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places
and spaces 02/2020
The Real Estate Magazine of Union Investment
Safety first
Real estate investors
favour domestic markets
Back to the office
Use of space is under
scrutiny
Green deal
Real estate industry
embraces ESG
The uncertain market environment is forcing
investors to adjust their strategies. It’s all about
searching for
stability
Contents Editorial
14 6
A new industrial
revolution
Cover Story
The way ahead: Every crisis offers opportunities 4
Safety first: Focus on domestic markets 6
Dear friends and business partners, gathered can also be used to support
Interview: Sven Bienert on decision-making in uncertain times 13 energy monitoring and manage-
The back-to-the-office challenge: Use of space is under scrutiny 14 The world remains in the grip of the ment in buildings, thereby making
Healthy spaces: Office Real Estate 4.0 21 coronavirus pandemic. Individuals an important contribution to greater
Green deal: Sustainability strategies in the real estate industry 22 and businesses alike are concerned sustainability.
48 about the possibility of another
lockdown, with sentiment in the real Digital ecosystems for tenants will
Cover Story / Real People estate sector also being affected. play a major part going forward,
Thomas Röhrs: Reliable management 26 Institutional real estate investors have Lars Scheidecker, as multidisciplinary collaboration
made significant changes to their CEO of Union becomes the norm. Union Invest-
investment strategy, as evidenced by Investment Real Estate ment’s first proprietary platform was
Concepts
Photos: Sebastian Vollmert (2), Cushman & Wakefield, shutterstock, Union Investment / Urban Zintel
the latest investment climate survey Digital GmbH launched recently. A digital ecosys-
Smart cities: Opportunities for real estate investors 30 of European investment professionals lars.scheidecker@ tem for tenants creates new options
Lamp posts: Rebooted for the 21st century 33 conducted by Union Investment. They union-investment.de and standards for the interaction
Megatrend: Upping the pace of digitalisation 48 are generally taking on less risk and between employees, the workplace
Interview: Faisal Butt on the future of proptechs 52 accepting lower returns as a trade-off and its surroundings. Digital solution
(see page 55). components generate real added
PropTech Innovation Award: Identifying new opportunities 54
value, making life easier for tenants
Balconies: A blank canvas for architects and users 56 The survey also found that respond- driver is still sustainability. This is be- and users both during working hours
ents are shifting their investment cause transparency around consump- and beyond.
26 Markets focus towards climate-friendly tion and emissions plays a crucial
Retail & logistics: Two sides of the same coin 34 investment – more than half of those role, but is impossible without digital The first specific application will be a
surveyed intend to invest more in this support. Accordingly, many compa- smart digital parking space service for
Interview: Andrew Vaughan on strategies in retail 41
area in future. Policymakers also con- nies and industry initiatives already the Emporio office complex in Ham-
Micro-apartments: Rethinking a niche market 42 tinue to push for greater sustainabil- involve digitalisation and sustainabili- burg, incorporated into the existing
ity. Legislation, ordinances and build- ty teams working hand in hand. building app. This will form a nucleus
Wide Angle ing regulations will all be tightened for further innovation. Whether the
up considerably in the coming years, Let me give an example: Union focus is on mobility, safety and secur-
Cover picture: Ross Helen / Alamy Stock
Let there be light: Artists illuminate urban spaces 62
with penalties for failure to comply. Investment is currently looking at ity or energy management, the real
At some point it will no longer be equipping all its fund properties with estate sector will need to work closely
News55 possible to let space if owners cannot smart technology to measure energy with other industries in order to make
Additions to the Union Investment portfolio 63 demonstrate how a building performs consumption. Fitting sensors and con- progress. Digital ecosystems create
Online & service, contact and publishing information 63 in terms of sustainability (see page necting different systems will make it precisely these connections and could
22). possible to combine building-specific mark the start of a new industrial
and usage-specific data in a way that revolution.
Cover picture: The Port House in Antwerp (Belgium) lit up at dusk.
