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  1. June 2020

  2. Homeworking is not a long-term answer

    22 June 2020
    During the past three months there has been a considerable amount of adaptation in how we work. Our dining tables, beds and spare rooms have become our new offices. We are now fully versed with how to conduct our meetings over video conference and are all too familiar with the highs and lows of our broadband connection
    On the whole, I’ve heard only positive things about the transition to home working and how morale has held up. I think the key to the success is the fact that we have all been placed in the same circumstances at once. Couple this with the fact that we are all working with people we, for the most part, have long-term relationships with and the transition hasn’t been as painful as many would have thought. Teams have learnt to trust each other more and be more transparent in the work they are undertaking. 

    However, the picture would look very different if we had been trying to work remotely with teams that we hadn’t spent time within the office, or with clients that we hadn’t met face to face over meetings, coffee and various industry events. 

    This is where the office comes in. In the short-term we have all managed to navigate this new way of working. However, it is harder to imagine it being as successful in the long-term when there are factors such as new members of staff, new clients and new instructions thrown into the mix. Connections are made face-to-face and over a period of time. We are by now all familiar with the ups and downs that a poor wifi connection or noisy dog can bring to our virtual meetings. There’s no escaping that offices will look different as long as social distancing measures are in place, however their role in providing a hub for collaboration, new ideas and much needed human connection won’t be diminished by this current crisis.

    Many of us have had to rapidly place trust in our team members and their ability to work from home, and this is by and large what has made the transition so smooth. For now, we are all following government and industry guidelines with regards to working from home, and none of us know just what the short-term future holds. However, it will come as a great relief for many to be back safely in an office where they can have conversations face-to-face, to discuss new ideas over coffee and get back the separation between work and home life.
    The Author
    Stuart Melrose
    Head of Occupier Advisory

    020 7344 6909

    07538 327 620

    Stuart.Melrose@colliers.com

  3. May 2020

  4. Shopping for victory?

    18 May 2020
    The commemoration of VE Day over the weekend highlighted both the efforts of the Allies during the Second World War and all those on the ‘Home Front’ who strove to support each other.
    Whilst it would inappropriate to directly compare the gravity of that situation with now, if we are going to mend the UK’s economy today then a lot of the challenge will have to be met domestically on our ‘Home Front’.

    For example, the shops of London’s West End have been heavily reliant on international tourist spend which accounted for more than 50% of total retail sales last year. The easing of lockdown restrictions will be gradual but if retailers are going to get some respite it will have to be in the form of domestic spending.

    Accordingly, London will need to look at how it can woo people back into the capital.

    Clearly, any measures cannot be antagonistic to the precautionary measures still in place to counter the pandemic. However, there will have to be something done proactively if shoppers – many of whom have become very comfortable with online retailing in the past two months – are to start repopulating our famous shopping streets.

    Some pundits believe that as the lockdown eases there will be a spike in ‘real life’ shopping as people enjoy greater freedoms of movement but this phenomenon is likely to be short-lived and tempered by the harsh realities of increased unemployment, wage cuts and poorer job security.

    Non-essential shops may be able to open as early as 1st June as part of the government’s new “road map” to reactivate the economy.  There will, however, still be challenges getting into the West End as we are discouraged from using public transport which must remain at 10% capacity to run safely.

    Both the Government and the London Mayor's office should therefore be looking at positive action to make it easier and cheaper to get into the capital (Accessibility); to provide some monetary incentives for shopping in town (Financial); and also allow retailers more flexibility to suit shopping hours to the new situation in which we find ourselves (Regulatory).

    We welcome pop-up bike lanes and the fast-tracking of e-scooter trials, but clearly the government will need to go much further with a raft of immediate and long-term initiatives.  Proposed measures could include:

    Accessibility

    - Legalise electric scooters and bikes – legalisation is needed as soon as possible to bring the UK in line with major EU countries such as France and Germany. New York has also recently legalised and plans to invest in new scooter lanes.

    - Cycle Lanes – major investment in “Smart Cycle Lanes” which have been pioneered in The Netherlands.

    - London Transport – once social distancing measures are eased, fares to be free of charge from Zone 6 into Central London after 10am.

