CAPITAL WATCH - The Well Work Place - Cushman & Wakefield
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CAPITAL WATCH
THE LATEST ON LONDON REAL ESTATE
The Well
Work Place
PAGE 03
ISSUE 02 • 2017 OPINION • 07 FEATURE SET • 14 TRENDING • 32
Twitter: A Value Proposition Tourism District
@CushWakeLDN for Health & Wellbeing in London Technologies
Welcome What’s Inside
It has been an interesting year for TOURISM
the London property market; one of
planning and positioning, and in spite • Tourism & Luxury Retail
of the developing political landscape,
one with a degree of positivity. During • London, Tourism and the
Sharing Economy
the course of the next 12 months, we
will achieve much greater clarity on • 24/7 Tourism
both our new relationship with the EU,
but also that with the wider world. Just
as the Government will be called on to
confirm its position, so we see next year
PAGE 14
as a year of action for both the business
world and also for real estate.
In this issue we lead with the theme
of wellbeing in the workplace; a subject
which ties together issues of design,
culture, talent retention and bottom
line. We’ve hit this from a number of
different perspectives, and provided a
link to our associated research report.
In our feature set we take a look at
how tourism presents opportunities for
LONDON DNA #TRENDING
real estate. We’ve also got interviews
Keeping Fit District Technologies
with Rob Tincknell of Battersea Power
Station, and the team behind District
Technologies. PAGE 21 PAGE 32
As ever, drop me a line if you like to
go into these subjects in more detail: COVER STORY THE HOT ISSUE
richard.pickering@cushwake.com The Well Work Place ‘Wellness’ – Buzzword
It remains for me to wish you a or Reality?
Happy Christmas and on behalf of the
Cushman & Wakefield team we hope PAGE 03 PAGE 06
you enjoy the festive season!
ROUND-UP SPOTLIGHT ON...
Richard A snapshot of London The Two Towers
real estate stories from
the last quarter
PAGE 12 PAGE 13
LONDON IN FIGURES IN CONVERSATION
Richard Pickering
Quantifying Wellbeing Richard Howard talks Battersea
Head of Futures Strategy, Power Station with development
Editor of Capital Watch lead Rob Tincknell
PAGE 23 PAGE 27
PAST, PRESENT, FUTURE VILLAGE LIFE
Find us online: cushmanwakefield.co.uk/london Eating out in London We showcase the best
Twitter: @CushWakeLDN of the Northbank
Photography page 7-11, 27-33: Tom Campbell
Design: Ascend Studio PAGE 34 PAGE 39
CUSHMAN & WAKEFIELD
03
COVER STORY
COVER STORY
The Well Work Place
The nature of how we work has been changing at an accelerated
rate over recent years. Frontier firms have been quick to recognise
the important influence that the workplace has on their ability
to execute new working practices. However, this is no longer the
domain of a few big tech companies – the ‘well workplace’ is now
a mainstream concern.
C onsequently the workplace of
the (not too distant) future may
look radically different for some, as
heightened absenteeism and loss
of earnings. Mounting evidence all
points in one direction: wellbeing in
and how they want to work.
Technological progress has also
created greater transparency and
employers respond to a growing the workplace is fast becoming a openness. It is allowing us to lay bare
requirement for a work-health strategic imperative. and quantify the relationship between
balance. The wellbeing industry So what is driving this change ‘where we are’ and ‘how we are’.
already has a global footprint, but now? Technology has been identified In doing so it allows us to redefine
most corporates and property owners as a culprit in eroding work-life how we work and how we measure
are still at the start of a journey boundaries. However, technology the output from our efforts. In turn it
to understand and interpret the tends to be a facilitator rather than should also create new ways for us to
implications for the built environment. a driver. It in fact has a positive role determine the value added
Most of us currently work in to play in empowering employees proposition of excellent real estate.
what are essentially ‘unwell’ offices. to change the nature of their work In the following pages, we explore
By Sophy Moffat,
Associate Director, Workplaces that are not ‘well’ impair contract. Employees will increasingly the role of the well workplace in
Research & Insight employee performance and promote choose where they want to work driving real estate value.
CUSHMAN & WAKEFIELD
04
COVER STORY
The case for
investment
Happiness counts An abundance of research
demonstrates links between employee
Our wellbeing as a society is often wellbeing and bottom line financial
measured though gross domestic outcomes. Human happiness has
product. As real GDP grows, so does been found to have large and positive
our aggregate standard of living. causal effects on performance.
However, there are deep flaws and Positive emotions appear to motivate,
nuances in this approximation, not while negative emotions have the
least because it does not address opposite effect. A study by PwC
social or environmental factors. found cost-benefit ratios ranging
Consequently, economists and from 2:3 to 1:10 – meaning for every
national leaders are increasingly US$1 spent on promoting employee
measuring the level of a country’s happiness, an organisation can expect
success using new metrics, including to receive US$10 in value back.
proxies for happiness. A 2009 study Tim Munden, chief learning officer at
on alternatives to GDP, commissioned Unilever, reinforces this. He estimates
by then French president Nicolas that Unilever recoups an estimated
Sarkozy, provides challenges to Retaining talent ¤6 for every ¤1 invested in wellbeing
our basic understanding of the programmes across its European
importance of non-financial factors. Three quarters of CEOs globally businesses.
