants from Midtown, the City Fringe and the West End with its combination of impressive design and accessible location, just 6 minutes’ walk from the new Elizabeth Line interchange at Farringdon, set to open in Autumn 2019 when Phase One of Crossrail completes.The letting of the 8th and 9th floors to the high quality meetings space provider, The Clubhouse, offers the occupiers of 20 St Andrew Street an extra expansion space for meetings, presentations and events at the top of the building.Agreed in November, this was an interesting pair of deals because, having made their respective clients aware of the situation, both lettings involved Colliers acting for the landlord and the tenants in agreeing the leases. While the Agency & Development team advised the landlord in the disposal, the Occupier Advisory team assisted Reorg and Hatch in acquiring their new space.Reorg Research has offices on three continents with an editorial team providing business information analysis to more than 15,000 professionals across the world’s leading hedge funds, investments banks, law firms and financial advisors. Reorg has taken the 5th floor and relocated to the building from Farringdon, having matured out of a serviced offices facility and decided to create its own identity by operating from its own space.Hatch is a global and multidisciplinary management, engineering and development consultancy, employing more than 9,000 people across 70 offices on six continents. The company’s London operation had been working out of smaller offices in Victoria and, driven by corporate activity and the acquisition of a company based in Clerkenwell, needed to expand and consolidate its operations. Hatch will take occupation of the 4th floor.
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