While the coronavirus pandemic enables user-oriented services. This
The building is a former fire station with an extension designed by has massively accelerated the pace is an important stepping stone on Kind regards,
architect Zaha Hadid. of digital transformation, the main the way to smart buildings. The data Lars Scheidecker •
2 places and spaces 02/2020 places and spaces 02/2020 3
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The way
ahead
The search for stability is the key theme that
connects all players in the property markets
in these uncertain times. Our special feature
seeks to provide answers:
Why safe harbours weather the crisis
better and benefit from investment
Page 6
How office properties will remain the
core of any real estate portfolio
Page 14
Why sustainability will become even
more important for the real estate industry
going forward
Page 22
Photo: Arterra Picture Library / Alamy Stock
How fund managers are delivering stability
and reliability
Page 26
4 places and spaces 02/2020 places and spaces 02/2020 5 ▶
Cover story
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Union Investment secured an exceptional property in Hamburg’s HafenCity
Safety first
district. Sold by Patrizia, the Ericus-Contor building was added to the portfolio of
open-ended real estate fund Unilmmo: Deutschland (see report on page 26).
During the coronavirus pandemic, real estate investors shifted their
focus to give greater priority to domestic markets. Because safety
is what counts in a crisis. Germany, Austria and the Netherlands all
offer compelling benefits in terms of risk mitigation.
By Christine Mattauch
T
he asset class and location clearly effect of the crisis is that investors are
ticked all the boxes: at the end of showing a preference for their domestic
June, Nuveen Real Estate bought markets (see interview on page 13). That’s
the City Park warehouse complex in the not just because travel restrictions have
Liesing district of Vienna for €65 million. made performing due diligence in other
It was the US investment company’s countries more difficult. Safety is what
first acquisition in Austria as part of its counts in a crisis and investors are more
European Cities strategy, which is focused familiar with their own markets, which is
on particularly resilient locations. Fund why “home bias” can actually be advan-
manager Liz Sworn praised the “exciting tageous. Based on a sample of REITs be-
opportunity” that the Austrian capital tween 2004 and 2015, researchers at the
offers for investment. University of Florida demonstrated that
institutional investors prefer to invest in
Exciting, really? Vienna? That shows how local markets and that this asset alloca-
much perceptions have changed dur- tion strategy “is associated with superior
ing the coronavirus crisis. Solid, reliable portfolio performance”.
locations – i.e. safe havens – are now in
favour. Covid-19 has altered the prior- Re-rating of risk combined with
ities of investors and developers alike. In social change
addition to growth, liquidity and tenant
demand, the quality of a country’s health- One thing’s for sure: the pressure on the
care system now matters, along with the real estate industry to invest remains high
seemingly banal question as to how good and is only likely to increase. Governments
or bad a government is at crisis manage- are pumping huge amounts of money
ment. Is enough capital being made avail- into the economy via support packages
able, and quickly enough, to minimise the agreed at national and European level,
Photo: Sebastian Vollmert
impact of the economic slump? Is a long while central banks are likely to keep
view being taken to limit the number of interest rates at a historic low for the
infections and provide enough hospital foreseeable future. In a trend study con-
capacity? Has enough confidence been ducted by Wealthcap in July of this year,
instilled in companies and consumers to 60 percent of respondents expected on-
stabilise demand, including demand for going high levels of investment in real es-
office and warehouse space? Another tate, with a fifth anticipating a further ▶
6 places and spaces 02/2020 places and spaces 02/2020 7
Cover story
increase. Unlike in the last financial crisis, Germany from high unemployment dur-
there’s no likelihood of a crash, according ing the financial crisis and the scheme has
to Berlin-based rating agency Scope. Fi- now been made more flexible. “Overall,
nancing arrangements have been robuster the German government is doing pre-
in the past decade, it says, with other cisely what should be done during deep
factors being more important: “Re-rating recessions,” says the IMF. On top of that,
of risk and social change will accelerate the German healthcare system coped
structural change instead, with the conse- well with the first wave of Covid-19. The
quences becoming apparent at the level of investor view is that “as was the case after
asset classes and locations.” In short, the the financial crisis, Germany will recover
crisis is amplifying existing trends. fastest from the effects of the pandemic
compared with other countries,” says Mar-
In terms of mitigating risk, three coun- cus Zorn, deputy CEO of BNP Paribas Real
tries stand out: Germany, Austria and Estate Germany. Savills’ ranking of resili-
the Netherlands. Germany was already ent cities puts four German cities – Berlin,
highly regarded by investors prior to the Frankfurt, Hamburg and Düsseldorf – in
pandemic. According to CBRE, transaction the top ten.