    - Pedestrianisation of Oxford Street – this is an opportunity to look at the proposals again and re-engage with residents and major stakeholders to make this happen.

    Financial

    - VAT – 100% VAT exemption on in-store purchases to compete against the rise in online shopping habits during lockdown.

    Coupons – the Chinese government is using a voucher system to stimulate shopper spending. Vouchers can be redeemed if you spend a certain amount at a participating retail and leisure businesses for a limited period of time.

    Business Rates – a wholesale restructuring of the system must now be an absolute priority.

    Regulatory

    - Sunday Trading Laws - extend opening hours to encourage footfall whilst keeping it at manageable and safe levels.


    The road ahead is rocky but with creative policies and occupier resilience London can weather the storm and once again become one of the most exciting places to shop, eat and drink in the world.


    If you are an occupier of a retail property and would like to discuss lease strategy, please contact:
    Peter Flint - Co-Head of Brand Representation
    Central London – Retail Agency
    07870 999192
    peter.flint@colliers.com
  5. April 2020

  6. Investors target supermarkets as tills continue to ring

    20 April 2020
    The received wisdom at present is that UK property capital markets have pretty much gone into suspended animation in the face of the pandemic, but this certainly isn’t the case in the grocery-led sector.
    There are currently seven substantial supermarket transactions totalling around £205m which are either under offer or due to imminently complete. And these are not fire sales from struggling funds: the average net initial yield on the deals is a shade under 5%. This is in addition to the £325m of supermarket deals that we’d already seen transact in the year to date, and is accelerating the buying trends that we identified in our 2020 UK Grocery Report

    While the financial markets may remain unconvinced about the long-term prospects for the UK supermarket majors – Tesco’s share price is strangely down about 13% since the beginning of the year – real estate investors remain sweet on the sector. 

    Exceptional grocery trading, triggered by the extended isolation measures brought forward by the Government, will mean that the Big Four – Tesco, Sainsbury’s, ASDA and Morrisons – together with the likes of Waitrose, the Co-Op, Aldi and Lidl, are set to see strong 2020 revenues. In March, grocery sales of £10.8bn represented year-on-year growth of 20.6% – and reflected a level higher than the typical trading month before Christmas.  

    Despite pleas for us to keep our distance, the supermarket giants will be particularly pleased by the number of in-store visits. In the week ending March 21st, shoppers on average each made three additional shopping trips than usual, equating to 79m more trips, and an extra £1.9bn spent on groceries. Yes, online trading has also boomed but the harsh reality is that the majors don’t make money from home delivery owing to the high fulfilment costs and low margins that it entails. 

    So for the present, a nation which had taken to eating out on a regular basis during the past few years has returned to the family dinner table - or eating ready meals while bingeing on Netflix.

    Of course, the question is will we go back to our previous ways once we again have freedom of movement? Certainly the charms of home cooking or ready meals may have palled by then but even so, if we are in for tougher economic times, then the nation’s appetite for eating out is likely to be blunted by its ability to pay.

    However, the need to eat and the growth of ‘comfort eating’ in the face of the current grim situation is going to underpin supermarket performance for some time to come.

    For property investors looking for supermarket assets they are likely to be confronted – metaphorically speaking – by shelves every bit as bare as those which appeared nightly on our TV screens a couple of weeks back. The sector – with its long-leases, index-linked rents and strong  covenants – was already extremely popular with investors. Now the argument to buy grocery-backed assets – or indeed to hold onto them – is even more compelling.
  7. Landlords Need to Consider the Pandemic Legacy

    15 April 2020
    Once the Covid-19 pandemic has abated and the UK retail property market returns to some semblance of normality, the way in which landlords reacted to the crisis will be forensically assessed by retailers.
    The hard lessons learnt by both sides will reshape the landlord-tenant relationship and people will have long memories with regard to how all parties behaved when the chips were down.
    The response from landlords has so far been extremely varied and generally falls into four categories:

    LANDLORD ASSISTANCE DURING COVID-19

    No Support

    Limited Support

    Support

    Full Support

    Statutory Demands for non-payment of rent & Winding Up Petitions

    Monthly rents offered

     

    Deferment of rent to be repaid over an agreed period (typically 12 months)

     

    Reduced service charge payments

    1-3 month rent holiday

     

    No service charge payable

     

    Turnover only for next 3-6 months

    No rent payable until tenant is able to re-open

     

    >6 month rent free

     

    Rent deposit return to assist with re-opening costs and cashflow

     


    The package of measures the Chancellor has set out to get businesses through this period of disruption caused by the pandemic are well documented, but clearly the Coronavirus Job Retention Scheme and 12-month business rates holiday have given people some breathing space and chance of survival.