This develops longer standing see accessing and retaining skilled
thinking, for instance the United labour as the biggest threat to their
Nations’ Human Development businesses. Attracting talent is not
Index and the Kingdom of Bhutan’s easy, and losing it is expensive;
insistence that it is out to maximize anywhere from 50-200% of a
not GDP but GNH – “Gross National lost employee’s salary is spent on
Happiness.” More than a ‘fad’ this recruiting and on-boarding. Some
is becoming a more pervasive shift banks are incurring up to US$1
in how we categorise a successful billion annually in costs associated
economy – rue the industry that is with replacing employees. The
not moving to address it. ‘well’ workplace can be a valuable
attraction and retention tool. A 2013
survey by mental health charity
Misery matters Mind found that 60% of staff were Well workplace
more likely to recommend their
Most workers are unhappy. 76% of organisation as a good place to work There are proven links between
the global workforce report they if the employer took action to support wellbeing, performance and the office:
The are struggling with wellbeing, while wellbeing. Meanwhile global analysis • Background noise in offices can lead
relationship research estimates the cost of work- shows that companies with satisfied, to performance drops of 66%.
between related stress to be as high as US$650 engaged workers have 25-65% lower • There is a 10% reduction in
‘where we billion in Europe. Presenteeism – employee turnover. performance if offices are too hot or
are’ and ‘how when workers are present in the too cold.
office but functioning at sub-optimal • Levels of cortisol, a stress indicator,
we are’ is levels – costs businesses US$1,500 decrease significantly after 20
becoming billion each year. Corporations are minutes in a more natural setting.
clearer understandably striving to identify • Seeing the colour green for just a
links between work environments and few seconds boosts creativity levels.
business performance. New data sets • Cognitive functioning doubles when
and ways of monitoring activity within workers are in well-ventilated offices.
the workplace expose the impact that • One third of absenteeism is due to
the workplace has on staff wellbeing, poor interior air quality.
retention and ultimately bottom In fact, bodies of evidence from all
line performance. The relationship parts of the globe prove that well
between ‘where we are’ and ‘how designed workplaces are critical for
we are’ is becoming clearer, and as wellbeing. The message to the real
it does, occupiers are increasingly estate and built environment sector
willing to invest in real estate to seems clear: re-humanise spaces to
enhance employee performance. improve employee performance.
CUSHMAN & WAKEFIELD
05
COVER STORY
Wellbeing as
Standard
A number of international frameworks
focus on the direct contribution of Corporations are
buildings to occupant wellbeing,
these include:
understandably
The International WELL Building striving to
Standard™; this is the first certification identify links
to focus exclusively on wellbeing. Its between work
compliance requirements fall into environments
seven areas: air, water, nourishment,
light, fitness, comfort and mind. Each
and business
category is scored out of 10 and performance
– depending on the total achieved –
silver, gold or platinum certification
is awarded.
Fitwel; this standard assesses The Future
building and workplace features such
as the design of outdoor spaces,
proximity to public transit, indoor air For tenants, there are operationally
quality, and healthy food standards. driven financial incentives to occupy
Organisations submit questionnaire ‘well’ workplaces. However, this
answers, with photographic evidence should not just be an occupier
where applicable, to receive a rating focus. Investors and developers who
of zero, one, two, or three stars. successfully adapt their offering are
The World GBC’s “Better Places shown to benefit from a tangible
for People” Framework; this is a three premium – three separate studies by
pillar framework designed to assess the Canadian Green Building Council,
and quantify the health, wellbeing and McGraw Hill Construction, and the
productivity of people in buildings. Urban Land Institute found buildings
Firstly, there is a focus on the physical that demonstrate positive impacts on
environment. Secondly, occupant wellbeing are likely to have a higher
perceptions of the environment are market value.
surveyed. Thirdly, economic factors are Wellbeing in the workplace has
taken into consideration; metrics are emerged as a critical issue, because
tracked over time as improvements are it is simply too fundamental to be
made to the workplace. ignored. It is no longer just about
New standards and frameworks doing the right thing, but about
help ensure challenging targets. taking the commercially sensible
They are driving progress in the field option. Bodies of evidence will
of workplace wellbeing. But it is of become more compelling, until ‘well’
course entirely possible to design workplaces are the norm. Those who
‘well’ spaces using thoughtful design fail to futureproof are likely to suffer
concepts, without completing a financially.
formal documentation system. There
are many routes to wellbeing, rather You can download a full copy of
than a ‘one size fits all’ solution it our recent report on the subject of
should be presented as a universally wellbeing and real estate at
accomplishable goal. cushwk.co/2kamTEw
CUSHMAN & WAKEFIELD
06
THE HOT ISSUE
THE HOT ISSUE PHYSICAL
ENVIRONMENT
‘Wellness’: PERSONAL PSYCHOLOGICAL
Buzzword or
RESILIENCE WELLBEING
THE EMPLOYEE
Reality? UNDERSTANDING
SELF
PHYSICAL
WELLBEING
ENGAGEMENT
T he press seem to be fixated by the ‘millennial’ as if
they are the only generation in the workplace now.
The fact is we have a multi-generational workforce, many
but not the whole story. We already know that good air
circulation, light and temperature can have a positive
effect on employee productivity. However, now it is more
of whom will work until they are 75, probably for multiple important for property professionals to support occupiers
companies. To do this they will need to be fit and healthy and investors to understand how they can contribute to
well after that to enjoy any sort of retirement. the support of the whole employee experience of wellness
If our employees really matter, then their wellbeing, that the employer supports, and is imperative to retain the
not just their productivity should be of concern even to good engaged and motivated people for their business.
the most hardnosed employer. All generations at work As an example of how things are changing: some
today expect choice, flexibility, authentic connections companies in Sweden are now supporting their employees’
with their managers and co-workers, knowledge sharing, wellness by rewarding them if they exercise three hours
convenience and their wellbeing to be considered. How per week outside normal working hours. If they do, they
your workplace is designed and operated is a vital piece of can get an additional week of vacation, thus promoting
what HR professionals call the ‘employee proposition’. prevention of stress-related illness and greater physical
HR and property professionals now need to work fitness among employees.
together to bring about real changes to this employee Wellness is actually about employee experience leading to
proposition to support “integrated wellness” delivery both better performance, and the resources employers give them
at individual and enterprise wide level. How we design, to be effective, creative, collaborative and less stressed,
manage and use our workplace is fundamental to how our the more valuable they will become for the enterprise.
employees feel about the company, the work they do, and Wellness is not a hippy concept or a buzzword, it is the
the choice of where they do that work, both inside our path to greater performance of individuals and for the
offices and elsewhere. companies that take it seriously, it is a new opportunity
For some employers and property professionals the for the fixed environment to add value, and be seen as an
penny has finally dropped. There is a variety of factors investment than a cost.
which affect employee wellbeing and the success of an I suggest you get in touch with both your workplace
enterprise. Not taking an employee centred approach will strategy team, and your HR Team to build an alliance on
lead to missed opportunities. an integrated approach to wellness, and a portfolio which
Integrating wellbeing is more than doing the right supports employees wellness, increases profits before
thing about the built environment, workplace design and your competitors do.
delivery to support better health. Simply embedding
By Peter Jones,
Partner, Strategic more active design, and greater thought and action about Peter is an expert on workplace change
Consulting the environmental conditions within offices is a start and change management.