volumes in the German property invest-
ment markets reached a new record of In the office segment, the country bene-
€84.5 billion last year, with the country fits from extremely low vacancy levels in
taking top spot in Europe ahead of the leading cities such as Berlin, Frankfurt
UK, which has been hit by the uncertainty and Munich. If demand for space falls “The Ericus-Contor
around Brexit. The pandemic seems to in the wake of the crisis, the German building proves
be reinforcing this trend. Whereas the market is better placed to cope with it that it’s possible
German share of European commercial than those elsewhere. “I regard declining
rents as pretty unlikely,” says Alexander
for premium
transactions was 26 percent last year,
figures released by Savills show the total Kropf, Head of Capital Markets Germany properties to
rising to 32 percent in the first half of at Cushman & Wakefield. There is more change hands
Photos: ZOOM VP, helmut Mitter / Segro Germany, Union Investment / Urban Zintel
2020 (see chart on page 10). prospect of rents moving sideways, he despite the
feels, with logistics properties being a
Germany is exceptionally popular with winner from the crisis: “In the past, the
coronavirus
real estate investors German logistics market has largely flat- pandemic.”
lined.” Matthias Pink, Head of Research
Deka acquired the Austro Martin J. Brühl, CIO
As Europe’s strongest economy, Germany at Savills Germany, also cites healthcare
Tower in Vienna. Due to can draw on formidable financial re- properties such as care homes and local and Management
be finished in 2021, the sources to fight the pandemic. Although medical centres as possible winners. Board member,
135-metre building will the country’s public debt to GDP ratio is Union Investment
set to rise to 68.7 percent this year based As was the case everywhere, transactions Real Estate GmbH
mark the completion
on an IMF forecast, that is still significant- in the commercial real estate market
of a new urban district
ly below France (115.4), the UK (95.7) collapsed in Germany, but the market
(above).
and the US (131.1). The picture is similar didn’t grind to a complete halt. For
when it comes to economic performance. example, Swiss Life purchased The Cube,
Segro recently sold the Germany took a major hit in the first half a skyscraper in Frankfurt that is home
City Park Vienna complex, of the year, and the decline for the full to the German Stock Exchange, while
comprising a cross- year could amount to 5 percent according Hamburg Trust acquired an office new
to the Munich-based Ifo Institute, but build and a number of existing buildings
dock facility, an urban
economists expect both France and the in the Cologne area. Union Investment
warehouse park and UK to see double-digit contractions. As a acquired the landmark Ericus-Contor
development land, to Nu- damage limitation instrument, short-time building in Hamburg’s HafenCity district
veen Real Estate (right). working (“Kurzarbeit”) previously saved from Augsburg-based real estate com- ▶
8 places and spaces 02/2020 places and spaces 02/2020 9
Cover story
pany Patrizia. The property boasts DGNB percent. “By international comparison, La Française Group acquired the 21-storey Two Towers office skyscraper
Platinum certification. The deal “proves that’s very good.” The Netherlands is also on Spittelmarkt in Berlin. The two buildings are connected by a central core
that it’s possible for premium properties on Göttler’s shopping list: in August, he fi- and provide some 19,280 square metres of rental space.
to change hands despite the coronavirus nalised the purchase of an office property
pandemic,” said Martin J. Brühl, Chief in Amsterdam. The Dutch capital’s office
Investment Officer at Union Investment. market, which suffered from oversupply
for many years, has performed well more
Other players equally convinced of Ger- recently. The vacancy rate at the end of
“Due to latent many as a location include La Française 2019 was 6.2 percent, and at €460 per
Group, which is headquartered in square metre prime rents are almost on a
excess demand for
Paris. “Germany is like a second domestic par with those in Berlin.