    Landlords have also started to offer bespoke assistance depending on the circumstances of their tenant.  Clearly if a retailer is able to continue to trade successfully though the crisis (e.g. food stores, pharmacies, newsagents) assistance is not required.  It is also true that some retailers are better equipped to survive than others if they have cash reserves or have the ability to continue to trade online more successfully than others.  All these factors should be taken into consideration during these negotiations.  We are seeing the more pro-active owners taking the opportunity to understand how their tenant’s business works by requesting detailed P&Ls and turnover projections to inform their response.

    However, the harsh reality for retailers which are unable to trade during the next few months is that even support from landlords may not be enough unless a broader approach is taken. The next Quarter Day on June 24th is assuming huge significance. If the levels of rent collection then are at the same level – or worse – than the March Quarter Day then landlords will have less and less room to manoeuvre.

    In this context, rather than provide piecemeal support, landlords may be well advised to explore the potential for a wider restructuring of leases. Restructuring could give retailers the required assistance they will need during the next 6-9 months and landlords would have a clearer view of the way forward for their asset. This could also give more reassurance to the providers of any debt secured against a property.

    Restructuring is also more of a process of give-and-take. If retailers are willing to remove upcoming break options or agree to lease extensions (if there is an imminent lease expiry), landlords may be able to more easily justify giving them the assistance they require and for their businesses to survive.

    This approach may be the only way to save fantastic retail and F&B businesses disappearing from our High Streets, whilst also maintaining landlords’ income streams and investment values.

    When we return to a more stable market, retailers are likely to have more choice available to them in terms of new store opportunities. Given these options, they will consider how landlords responded to the lockdown market and will be more likely to deal with those who proved themselves constructive and supportive. And, of course, landlords will also seek out the occupiers who took a similarly positive approach.

    The pandemic will undoubtedly bring structural change to our industry, but it will also bring an opportunity to re-balance the landlord & tenant relationship making it a more collaborative and open relationship.

    If you are an occupier of a retail property and would like to discuss lease strategy, please contact:
    Peter Flint - Co-Head of Brand Representation
    Central London – Retail Agency
    07870 999192
    peter.flint@colliers.com
  8. Architecture firm draws up plans for move to creative Clerkenwell

    9 April 2020
    Clerkenwell’s reputation as a creative hub continues to grow and with it comes a whole host of occupiers, restaurants and bars that keep the area vibrant...
    ...including Runway East, Malmaison hotels, Fix Coffee and Breddos Tacos. Transport links are another string to its bow with Farringdon set to become a Crossrail station and Barbican and Angel within walking distance.

    Conran+Partners are the latest names to move in to the area with the architecture firm taking two floors at 30a Great Sutton Street, a total of 8,615 sq ft of space. Located slap bang in the middle of Clerkenwell, the three floor office building has recently undergone a complete refurbishment by landlord Harel Insurance and now provides modern, media-style space. A brand new reception area has been created, and features in the office include full height glazing, exposed services and new shower and cycle facilities creating an environment that lends itself to creative firms.

    Conran+Partners expressed a desire to move to Clerkenwell and has chosen the property as its new home as part of its expansion plans. The firm and will be the first occupiers to move in with the further three floors still available through the Colliers City Fringe office.

    The Author
  9. London and the 'New Normal'

    3 April 2020
    There is consensus that the current world situation will lead to a reshaping of the way we live globally and, of course, this extends to the way in which we’ll shop.
    Prior to the pandemic, it was thought that the UK’s propensity to shop online had plateaued with the web accounting for around a quarter of our total retailing spend. The picture was pretty much the same with food shopping with online accounting for around 7% of UK supermarkets’ total revenues. However, the new habits formed in the past few weeks and in the months to come may change those proportions.

