Bisnow London State of The Market
John Duckworth recently moderated a lively panel on the ‘future of the office’ at the Bisnow London State of The Market conference.
Arriving at 7am I was greeted by James Bond, had a coffee to the soundtrack of a DJ, and walked into a room full of puppies – surreal!
The panel consisted of a number of well-known industry players:
- Jonathan Goldstein, Cain International
- Tony Gibbon, GM Real Estate
- John Munday, Paragon
A key theme of debate focused on disruption across the board – in the hospitality sector, taxis, commerce, digital entertainment, and more latterly, the corporate real estate world. This disruption has been accelerated with new market entrants including WeWork with their aggressive approach to entering new markets with a credible and desirable product.
With a number of key industry players in the room there was some differing opinions on average lease lengths and the impact of new operators on the market, but one thing is certain – flexible space is here to stay and there will be winners and losers along the way.
This disruption is being influenced by occupiers from medium enterprises to large corporates, and there is evidence that all types of organisations in all sectors are adopting more agile ways of procuring and occupying office space.
One factor within this is the reduction in lease lengths, especially in London. I posed a question to the panel citing the ‘average lease length in 1990 was 23 years’ and although there was some resistance to admit the average length has declined since then, there is evidence to demonstrate the impact of shorter leases on the market. The large corporates will continue to take long-term leases for HQ locations in key cities, but it is the mid-cap organisations and the critical mass of corporate requirements that will influence the provision of flex over the next 5-10 years.
This shift has been elevated by strong players in the flexible market including the likes of The Office Group, most recently acquired by Blackstone, one of the world’s largest property investors. The panel discussed the impact of this on existing players and new market entrants where only two weeks ago, we saw the impact of a cooling in demand affecting the IWG share price significantly. The general consensus was that there will undoubtedly be room for all of these operators with increased demand and adoption of new ways of working, but the winners will be those who focus on the value of the brand, the quality of amenities provided, and the flexibility in using workspaces in areas of a city that suits the occupier – the ultimate convenience.
The final question to the panel stimulated discussion on the impending impact of Brexit, What does the panel think of Lloyd Blankfein’s tweet: “Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit”?
This encouraged some spirited conversations on the potential impact on London, but without a crystal ball this is difficult to apply to anything other than hypothesis. However, there seems to be widespread feeling that clarity needs to be provided…and the sooner the better.