core investments, market for us,” says managing director
in Vienna it’s pos- Jens Göttler, who is responsible for La Deals continue to be done in the
sible to achieve Française’s international investments Netherlands despite coronavirus
and works out of Frankfurt. German
a premium even
investments account for two thirds of The Dutch economy is in good shape
during a crisis.” the company’s non-French portfolio. overall. Public debt – which according to
Among the properties acquired by the IMF forecasts will be 58.3 percent at the
Matthias French company in the past are the Two end of 2020 – is lower than Germany’s,
Brodeßer, Head of Towers office skyscraper in Berlin, an office while the economic slump will likewise be
Transaction complex in Düsseldorf and – on behalf of moderate. The IMF’s view is that the risks
Management South Korean investors – an e-commerce are lower in the Netherlands than in
International at fulfilment centre in Mönchengladbach. other countries in terms of its public
Warburg-HIH Göttler is confident that “Germany will finances and the effects of the pandem-
emerge stronger as a real estate location ic on the economy. That’s despite the
from the coronavirus crisis. We’re expand- fact the economy of this former colonial
ing our presence further.” Among the power is highly connected and therefore
market’s strong points, he emphasises susceptible to global shocks. This very
the creditworthiness of tenants. In the openness and internationalism is also a
first half of this crisis-ridden year, rental positive factor that drives demand for
receipts from La Française’s German port- office space and logistics properties.
folio were running at between 90 and 95 According to the most recent market ▶
Photo: Achim Reissner / La Francaise, Warburg-HIH Invest Real Estate GmbH
Commercial transaction volume in Germany
(EUR bn) 73.6
64.9
59.4 58.3 60.0
55.5
41.7
32.3 29.2
24.7 25.7
20.7 18.0
10.2
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *
Germany’s share of commercial transaction volume 32%
in Europe (%) 26%
25%
22% 21%
21% 19% 19% 19% 20%
18%
14% 15%
13%
Germany seen as safe harbour:
share of commercial transaction
* 1st half of 2020 Source: RCA/Savills, July 2020 volume in Europe up from 26%
to 32% in first six months of year.
10 places and spaces 02/2020 places and spaces 02/2020 11
Cover story
report by Cushman & Wakefield, demand
exceeds the available space. Rotterdam
countries, including during the current
crisis. In May, Deka acquired the 32,000 €460
in particular is popular with investors due square metre Austro Tower in Vienna for is the prime rent
to its status as a hub for goods moving to its new office fund “Fokus Büro Wien”. per sq m and year
“There’s an increasing focus
and from Continental Europe. Deals con- The property is scheduled for completion
for office space in
tinued despite the coronavirus pandemic: in 2021 and has been pre-let on a long
Aviva, Union Investment and Nuveen – lease. Zurich-based Eastern Property Amsterdam.
which has its own office in Amsterdam as Holdings, meanwhile, secured an office
of this year – all purchased major logistics
centres in the Rotterdam area, while
Union Investment also acquired a devel-
building in the Austrian capital’s second
district comprising almost 30,000 square
metres. After refurbishment, its tenants
€310
is the top rate for
on domestic markets”
opment project in Almere. will include the city authorities and state office space in Sven Bienert on making investment decisions in uncertain times
police. What makes investment here so Vienna.
Austria is popular with investors from attractive is a vacancy rate of 1.8 percent
the German-speaking countries in Vienna’s CBD and of 4.7 percent across When times get tough, investors sitions abroad is to diversify and capture
the city as a whole. As with many cities traditionally revert to their domestic good performance – with a tendency to
Resilience is a quality also associated that have a lot of old building stock, mod- markets. Is that the case now? ignore certain downside risks. In a weaker
with Austria, thanks to a low number of ern space is in particularly high demand economic environment, the focus is on
infections, comparatively strong econom- and new builds have pre-letting levels As in previous crises, we expect the pro- risk management; diversification becomes
ic data and a conservative fiscal policy. of significantly above 50 percent. Prime portion of cross-border transactions to less important. Especially as there are now
Big international funds mostly ignore rents are moderate, at around €310 per decline considerably. In 2009, after the more opportunities in the domestic mar-
the Alpine republic, but it’s popular with square metre, thanks to a combination financial crisis, the figure fell to a fifth ket to pick up a bargain and more prod-
investors from other German-speaking of tradition and regulation. “We like the compared to the previous year. That’s why uct is becoming available. Staying close to
market because it’s boring in a positive I believe there will be an increasing focus home is therefore completely rational.