CUSHMAN & WAKEFIELD
07
OPINION
A Value Proposition for
Health & Wellbeing
Despina Katsikakis, recently appointed as Head of
Occupier Business Performance at Cushman & Wakefield,
gives her perspective on the value of health and
wellbeing to the real estate sector.
CUSHMAN & WAKEFIELD
08
OPINION
It is clear that expectations have
changed in the real asset sector.
Health and wellbeing is emerging as GRESB
an important source of both risk and assesses the
opportunity for property investors, sustainability
landlords and occupiers.
performance
Investors are asking for greater
transparency about the environmental, of real
social and governance (ESG) asset sector
performance of real asset portfolios portfolios
and occupiers are demanding more and assets
sustainable, greener and healthier
in public,
buildings.
GRESB assesses the sustainability private and
performance of real asset sector direct sectors
portfolios and assets in public, private worldwide
and direct sectors worldwide. It
emerged from a unique collaboration
of the world’s largest pension funds
and academics from Maastricht WELL Certified office One Carter Lane. Photo: Dirk Lindner
University and the University of • External health promotion refers
The GRESB Health & Well-being Module California at Berkeley. More than to intentional actions taken by
gresb.com/health-well-being-module 66 institutional and retail investors, companies and funds to improve
collectively representing over USD the health and well-being of
17 trillion in institutional capital use their tenants, customers and the
GRESB data and analytical tools. In communities surrounding their
Promote Promote Employee 2017 GRESB assessed real estate real estate assets.
Employee Health Health &
& Well-being Well-being
portfolios jointly representing more Internal health promotion is usually
+ than USD 3.7 trillion in assets under undertaken though corporate
Promote Health &
Well-being through management, as well as more than wellness programmes which are
products and 200 infrastructure assets and funds. notoriously difficult for investors
Promotion of health of employees
serivces
The new GRESB Health & Well- to measure and compare between
being Module provides participating organisations and typically struggle
Promote Health &
Well-being
companies and funds with practical with low participation rates or offer
through products tools for assessing and benchmarking only piecemeal interventions that
and serivces
the actions they are taking to do not comprehensively address
promote health and well-being. employees’ health.
The Module has two areas of focus: One intervention which the real
• Internal health promotion refers estate industry is uniquely positioned
Promotion of health through products and services
to policies and actions focused to integrate is implementation of
directly on a real estate company’s healthy building features that have
own workforce. been scientifically shown to support
CUSHMAN & WAKEFIELD
09
OPINION
human health and well-being and metric that can help investors
offer a promising method to passively predict long-term growth of
improve participation and improve Instead of corporate financial value. In order to thrive,
employee health. directly Environmental interventions people need to
Research from Dodge Data &
Analytics found that 69% of U.S.
trying to target making the healthy choice the
easy choice by incorporating active
move, have access
building owners surveyed, who change staircases and nutritiously stocked to daylight and
implemented healthy building employee break areas more visible or convenient. alternate between
features reported a corresponding behaviour, Completely passive interventions such different physical,
improvement in employee satisfaction employers as filtered air and water, or circadian emotional and
and engagement. Therefore, instead
of directly trying to change employee
are finding lighting can impact more people
and significantly increase wellness
mental states
behaviour, employers are finding it it easier to programme participation rates up to
easier to change their environment change their 100% (i.e. all building occupants can
by implementing passive health environment experience the benefits of cleaner air
interventions strategically through or better lighting without taking any
pursuit and achievement of building specific action).
certifications such as the WELL Recent research suggests that
Building Standard TM (“WELLTM”). these passive interventions can also
This can act as a comprehensive, have positive impacts on employee
comparable, and standardised ESG performance. A 2015 Harvard study,
for example, suggests that indoor
air quality improvements (i.e., low
concentrations of volatile organic
compounds and carbon dioxide) can
significantly improve cognitive function.
In order to thrive, people need to
move, have access to daylight and
alternate between different physical,
emotional and mental states, yet
the impact of the workplace on
health and productivity is often
an afterthought. When assessing
the business case to invest in
incorporating healthy features and
standards, it is important to be
clear about the relative value of the
interventions against the overall
Runners on the 16th floor running track of the White Collar Factory building, Old Street operational expenditure.
CUSHMAN & WAKEFIELD
10
OPINION
We have for far too long been
ignoring the 90 percent; we spend
90 percent of our time indoors
and 90 percent of opex is typically
attributed to people costs, so
designing workplaces and buildings
to support people’s wellbeing makes
business sense – as even a modest
improvement in employee wellness,
can have a huge financial implication
for employers – one that is many
times larger than any financial
savings associated with an efficiently
designed and operated building.
It is clear to see in the example
Designing
below where the value of two workplaces Eight Features that make
productive hours is the same as the and buildings
annual cost of real estate. to support Healthier and Greener Offices
The World Green Building people’s
Council has developed a simple
framework to help companies take
wellbeing
action and create healthier offices: makes
business
01 02
betterplacesforpeople.org.
The framework assesses key sense – as
environmental factors which affect even a
health and wellbeing, surveys
employees to find out how they
modest Indoor Air Quality and Ventilation Thermal Comfort
experience them, and measures the improvement A well-ventilated office can double Staff performance can fall 6%
economic factors they influence, such in employee cognitive ability. if offices are too hot and 4%
as productivity, absenteeism and wellness, can if they are too cold.
medical costs. have a huge
The report identifies eight key
factors in creating healthier and
financial
implication
03 04
greener offices which can impact on
the bottom line. for employers
City of London Occupier Daylighting and Lighting Noise and Acoustics
A study found workers in offices with Noise distractions led to 66%
windows got 46 minutes more sleep a drop in performance and
night than workers without them. concentration.