    In a survey of more than 2,200 marketers conducted by Econsultancy and Marketing Week last week, 71% of UK marketers predicted that there will be an increase in ecommerce usage as a result of coronavirus. A substantial number people who were previously reluctant to shop online for whatever reason have been compelled to do so and will form habits that they do not relinquish in future.

    But if this is the general retailing landscape, what will the legacy of the pandemic be for London? Well, of course, the immediate impact has been profound as social distancing remains the key weapon in fighting the spread of Covid-19.

    However, looking further into a future when there will be respite from these measures, London will remain the ultimate experiential shopping city. Its blend of high fashion, street style, heritage and innovation is unmatched in the world and that will not change. The challenges in the medium-term will be around who is able to come and shop in London. It has for decades been a focal point for international tourism and, in that context, a resumption in global air travel will be key to bringing shoppers back.

    Whilst London’s high-end, luxury retailing streets will retain their cachet and attraction, the shops serving the middle-market will have to redouble their efforts – especially if the impact of the pandemic on the economy means more muted consumer spending. In order to woo shoppers, brands will need to use all their ingenuity to revamp their offer at accessible price points.

    The pandemic is also changing the way we think about our lives and the world we live in. as we head towards the ‘new normal’, the rise of ethical, socially responsible brands will accelerate, and London will have to explore how it can meet people’s hunger for experiences and excitement as millions come out of self-isolation.

    Author:
    Matthew Thompson
    Matthew.Thompson@colliers.com
    +44 20 7344 6817
  10. Up Close With Watch House

    3 April 2020
    Whilst at university, Roland Horne started a business which designed and installed high-end aquariums. Then a passing conversation with a friend eventually led him to founding Watch House – one of the most distinctive café brands across London.
    So Roland, from fish tanks to pulling flat whites, how did that happen?

    I’d been running the aquarium business for about five years straight out of uni when a friend asked me to go into a joint venture with him to open a coffee shop concept. I was going to finance it, and he was going to run it.  In the end he had to pull out. I thought: “Let’s just go for it” and found a great little space on Bermondsey Street, London Bridge: £6k a year rent, no business rates, five-year lease, Council landlord. So the worst case scenario if it all failed was that I’d be down £30k if I had to close the door and wait for the lease to run out.

    The first Watch House opened in September 2014 and it flew; it went really, really well.

    What was the secret of its success?

    Providing excellent coffee and food in a space that you really actually wanted to be in seemed obvious to me but nobody really did it. At that time, there were the big coffee chains where the product was OK and the service was generally good but they weren’t exactly inspiring places to be in. I felt there had to be a better way. 

    And then you took a year off?

    (Laughs) Yes, well I’d gone straight from uni into setting up my first business and never had that break. So my partner and I took our sabbatical travelling through many coffee plantations and when I came back in 2016 I realised that the scalability of A1 coffee/F&B was very appealing to me compared to the aquarium world. Whilst the profits were great - the value of the aquarium business was always going to be in the people rather than the product. So I sold my shares and we opened the second Watch House near Tower Bridge which also flew from the off. 

    You must’ve thought: ‘Wow, this is easy!’

    I did but I soon came back down to earth. We were lucky on the first two sites, and when we opened a third store on Fetter Lane in Holborn, got an alcohol licence and tried to do all-day dining but that really didn’t work in that location. I’d forgotten to ask myself the key question: ‘As a customer, would I go to this place!?’. If I had, I would have said ‘no’ – it was too confusing. It launched and made a small profit, but it wasn’t Watch House and it certainly wasn’t me. 

    So in the end we closed it for two weeks in 2018, completely revamped the concept and interiors including changed seating and we got rid of the alcohol.  We focused on what we were good at: a best-in-class daytime café operator with great coffee and food and it began to really perform. It was an interesting lesson and today the site is our busiest coffee site.

    You seem to have picked up the pace of openings since then?

    Yes, we were trading really well at our first Tower Bridge cafe when Columbia Threadneedle, the developer of the nearby Courage Yard scheme, offered us a very large site on great terms, and that has gone from strength to strength.