way,” says Matthias Brodeßer, Head of on domestic markets.
Transaction Management International Where do you see the strengths of safe
at Warburg-HIH. The Hamburg-based in- Are there differences between havens like Germany?
vestment management company opened European investors and those from
Sven Bienert is a
an office in Vienna in 2018 and currently overseas? Even in times of crisis, the market con-
professor at the
has €488 million invested, with plans for tinues to function, albeit at a lower level.
more. Brodeßer rejects criticism that the In times of crisis, the reflex is always to Transactions are still taking place, yields International Real
market has low liquidity, pointing to a invest in your own backyard. Unless it’s on and rents are less volatile than in other Estate Business
lack of properties rather than a lack of fire, that is. In some regions, the pandem- markets. There are also fewer risks at School of the
investor interest. “Due to latent excess ic has led to elevated risk and – unlike occupier level. When you look at the job University of
demand for core investments, in Vienna in 2009 – a tidal wave of capital seeking market in the US and compare it with Regensburg.
it’s possible to achieve a premium even investment opportunities. As such, it’s Germany, there just isn’t the same kind of
during a crisis,” he says. entirely possible that global investors will downward spiral here.
Photos: Deutsche Börse AG, University of Regensburg / Margit Scheid
continue to regard Europe as a safe haven,
More caution, a stronger focus on familiar especially the “more boring” markets Will returns continue to fall if
markets, a greater preference for core in real estate terms, like Germany and Germany becomes even more popular
assets – in a downturn, that’s the obvi- Austria, which have been less affected by as an investment destination?
ous response. Experts are unwilling to coronavirus. The German market is notable
speculate as to how long such attitudes for very low risk, particularly compared I don’t see that happening, but there are
will be a feature of the real estate market. with other countries around the globe. differences between the various property
“The unprecedented nature of the crisis types. Many market players have serious
makes any forecast highly uncertain,” thus People talk about home bias. Are the doubts about shopping centres, whereas
the verdict from Scope. But regardless of decisions made in this kind of context retail parks are performing well because
Swiss Life acquired The Cube office an understandable desire for stability, a always good ones? they cater for daily needs. As an asset
building in Frankfurt/Eschborn, which wait-and-see approach isn’t the only or class, I also take a generally positive view
is occupied by the German Stock even the best strategy. It’s also possible to You have to ask yourself why someone of logistics, especially when warehousing
Exchange. regard a crisis as a buying opportunity. • ventures into foreign markets. When is used to support online shopping. When
markets are booming, investors have typ- it comes to office buildings, we’ll have to
ically exhausted the opportunities in their see how demand evolves structurally, but
own country. In the process, prices rise it’s difficult to imagine there being any
and yields fall. The aim of making acqui- further yield compression. •
12 places and spaces 02/2020 places and spaces 02/2020 13
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Anyone who spent time in the office during lockdown, voluntarily or otherwise,
often found themselves virtually alone. For many companies, enabling people
to work effectively on site or at home was a key aspect of crisis management.