The building as a dynamic system
to support business priorities
05 06
PEOPLE PROCESS PLACE Interior Layout and Active Design Biophilia and Views
(£35m)* (£2.5m)** (£5m)*** Flexible working helps staff feel Processing time at one call centre
Brand & Business Agility & more in control of workload and improved by 7-12% when staff had
Values Performance Flexibility
encourages loyalty. a view of nature.
Looks and Enables Supports
07 08
feels like a people to do cost
great place their best reduction
to work work and and business
support change
wellbeing
Look and Feel Location and Access to Amenities
Colours, textures and materials that Public transport accessibility,
evoke nature; adding houseplants provision for bikes, showers, healthy
* Total salary cost per year to an otherwise sparse office food and other lifestyle amenities; a
** Value of 1 hour of productive time per year
*** Building and management costs per year environment can increase well-being Dutch cycle to work scheme saved
by 47%, increase creativity by 45% £27m in absenteeism.
and increase productivity by 38%.
CUSHMAN & WAKEFIELD11
OPINION
Opinion: Wellbeing
By Colin Wilson,
CEO, EMEA
It is important to note that changes to
the design of the workplace are only
effective if there is an empowering
workplace culture to support it. When
space is designed with purpose and
focused on supporting people, it can
have a big role to play in facilitating
behaviours that make our life at work
more meaningful; connecting us with
others to share knowledge and ideas,
to concentrate and focus, to activate
our mind and body, to connect with
nature and recharge our energy and
to be inspired to do our best work.
It is
important
to note that
changes to
the design In an industry where people are
everything, attracting, retaining and
motivating the best talent is critical.
amount of productive time in a typical
8-hour day at less than three hours,
the opportunity in the cost-value
of the Providing appropriate progression equation is significantly weighted to
workplace opportunities as well as reward the value side.
are only are of course key parts of this, but In the past couple of years, we
effective if increasingly they are not enough. have seen some of our clients pushing
there is an Providing lifestyles that balance the boundaries of the ‘wellness’ offer
the intrinsic needs of individuals to their staff, but often this has been
empowering with health and family friendly intuitive rather than data-based. As
workplace options has an important part to the science and technology around
culture to play. When one considers that most this area develops, I envisage that
support it waking hours are typically associated this will become a key consideration
with the office and work related to tenants at the point that they
activity, it is important to provide an enter into lease commitments.
environment that helps to achieve For our part, we are committed to
these needs. Beyond talent retention, exploring how we provide our teams
and generally doing the right thing with increasingly flexible options
by your employees, this is given around how they work, with a view
increased focus by a widening data to promoting health and productivity
set linking workplace design, health, and removing unnecessary friction in
work-life balance and productivity. the working day.
With some studies assessing the
CUSHMAN & WAKEFIELD12
ROUND-UP
ROUND-UP
London at Banks long term
commitment to London
a Glance Deutsche Bank has taken a pre-let
for a new headquarter building at Boost to cultural
Landsec’s 21 Moorfields development. regeneration in Whitechapel
New Bloomberg HQ opens The bank has a minimum commitment
to 469,000 sq ft, but also has an The continuing renaissance of
The new Bloomberg London option to expand later to take up to the Aldgate and Whitechapel
headquarters has been identified as a maximum of 564,000 sq ft. The submarket has been boosted by the
the world’s most sustainable office scheme will benefit from its proximity imminent arrival of a new centre
building, achieving an ‘Outstanding’ to both Moorgate and Liverpool for photography. Fotografiska,
BREEAM sustainability rating, with Street stations following the opening which runs the world-renowned
a 98.5% score. This is the highest of the Elizabeth line. The German photography museum in Stockholm,
design-stage score ever achieved by bank has taken a 25-year lease, has pre-let the entire Phase two of
any major office development. The subject to planning permission, which Derwent London’s The White Chapel
building delivers a 73% savings in is a strong sign of its commitment Building, 10 Whitechapel High Street,
water consumption and a 35% savings to London and the UK, despite the E1 to house a new London Museum of
in energy consumption compared to a current Brexit uncertainty. Photography. The 89,000 sq ft lower
typical office building. In fact, despite Brexit, the 2017 Z/ ground space and pavilion space is
A number of innovative sustainable Yen global financial centres index, due for completion in 2018, and will
design features, such as integrated released in September, shows that bring a vibrant cultural focus to the
ceiling panels, natural ventilation, London extended its lead over its once overlooked area.
combined heat and power and smart nearest rival, New York to remain the Phase one of the redevelopment
airflow, have been incorporated into number one global financial services created a new public entrance and
the building’s design. centre. Overall assessments for atrium, including a cafe and bar, and
The development’s interiors encourage the European centres continued to was fully let earlier this year to clients
active working, with sit-to-stand fluctuate as people speculate about such as the Government Digital
work stations for all employees and a which centres might benefit from Service, Wilmington, Perkins+Will,
central ramp spanning six floors that London leaving the EU, with Frankfurt, Unruly, Reddie & Grose, Shipowners’
encourages movement through the Dublin, Paris and Amsterdam all rising Club, ComeOn! and Lebara.
building on foot. The omission of an up the global rankings.
in-house canteen serving lunch means
employees, in the words of Michael Blackstone enters growing
Bloomberg, ‘get out and enjoy the Quintain kicks off JV Serviced Office arena with
local economy’. partnerships at Wembley Park purchase of interest in TOG
The company recently unveiled the
names of seven restaurants that will Quintain announced two new Blackstone acquired the majority
be at the heart of the development’s joint ventures to enhance the interest of The Office Group (TOG) for
restaurant quarter. The ‘Bloomberg redevelopment of Wembley Park. approximately £500m. TOG currently
Arcade’ will eventually comprise of Network Homes and Quintain has a portfolio of 36 centres, focused
ten independent restaurants, open have joined forces to provide 252 on London and this investment into
seven days a week offering a diverse affordable homes in the area. This the company is to assist expansion
selection of cuisines in a move away follows the completion of the Alto, against a background of increasing
from national chains. Quintain’s third Build-to-Rent building demand and scale in the sector. 2017
The office building provides 1.1m and Vivo, a collection of affordable YTD has seen over 1.4m sq ft leased
sq ft and opened in October 2017. apartments managed by Network to the sector, which already surpasses
Homes. With planning permission the previous annual record of 1.28m
already secured for 7,000 homes, sq ft back in 2014.