    Last year we opened in Spitalfields, and about the same time sold an equity stake in the business to our venture capital partners Edition Capital. This ultimately enabled us to acquire the Fernandez & Wells sites which had four outlets that are now changing to Watch Houses. Since then we have completed our Series B funding round and we are really kicking on. 

    So after Boris Johnson addressed the nation on March 16th did the sky fall in?

    It was a shock for sure, but we quickly saw the benefits. We were due to open our own roastery on April 1st  which would have taken us to nine sites, but obviously that had to be postponed. And of course things got very serious when we chose to close all our outlets which we did relatively early on.  But the furlough support for businesses has been a real game changer. With 80% of staff salaries paid by the Government, we can cover the shortfall and keep the business ready to move forward again. In addition, we also launched our Project Pool scheme which saw salaried members of staff sacrifice 25% of their income to subsidise the hourly members of staff. This has resulted in 100% staff retention during this period. I was really proud of the team for this. 

    You sound pretty optimistic?

    Well, we’ve clearly all got a long way to go before the world looks even remotely normal again but yes I have a bullish outlook compared to most. We’ve always wanted to grow the brand but only in a sustainable and quality driven way. No one likes brand rollouts - largely because a lot have been done so poorly over the years. But there’s nothing wrong with having a multi-site operation as long as that operation is always about quality. Watch House is in a really excellent position to springboard out of this period so we are excited in some ways and can see the opportunities already starting to become apparent. 

    And how do you achieve that?

    It’s about authenticity. Keeping faithful to where you started and continuing to guarantee quality and excellent customer experience. Bringing your staff into that culture is really the key. Too many places just throw you an apron and tell you to serve someone. 
    There’s a chain in New York called Blue Bottle who are, in my view, the gold standard in terms of culture and having staff who understand what and why they’re serving. I went to what must have been 10 of their outlets one summer and there were all uniformly excellent. I later discovered that when you join Blue Bottle as a server you have a full five-day immersion course into the business - completely ‘off the tools’ - and their ethos before they let you anywhere near a customer. It was inspiring to me and we strive to better their approach. 

    There’s always going to be a clear connection between that sort of commitment and the quality of your offer.
  11. 130 Wood St

    1 April 2020
    A rare city opportunity proves to be just the ticket for overseas buyer
    Found in the heart of the City and a stone’s throw from St Paul’s Cathedral, 130 Wood Street is close to many of the district’s shops, gyms and restaurants. It was this, coupled with the fact that the property is fully let to four tenants including Buzzacott and Louis Capital Markets that made it attractive to its new owners following a £55 million deal by the City investment team. 

    Directly opposite the popular City shopping destination of One New Change, which also houses Madison wine bar and its spectacular views over London, occupiers are not short of places to spend their lunch break (and pay). Nearby neighbours in this renowned financial district include a range of international firms including Investec, London Stock Exchange and Commerzbank.

    The Grade A office building provides a total of 57,976 sq ft of internal space across six floors and there are ample outdoor areas that make the most of the views over St Paul’s Cathedral. Occupiers at 130 Wood Street can enjoy not just one, but two roof terraces alongside a first-floor courtyard terrace. 

    The property was acquired in an off-market deal by a Japanese client of Colliers, with the price representing £950 per sq ft.
    The Author
    Dominic Amey
    Director | Capital Markets

    02073446604

    07811944024

    Dominic.Amey@colliers.com

  12. March 2020

  13. Coming Full Circle in Paddington

    16 March 2020
    After completing the deal within seven days of their first viewing, Moon Intelligence have now moved into their new office in Paddington.
    Founded in March 2018 by Alexandru Luneau and Sebastian Sabic, Moon Intelligence is a sporting algorithm start-up that sells the data from its sporting events predictions. The firm was operating out of a flat in the Paddington area when they approached us in search of their very first office space.

    In our initial conversation, the company was fully convinced that a self-contained floor on a conventional lease arrangement was what they should be looking for, but had been searching for something suitable for several months with little success.