T
he global pandemic has had a rad- work and how they operate and manage
ical effect on what was previously their workplaces,” says Dr Marie Puyba-
seen as a fairly unassailable real es- raud, global head of corporate research
tate concept: the office. While like all real at JLL. “Equally, employees will now have
estate asset classes offices are in constant a different mindset about work as they
evolution in line with the needs of their adapt to these unprecedented times.”
end-users, many of the latest workplace Prior to the pandemic, just 3.4 percent
trends, such as the rise of flexible space, of Americans worked from home. At
have served to underline rather than the peak of the shutdown, an Upwork
diminish their relevance. However, the report in partnership with MIT found that
unique parameters of lockdown during nearly half of the workforce was working
the pandemic introduced a drastic shift remotely.
to home working, even across businesses
that were poorly equipped to manage Similarly, in the EU, nearly four in 10
this change. people began working from home as a
result of the pandemic, according to Euro-
“Covid-19 has made a lot of companies found. More than half of respondents
think very differently about how people from Finland, Belgium, Luxembourg ▶
The back-to-the-
office challenge
Photo: Jetta Productions / Stocksy
Exodus: deserted offices, locked conference rooms, unused
kitchenettes. During lockdown, companies asked thousands of staff
to work from home. Many businesses are now re-evaluating
office environments and their use of space accordingly. New ways
of working will also create opportunities.
By Isobel Lee
14 places and spaces 02/2020 places and spaces 02/2020 15
Cover story
and the Netherlands said they had made staff, and Facebook recently joined Twit-
the switch. ter in stating that employees could work
from home forever. Google is pursuing
As lockdown protocols are eased and a hybrid model. As one of the pioneers
physical offices prepare for staff to come of talent-friendly offices more than 20
back, choice is returning to the workplace years ago, introducing table football, beer
equation. How companies pursue that fridges and more to engage and inspire
choice is likely to shape the world of real its workers, the search engine giant wants
estate, technology and investment for key employees on its premises, while
years to come. “It’s fair to say that the allowing partial home working for others.
implementation of working from home Rather than heralding a significant home
during the pandemic has been more working shift, these latest signs reflect a
successful than many had anticipated longer term, emerging trend. While the
and should lead to increased adoption of number of people in the EU working sole-
more flexible work models,” notes Brühl. ly from home has remained at around 5.0
“The often-cited advantages are lower- percent over the last decade, according to
to-no commute times, flexible working data from Eurostat, the percentage that
hours and a corresponding improvement sometime work from home has been
in work-life balance.” rising, climbing from 6.0 percent in 2009
to 9.0 percent in 2019. A new survey by “Especially for
Traditional use of office space is under JLL backs up these findings. From an inter- employees who
scrutiny view of 3,000 workers in July of this year, currently
the firm found that while employees are
However, Nathalie Charles, deputy CEO of keen to return to the office, after missing
commute from
BNP Paribas Real Estate, sounds a note of the human and social interaction, they the suburbs to
caution. “Companies have had to adapt would like to keep the option of working an office in the
everything from IT systems to signatory from home 1–2 days per week. city centre, the
and authorising processes, and this in-
credible test has, on the whole, worked,” Pros and cons of city centre offices as a
commute time
she says. “However, the pandemic’s social catalyst for new concepts [benefits of the
experiment is not representative of what hub-and-spoke
Photo: Cushman & Wakefield, Union Investment / Adele Marschner
home working might look like in normal “An office environment is sure to offer model] could be
conditions.” Nevertheless, it seems likely inimitable benefits with regard to prod-
there will be a change in how offices are uctivity, creativity, motivation, corporate
meaningful.”
used in the short to medium term. Many culture and social interaction that will
Tal Peri, Head of US
businesses will look to the example of the remain relevant and important for em-
East Coast & Latin
world’s most powerful tech firms, which ployers and employees in the long term,”
America at Union
are seriously examining the possibilities underlines Tal Peri, Head of US East Coast
Investment
of remote working. Siemens has said it & Latin America for Union Investment
will establish mobile working as a core Real Estate. “This explains why big tech
component of its ”new normal”, and will companies create ‘office meccas’ with
make it a permanent standard during the extensive amenities and company cultures
global pandemic and beyond. that spur many of the aforementioned
positive aspects.”
Meanwhile, the likes of Microsoft and
Amazon have extended work-at-home However, despite the draws of the office,
protocols until the autumn for corporate commuting has never looked more ▶
Returning to work with social distancing: Maintaining a distance
of 1.5 metres forms the basis of the 6 Feet Office concept devised
by workplace strategy experts at Cushman & Wakefield.