5,000 of these will be available for The trend for investors to enter the
rent, which will see Wembley Park sector has been building momentum
become the largest Build-to-Rent over the last few months. British Land
development in the UK. launched its Storey concept, aimed
Quintain has also joined forces with at companies employing between 20
Boxpark to open Boxpark Wembley and 70 people who have outgrown
that will provide a pop up dining and co-working space which will be based
event destination at the heart of the in their existing portfolio. While
scheme. It will include street food another private equity company,
and bars, with the aim of bringing 29 Carlyle, has purchased three office
independent and established food buildings to operate as flexible spaces
traders onto Olympic (Wembley) under the Uncommon brand name,
Way and provide year round space which will cater for 1300 desks. Fora,
By Christopher for events. This is the third BoxPark in backed by Brockton Capital, has also
Wilton,
London, following on from Shoreditch increased its portfolio to ten in the
Graduate Surveyor,
London Capital and Croydon, and is scheduled to open last 12 months, scheduled to open
Markets in 2018. between now and 2019.
CUSHMAN & WAKEFIELD13
SPOTLIGHT ON...
SPOTLIGHT ON...
It is the
Ultra High
Net Worth
families out
of Hong Kong
and Singapore
that are
making the
running at the
moment
The Two Towers
The pricing for City office towers has been reset by the transactions
at The Leadenhall Building and 20 Fenchurch Street. The Cheesegrater
and Walkie Talkie respectively have seen yields for new iconic office
towers in London driven down to sub-3.5%.
W ith lot sizes over £1 billion this provokes the
question as to what is driving these buyers.
The answer depends on where in the world you sit.
privilege not enjoyed by many jurisdictions.
Following the statement made by the Chinese State
Council restricting investments in sectors including
Sterling has weakened significantly since Brexit so gambling and real estate (no connections assumed!) this
from a currency point of view prices are cheaper on the raises the question as to whether the Chinese investors will
exchange rate basis. be pulling back. Interestingly as Dalian Wanda pulled out
On a global basis, yields for similar prime CBD office of completing on their Nine Elms scheme it was CC Land
properties, whether it be Tokyo, Taipei, Amsterdam or that stepped up to take their place.
Berlin, are all beginning with a 3% yield. The context here is important with the US having had
In this context, new best in class assets with income $16.4 billion of Chinese investment in 2016 and $7.2 billion
streams in excess of 10 years, let to a range of investment this year, the UK has had $1.8 billion in 2016 and $6.5 billion
grade covenants can attract excellent leverage thereby this year.
providing enhanced geared returns. Apart from the recent acquisition by CR Land at 20
With both the Cheesegrater and the Walkie Talkie the Gresham Street where we sold for AXA at £310 million,
buyers are Ultra High Net Worth investors from Hong there haven’t been that many Central London purchases by
Kong, being CC Land and LKK respectively. Given the state-owned enterprises. The four big highlighted entities
increasingly assertive regime from mainland China, there from China, An Bang, Fosun, H&A and Dalian Wanda,
By Martin Lay, is a push for global diversification and London is of course haven’t had a deep impact on the London market.
Co-Head of London a first point of call being a global gateway city with rule of It is the Ultra High Net Worth families out of Hong Kong
Capital Markets law, transparency, accessibility and liquidity. and Singapore that are making the running at the moment.
and Argie Taylor,
Partner, Cross
Whilst many Brits see Brexit as disruptive and negative, Our experience of acting on these two leading tower
Border Capital depending where you sit in the world it could easily just investments, has given us a unique insight into this market,
Markets be seen as a part of the democratic process, which is a and we expect the trend to continue looking forward.
CUSHMAN & WAKEFIELD14
TOURISM
Tourism
FEATURE SET
The most observed impact of the EU referendum
vote has been the devaluation of sterling. This is
largely a confidence issue, and much will depend on
the negotiations ahead of us. A natural consequence
of this is that imported goods are becoming more
expensive in the UK. The flip side of the coin is that
products made largely within the UK can now be
priced more competitively for export.
However, the export of sales and services does
not have to cross our own borders. An increasing
wave of tourism, buoyed by its relatively cheaper
cost, is fuelling international demand in London
for leisure, hotel stays and luxury retail. Already
the world’s top tourist destination on a number of
metrics, is London’s tourism industry going through
a gold vein, or is there something more durable
here? In the following feature set on tourism,
we take a look at the trends in this market.
CUSHMAN & WAKEFIELD15
TOURISM
TOURISM
Tourism & Luxury Retail
It is the exclusivity of the buying experience that defines luxury
retailing. Way beyond the need for the object being bought, luxury is
an unashamed indulgence. That’s why, despite the enormous growth
of internet-based purchasing, London as a luxury retail centre remains
the destination of choice for high net worth tourists the world over.
L ondon-based retailers are masters at delivering
the standards that individuals who live a wealthy
lifestyle expect. They offer a very British combination
spread to neighbouring Bruton, Mount and Albemarle
Streets and other mixed-use thoroughfares that meander
pleasantly around Mayfair’s Berkeley Square.
of outstanding product quality wrapped with quietly Similarly, Sloane Street and the attractions of Harrods,
effective, but wholly unassuming, service. The outlets Harvey Nichols and the designer boutiques of the
themselves sit in bustling cosmopolitan settings, yet still Brompton Road have helped maintain Belgravia’s place
manage to retain a presence of timeless refinement. among London’s traditional luxury retail destinations.