    It's often the case with companies seeking their first workspace that more options are available than they realise or even know about, and so it was with Moon Intelligence. A lengthy discussion around their plans and concerns revealed a commonplace truth: that a conventional lease with its long-term commitment really didn't suit a fledgling start-up at this moment in its life.

    Given the very possible need for rapid expansion at potentially very short notice – a regular occurrence in start-up culture – we mooted the idea of serviced offices to give the company comfort around the length of time and agility in the event of a sudden change in requirements. And with the desire for close proximity to Paddington station, we suggested Moon Intelligence take a look at 19 Eastbourne Terrace from The Office Group. Not only is the site close to the station; it has a secret members entrance directly off Platform 1.

    The Office Group is the only serviced office provider to have a contract with National Rail and has a presence in numerous London termini including Kings Cross, Victoria and Liverpool Street. One of the company’s first locations, 19 Eastbourne Terrace wraps its comprehensive offering of meeting rooms, break out lounge, shower facilities, etc in a beautiful Grade II Listed building.

    Moon Intelligence took an office of approximately 600sq ft split across two rooms, with floor-to-ceiling windows, plenty of natural light and 12 desks in situ. The initial viewing took place on February 21st and, with the space, location, amenities and terms all ticking the right boxes, papers were signed and the deal closed one week later on February 28th. And proving the popularity of the location with its members, the previous occupant vacated to expand into a larger space within the building. 

    The icing on the cake is that Sebastian used to work at 19 Eastbourne Terrace at his previous company: a true case of what goes around, comes around.

    The Author
    Daniel Reid
    Serviced Office Consultant

    0203 815 5162

    07732 094 909

    daniel.reid@colliers.com

  14. “I grow old…I grow old…I shall wear the bottoms of my trousers rolled,” T.S. Elliot

    13 March 2020
    “I grow old…I grow old…I shall wear the bottoms of my trousers rolled,” T.S. Elliot writes in his masterful poem, The Love Song of J. Alfred Prufrock.

    You might be asking why on earth we’re quoting poetry about hipster fashion habits and we’ll tell you why.
    We’re shamelessly (mis-)using it by means of introduction to the Verse Building (poetry? Verse? Get it?!), which is located in London’s spiritual home of the trouser-rolling hipster, Old Street. 

    What do you think of the segue now? Clunky? Yeah, maybe a bit.

    But there’s absolutely nothing clunky about Verse Building, or its sister development next door, the now-fully let, Chapter House. 

    The scheme, designed by world renown architects BucklyGrayYeoman, combines state of the art design, connectivity and sustainability to bring just over 17,000 Ft2 of office space across 8 fabulous floors to the market. 

    And perhaps the least clunky, most funky, sickest, slickest (how’s that for verse) part of renting here is the bespoke fit-out service on offer. 

    You can work with a design consultant to get your branding in place and to configure the space to make your business model flow.

    Then dive deeper into detail and choose from a curated range of high-spec finishes: from flooring to feature-walls to kitchen cupboard finishes and everything in between. 

    We’ve also created a streamlined paperwork process, meaning the time from initial viewing to moving into your fully fitted office is 8 weeks. 

    And if you’d rather take the space open plan (CAT A), then that option is, of course, always on offer too. A range of rents reflecting letting, design and fit-out preferences is available. 

    Whichever way you go, your offices will be part of a thriving environment in a building which has a commissionaire, air-conditioning, openable windows, almost 3m ceilings, cycle spaces, lockers and showers for everything your team needs.  

    Verse Building is moments from the Northern Line at Old Street and no more than a 10-minute walk from the soon-to-arrive Elizabeth Line at Moorgate. Shoreditch High Street Overground is also 10 minutes by foot, and a whole host of buses connect every which way. 

    Bars, restaurants, markets, music venues, shopping, art and fashion fill the area with colour, scent and sound. Some local favourites are Nightjar, Shoreditch Grind, and Lyle’s, but that’s really just scratching the surface. Speaking of which, the surface area of Old Street roundabout is undergoing one big transformational scratch and will soon be an open, public space designed for pedestrians and cyclists making the neighbourhood an even greener place to work.

    So roll up those trousers, before you get old, and come take a look. Call us on 020 7101 2020 to arrange a viewing. 
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