16 places and spaces 02/2020 places and spaces 02/2020 17
Cover story
unattractive. The environmental and survey, 67 percent of real estate decision
practical issues of worker travel over makers are increasing workplace mo-
the last decade have collided with virus bility programmes, while only 4 percent
transmission fears today in packed public indicated they would be scaling back
transport. such programmes. Providers are already
mobilising. Hana – a flex-office subsidiary
One solution is what Hamilton Place of the CBRE group – indicated it would
Strategies calls a hub-and-spoke model, be launching new flexible work space lo-
where company premises are physically cations in London from July. Meanwhile,
dispersed with office locations spread BNP and French flex office operator Now
across cities closer to where people live, Coworking have teamed up to launch a
allowing users to often walk and cycle bespoke service for transforming regular
to work. In this environment, flexible offices into co-working spaces.
offices, which conspicuously emptied
out during the pandemic, are likely to These coalescing trends seem set to have
gain a new relevance. “As companies a short to medium term effect on office
re-evaluate their office footprint, the take-up. As usual in a downturn, second-
‘hub and spoke’ model should gain more ary stock may well bear the brunt. In a
traction. Especially for employees who report on the performance and outlook
currently commute from the suburbs to for London offices, UK property consult-
an office in the city centre, the commute ancy Carter Jonas suggests that vacancy
“The pandemic’s time could be meaningful,” notes Peri. in the second-hand office market is likely
social experiment to increase as businesses offload surplus
“As a result, occupiers will likely retain space and introduce more efficient ways
is not representa-
their main headquarters – possibly at of utilising the real estate they plan to
tive of what home reduced footprints in densely populated retain. Real estate often represents the
working might city centres – while offering their employ- second-largest operating cost for
look like in normal ees flexibility by granting them access to businesses after staff salaries, meaning
a secondary office or co-working location that savings could be vital if there is a
conditions.”
Photo: Cushman & Wakefield, BNP Paribas Real Estate / Laurent Villeret
closer to home. Especially for suburban downturn in the next 12 months.
locations, co-working companies or
Nathalie Charles,
flexible office providers would offer a Traditional office investors are reassess-
deputy CEO of BNP
relevant solution, because a company in ing their strategies and exposure
Paribas Real Estate
a major city centre wouldn’t want to sign
direct leases for a high number of office However, well-located, high-quality space,
locations in multiple nearby suburbs,” which was already in short supply in key
Brühl adds. global cities, should remain attractive.
Traditional office investors may also re-
Flexible office use an increasingly hot examine their exposure to the asset class.
topic in the wake of the pandemic UK real estate private equity fund man-
ager Moorfield had already embarked
JLL research confirms this trend, predict- on a long-term strategy to offload its
ing that 30 percent of all office space will office assets pre-pandemic, but as chief
be consumed flexibly by 2030. According investment officer Charles Ferguson-
to the firm’s occupancy benchmarking Davie notes, the timing of the firm’s ▶
“Feet routing” in the form of clear signposting is part of the 6 Feet Office
concept implemented by Cushman & Wakefield, which is designed to coordinate
employee movements and keep people safe.
18 places and spaces 02/2020 places and spaces 02/2020 19Cover story
final sale was textbook. “We actually sold housing, multifamily and senior residenc-
the last of our offices in the first week es or healthcare. As interest in these asset
of lockdown,” he says, “completing the classes rises, what will the effects be on
disposal of a portfolio worth about £1 office investment? All evidence suggests
Flexible office
solutions such as
billion. We have a great track record in
offices and would invest in them again,
but the result of the pandemic is that
we are now in watch-and-wait mode.”
that the long-term investment case for
offices is strong.