Of all London’s traditional luxury retail destinations, However, the growth of global consumer brands and
Bond Street reigns supreme as one of the most sought the need for a different type and bigger size of outlet
after and expensive locations of its type in Europe. Ever to accommodate them has moved some luxury retailing
since it was first developed in the 1720s, the social elite closer to the mainstream high-footfall shopping venues.
have claimed Bond Street for themselves as the place to Nowadays we see luxury clothing, jewellery and top-end
By Pete Mace,
meet, greet and shop. digital and technology brands in prestigious flagship stores
Head of Central More recently, reflecting the inexorable growth in along Regent Street, in the City by the Royal Exchange and
London Retail demand for retail space, the cachet of Bond Street has in discrete clusters in places as far afield as Canary Wharf
CUSHMAN & WAKEFIELD16
TOURISM
Of all non-EU long-haul
arrivals into Europe,
London is the favourite
Top tax-free destination with a 12% Top tax-free
shopping share. This compares shopping
tourists by to Paris with 9%, Rome Arrivals from China into London tourists by
volume by 7% and Barcelona 5% are up by 35% YoY. This compares average
nationality to a 15% YoY increase for Europe transaction
in London’s as a whole value in
West End London’s
1 West End
2
31% £1,478
4 3
CHINA 39% from Asia Pacific
CHINA
(14% YoY increase)
6% 6% from the Middle East £1,205
(20% YoY increase)
INDIA 50% from the Americas UAE
(21% YoY increase)
7% £1,069
USA HONG KONG
5% from Africa
(15% YoY increase)
5% £1,047
HONG KONG THAILAND
Global tourism into London
and Westfield London in White City. Of course, London and the UK in general have an extra
Such developments reflect that today’s perception of luxury advantage at the moment in that the sterling exchange
is very much more fluid than it ever used to be. Contemporary
London rate is very attractive for tourists.
symbols of wealth are universal, and people with sufficient makes a Everything adds up to making luxury retailing in London
resources are travelling the world to acquire them. compelling a viable business proposition. Luxury is well established
London, Paris and New York, with perhaps to a lesser offer for top- as part of the city’s core identity and contributes greatly
extent Milan and Tokyo, are the global destinations of end retail- to the appeal for high net worth tourists. Also, we have to
choice for luxury retail. Noticeably within that small but remember that there is already a very strong home market
exclusive group, London is significantly growing its appeal.
centred for luxury goods.
London makes a compelling offer for top-end retail- tourism In terms of real estate, there are various opportunities
centred tourism. It is comparatively compact in terms to buy and rent in the marketplace that offer routes into
of its retail footprint and has all the major brands easily London’s luxury’s business market. However, the best
accessible. There’s a good choice of five star hotels close store opportunities can sometimes be hard to come by,
by, and visitors have access to an extraordinary array of particularly in the prime Mayfair and Belgravia locations.
first class dining and entertainments. The effect for those Therefore, having a view to emerging luxury clusters and
with deep pockets is that luxury in London can be a fully being informed on new models and trends is as important
integrated city experience. as ever.
CUSHMAN & WAKEFIELD17
TOURISM
TOURISM
The
partnership
with the
corporate
travel portal
Concur will
allow users
to compare
Airbnb
properties
directly with
hotels
citizenM Tower of London
London, Tourism and Sharing Economy
With over 19 million visitors to London every year, our capital
remains one of the world’s most important markets for hotel
operators. Success attracts competition and competition breeds
innovation. We are already seeing this in the market, but on the
horizon there are potentially bigger changes.
D espite limited supply growth in
Europe over the last decade,
London hotel supply shows no
developing around the sharing
economy that is growing at a quicker
rate and this may be only the tip of
markets, one only has to look at the
retail sector or the taxi industry to see
how digital platforms can quickly take
signs of abating, with the capital the iceberg. The number of properties share from incumbents. As the private
now home to over 1,600 hotels and listed on Airbnb almost doubled over market develops a taste for using the
149,200 bedrooms. In 2016 alone, the course of 2016 to 50,000 and platform, unless there is intervention
53 new hotels opened, including 15 bookings surged by 130% in 2016 (to from regulators, inventory levels will
By Jeanne De
L’Espée, Senior
aparthotels and 16 budget hotels. This 4.6M) and by a further 55% during rise and hoteliers will face challenges
Consultant, trend is continuing through 2017, with the first four months of 2017. As a to sustain existing growth trajectories.
Hospitality 59 new hotels, providing 3,575 new result, Airbnb’s share of the London But more than that, the emergence
and Maria-Pia rooms, expected to be added to the overnight stay market has more than of the so-called sharing economy
Intini, Director,
Development &
stock by the end of the year. tripled since January 2015 to 9%. has already started to alter consumer
Investment, However, this isn’t the whole Whilst these stats may illustrate expectations on a fundamental level
citizenM picture. There is a new market the capacity for expansion in both and redefine what and where a hotel is.
CUSHMAN & WAKEFIELD18
TOURISM
As well as
impacting
mainstream
hotels, Airbnb
and other
intermediaries
have also
become a
disruptor
to the wider
residential
market
25Hours Hotel Hamburg
This impact of Airbnb is also appeal against the higher business to police and the associated tax
diversifying across market segments. rates proposed in the April 2017 advantages deliver around one third
Alongside leisure travellers (upsold revaluation. In some cases rates of the savings that Airbnb offers
with tours and excursions by ‘Airbnb payable will more than double. The to its customers. This is without
Trips’), Airbnb is now also directly argument for material change has even considering the alternative
targeting the business and the luxury greatest weight in Westminster, Tower home-sharing platforms. In addition,
travel markets. The partnership with Hamlets, Kensington & Chelsea and inspections to check hotel-standard
the corporate travel portal Concur Hackney, which collectively account fire protections are far less common
will allow users to compare Airbnb for almost 50% of all Airbnb bookings than for traditional B&Bs and hotels.
properties directly with hotels. The in the UK in 2016. As well as impacting mainstream
pilot project, unofficially referred to as Lack of regulation is becoming hotels, Airbnb and other
‘Select’, will allow Airbnb to address an increasing concern not only for intermediaries have also become a
older and wealthier travellers still hoteliers but also for local authorities disruptor to the wider residential
preferring the amenities that come and many private landlords, market. Last March, Sadiq Khan
with upscale and luxury hotels. although things are starting to warned that the rise of short-term
Traditional operators cannot change. From early 2017, Airbnb’s rentals risks reducing the number
ignore the disruption and many systems automatically limit entire of homes available for permanent
are taking stock of their positions. home listings in Greater London to residents, albeit demand in the long-
As a result of a cited ‘material 90 nights per calendar year unless let market has softened since Brexit.
change’ in their circumstances, hotel users submit an Exemption Form to This, together with the recent cuts
operators, supported by the British share their space more frequently. in tax breaks on mortgage-interest
Hospitality Association, are likely to However, the 90-day limit is difficult payments and the growing pressure
CUSHMAN & WAKEFIELD19
TOURISM
on returns, has allowed the short-term inspiration from the millennial Eats in the leisure sector. Similarly,
rental market to flourish, especially hotspots of Williamsburg and Berlin. avant-garde hoteliers will embrace
for luxury apartments hit by higher
Hoteliers are The rise of the sharing economy innovation and reshape their own
SDLT rates. also setting is irresistible. It reduces barriers to core models to adapt to demand
However, disruption also breeds their sights entry, improves efficiencies and, in for customisation, authenticity and
innovation. The rapid growth of on new many ways, adds to the customer community engagement.
platforms such as Airbnb is testament markets, experience. Its effect is felt most Challenge and change are positive
to the vast market for travel products acutely in markets where cost drivers for the guest experience but
outside of mainstream hotels - and
including the pressures are high and utilisation is the form of regulation applied to the
smart hoteliers are capitalising on the burgeoning inefficient. Where already established, disruptors will be key to shaping the
trend. Hilton’s latest brand Tru (which flexible office sharing economy platforms will industry going forwards. The clearer
boasts the fastest growing pipeline sector continue to innovate and expand the lines, the better the tourism
in the history of the hospitality vertically. This is the case with industry will be at managing and
industry) owes its success to smart Airbnb Trips and Airbnb Select in sustaining the co-existence of its
and efficiently designed guest rooms, the hospitality industry and Uber brands.
reimagined public spaces and creative
updates around food and beverage.
On a smaller scale, stripped-down
but design-forward hotels like Yotel,
citizenM and 25hours have been
popping up in urban locations and
next to major hubs all over the world.
Additionally, some hotel groups
are offering Airbnb-style lodgings
alongside traditional offerings. Room
Mate Hotels now offers short-stay
urban apartments through a brand
called Be Mate, whereas Accor Hotels
(Europe’s largest hotel group) last
year bought London’s Onefinestay, an
upscale version of Airbnb, as well as
investing into 25hours.
Hoteliers are also setting their
sights on new markets, including the
burgeoning flexible office sector.
Partnering with LiquidSpace, Marriott
International has started testing a
new concept called Workspace on
Demand, which gives guests and non-
guests of 35 selected hotels in the US
the opportunity to book small scale
meeting space for an hourly fee. In
Europe, the chain has created Canvas,
a food-and-beverage talent incubator
designed to unlock the potential of
unused spaces in Marriott hotels and
leverage the hotel space to engage
the community. In 2016, the Marriott
Park Lane in London welcomed
Notch, a pop-up rooftop bar revolving
around Japanese street food and In 2016, the Marriott Park Lane welcomed Notch, a pop-up rooftop bar revolving around Japanese street food
cans of homemade cocktails, taking and cans of homemade cocktails
CUSHMAN & WAKEFIELD20
TOURISM
TOURISM
Both
practice and
perception
needs to be
overcome to
create a truly
liveable and
importantly,
bearable
24-hour city
24/7 Tourism
It’s a truism that tourists probably don’t come to London for
the weather. In the most visited city in the world, four out of
five travelers say ‘culture’ is their main reason for their trip.
Sadiq is
seeking
L ondon’s top 20 attractions
account for almost 90 per cent
of visits and account for significant
ago and a fall of 35% in grassroots
music venues. Pubs are estimated
to be in decline at a rate of over 140
and other places of special interest.
Alongside this, existing day-based
visitor attractions will be supported
to further spend alongside the boutiques per year. There also remains pressure to explore extended opening hours
promote both of Bond Street, Oxford Street, around the juxtaposing late night to ‘blend’ the 24-hour city experience
Knightsbridge and Covent Garden activities with both real and perceived and create crossover between day
domestic which capture the lion’s share potential risk for antisocial behaviour and night-time tourism.
and overseas of dollars and yen. However, the alongside residents and businesses. The further contribution of these
tourism and weekend crowds increasingly heading The new London Plan which will quarters to both place-making in
its £26.3bn to Camden Lock, Brick Lane and go out for consultation this autumn is the city and as a driver to London’s
annual Borough Market suggest that tourists forecast to be the most pro-cultural economy could be significant. There is
also have an appetite for more Plan yet. Planning policies and likely to be a minimum of 70 night-
contribution divergent experiences. decisions are likely to guard against time clusters across the city and future
to London’s The Mayor is seeking to further any unnecessary loss of valued social, proposals are likely to represent a
economy develop London’s rich cultural and recreational and cultural facilities: huge opportunity to make London’s
architectural diversity through the particularly those which meet the tourist economy and culture an even
development of ‘quarters’ based needs of specific groups (e.g. LGBT). richer proposition. However, both
around the city’s built environment Within central London, the special practice and perception needs to be
and world leading night-time characteristics of the West End, overcome to create a truly liveable and
economy. In doing so, Sadiq is seeking South Bank / Bankside / London importantly, bearable 24-hour city.
to further promote both domestic Bridge, Barbican, Wembley, and the With the appointment of Amy
and overseas tourism and its £26.3bn South Kensington Museums / Royal Lamé, as the UK’s first-ever Night
annual contribution to London’s Albert Hall will be further promoted, Czar to champion night-time culture
economy: enhancing an industry enhanced and protected. Elsewhere, and now just over a year since the
which already employs one in eight Councils are being encouraged to successful introduction of the night
By Ian Anderson, people in the city. identify cultural quarters which can tube, these changes are predicted
Partner,
However, it’s a sector under be enhanced as visitor attractions; to provide a further boost to the
Development &
Planning pressure, with 103 fewer nightclubs encouraging a wide range of tourism- economy and vibrancy of the city –
and live music venues than a decade driven activities within town centres London is open 24/7!
CUSHMAN & WAKEFIELD21
LONDON DNA
LONDON DNA
Keeping Fit
John F Kennedy said, ‘Physical fitness is not only one of the most
important keys to a healthy body, it is the basis of dynamic and creative
intellectual activity’. Then again, in the words of Joan Rivers, that other
great American thinker, ‘The first time I see a jogger smiling, I’ll consider
it’. So what are the alternatives to jogging that Londoners take to
keep fit? We look at some of the alternative – and in some cases
downright adrenaline-pumped – opportunities that London offers.
COVENT GARDEN
Ice Climbing
As surreal as it sounds, Ellis Brigham have eight metres of ice to climb in their
store in Covent Garden. Called Vertical Chill, The aim of the ice wall is to, ‘provide
a realistic test environment for beginners and experienced climbers to learn winter
climbing techniques, and hone their skills using new equipment.’ The advice is
to bring warm clothes as temperatures range from -5 to -12, and for anyone who
is thinking it sounds like a cold equivalent of a plastic climbing wall, ‘The Covent
Garden ice wall is 8m in height and ranges in steepness from a pleasant slab to a
drastic over-hang with everything in between’. www.vertical-chill.com
PADDINGTON
Paddle Board Yoga
Most people are aware of what a
standup paddleboard is (it is the
world’s fastest growing watersport),
and in Paddington this is taken to a
whole new dimension with Active 360
‘taking a traditional yoga class onto
the water where the paddleboard
becomes your new floating yoga
mat’. By having to adjust to the
movement of the board on water,
you will maximize your core stability.
Apparently you can wear your usual
yoga clothing, but wetsuits are
available on request! You can organise
a class at www.active360.co.uk
KING’S CROSS
Festiwell
King’s Cross has also just played host to its first Festiwell – offering Tai Chi
taster classes, a wide range of nutritional classes, mindfulness sessions, boot
By Richard camps, a boxing masterclass and even a Bollywood dance workshop, this was
Howard,
truly a celebration of fitness and health and a reflection of how health and
International
Partner, Head wellbeing have grown from being a trend to a key strand of life today.
of Leasing www.kingscross.co.uk/festiwell-programme
CUSHMAN & WAKEFIELD22
LONDON DNA
KING’S CROSS
Move Your Frame
Frame has arrived in King’s Cross – their mission is to foster a more positive
approach to health and fitness, ‘more than just the regular gym session
pounding the treadmill’. King’s Cross has three studios: fitness (complete with
punch bags and kettlebells), yoga and barre (with big windows overlooking
a beautiful garden) and a Pilates studio (with 10 state of the art reformer
machines). A fourth studio will be added early next year. ‘With a busy Framer
in mind the changing rooms are equipped with power-showers and all the
necessary bits and bobs (hair dryers, straighteners, shampoo, conditioner and
body wash) to take you from studio to the street’. www.moveyourframe.com
ROYAL VICTORIA DOCK
Frame has Wakeboarding
arrived in
King’s Cross –
in the Wharf
their mission From the serenity of yoga
is to foster a overlooking a garden, we turn to
Wake Up Docklands in Canary Wharf
more positive – ‘London’s Inner-City Water Sports
approach to Oasis’ – they too offer paddleboard
health and yoga but for more adrenaline try the
fitness, ‘more cable-tow wakeboard option. No need
than just to leave London to, according to Time
Out, ‘feel like being transported out of
the regular London and into a beach holiday’. The
gym session Shack is a fully licenced bar so a drink
pounding the to recover is at hand.
treadmill’ www.wakeupdocklands.com
CANARY WHARF
Pop-up Velodrome
Also at Canary Wharf is the street velodrome – this is an amazingly cool
unique cycle sport concept which brings all the excitement of Olympic style
sprint pursuit racing right into the heart of the community – essentially it is
a pop-up mini velodrome. The core vision is to make being active by cycling
more accessible – a key aspect is that taking part in Street Velodrome
events is always 100% free. www.streetvelodrome.co.uk/canary-wharf
Of course, you can be like our last great American, Mark Twain – ‘I have never
taken any exercise, except sleeping and resting, and I never intend to take any.’
But if you want to get out, have fun, and do something completely different
(where else could you ice climb and wakeboard on the same day without
leaving the city?), it’s all right here.23
LONDON IN FIGURES
London
in Figures
Our team of experts delve into the
latest market stats and more...
£ RENTS
EUSTON
Annual Rental Change
£75.00
& MARYLEBONE
■ More than 0% ARC
■ 0% ARC
£77.50
KING’S CROSS
■ Less than 0% ARC per sq ft
£42.50
STRATFORD
0.0% ARC
per sq ft
0.0% ARC per sq ft
0.0% ARC
£85.00
FITZROVIA
£92.50
NORTH OF OXFORD ST
per sq ft
£67.50
PADDINGTON
per sq ft -2.86% ARC
-2.63% ARC
£68.50
BLOOMSBURY
per sq ft CLERKENWELL
8.0% ARC
£65.00
& SHOREDITCH
per sq ft
0.0% ARC
per sq ft
0.0% ARC
KENSINGTON ALDGATE &
SOHO &
£60.00
& CHELSEA
£55.00
WHITECHAPEL
£112.50 £87.50 £65.00
COVENT GARDEN
MAYFAIR & ST JAMES’S
MIDTOWN
per sq ft per sq ft
0.0% ARC 0.0% ARC
per sq ft per sq ft
£87.50
KNIGHTSBRIDGE
-2.86% ARC 0.0% ARC
per sq ft
£67.50
CITY CORE
-6.25% ARC
£55.00
HAMMERSMITH
£42.50
CANARY WHARF
per sq ft per sq ft
-3.57% ARC
0.0% ARC
per sq ft per sq ft
0.0% ARC 0.0% ARC
£65.00
SOUTHBANK
£77.50
VICTORIA
GREATER
£30.00
DOCKLANDS
per sq ft
per sq ft 4.0% ARC
-6.06% ARC per sq ft
0.0% ARC
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