Offices need to offer state-of-the-art
Healthy spaces
co-working spaces Moorfield’s evolving investment strat- functionality disinfectants, a touch pen, guidelines and
offer many benefits egy reflects a larger industry trend of a door opener, while new signage encour-
in times of change, investors pivoting away from the hith- According to Nathalie Charles: “History ages movement flows.
but social distan- erto traditional asset classes of offices shows that over the past 30–40 years
cing is likely to and retail and towards recession-robust there have been a significant number of Looking forward, these kinds of specs are
necessitate changes “living” segments, including student crises, for example the dot com bubble being applied to new-build offices too.
to existing practice and the global financial crisis, but in International workplace provider HB
here as well. parallel, total office stock has grown in Reavis launched a tech and sensory
absolute terms. Megatrends including platform in the UK earlier this year called
urbanisation and population growth, as Symbiosy, which assesses space utilisation,
well as more people overall working in of- indoor environmental quality and in-
fices than in factories, fields and hospitals, company collaborative networks. The firm
have all contributed to this equation.” recently agreed to fit this smart solution
into the office it is developing for global
Equally, while corporate use of flexible energy company BP, Agora Hub Budapest.
offices has its benefits in times of tran- Meanwhile, Skanska’s new “care for life”
sition, it is unlikely to prove a long-term office concept, while leading with
fix. “Companies are prepared to pay pandemic-appropriate protocols, is
Edge Suedkreuz
for flexibility right now, but will seek deemed a long-term strategy by the firm
T
in Berlin will be
balance. The bottom line is that leasing he design of office buildings is in in line with industry wellness trends.
completed in 2021.
a classic office building costs a lot less in constant evolution, influenced by
the long term,” she adds. “Looking at the The generation 4.0
end-user needs as well as urban It has become clear that the pandemic
bigger picture, megatrends matter more office complex will planning visions and environmental has not diminished interest in topics
than the crisis.” offer open space benchmarks. But the pandemic has in- such as ESG but created a focus for their
that promotes com- jected a new sense of urgency into fit-out application. Innovative construction
“For office investors, it will remain rele- munication as well and layout debates, driven by scientific techniques, such as timber frames and
vant to focus on the location – strong as dedicated quiet data and the search for a new comfort modular builds, will continue to grow in
micro-locations vs. fringe, urban vs. spaces, meeting and wellness paradigm. popularity. Evidence suggests that issues
suburban – plus building quality, build- rooms and areas for like air quality played a role in virus trans-
ing age, amenity package, tenant roster informal network- Innovative office developer and re- mission rates during the health crisis, and
and many other factors that define the developer Edge has already modified its this knowledge – alongside an increas-
Photos: Djokovic Photography / Stocksy, EDGE Technologies
ing, combined with
attractiveness and value of an office Amsterdam and Berlin workspaces to ingly interconnected sense of global
lounges and cafés.
building,” says Brühl. He concludes: “The create flexible and reversible offices with responsibility towards health and well-
jury is still out with regard to what the a 1.5 metre protocol ready for employees being – means that sustainable recovery
future of office work will look like, but to return. Before Covid-19, Edge Amster- strategies are more relevant than ever in
investors will focus more than ever on dam was certified as the healthiest office the provision of commercial buildings. •
functional obsolescence and how to in the world, achieving the first Well V2
price risk as a result of the new health certification at Platinum level. Covid-era
and safety considerations.” • changes include minor software adapta-
tions to sensors to now monitor aspects
such as meeting room occupancy and live
air quality scores, as well as adding extra
ventilation breaks after conference room
use. Employees have also been educated
with a welcome-back pack containing
20 places and spaces 02/2020 places and spaces 02/2020 21Cover story
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Green deal
For property companies, sustainability is a prerequisite for business success
R
– especially in the wake of the coronavirus pandemic. By Christian Hunziker obert-Christian Gierth and Alexan- with the proposition that sustainability
der Happ could hardly have chosen issues are taking a back seat due to the
a tougher time to set up their own economic fallout from the coronavirus
company. Together, the two senior real crisis. An asset management report by EY
estate industry managers have a wealth Real Estate paints a similar picture, based
of experience (one previously worked on a survey conducted in the first quarter
for Colliers International, the other for of 2020. It found that 85 percent of asset
Buwog), and almost exactly at the start of managers active in the German market
the coronavirus outbreak in Europe they expect the proportion of investment in
founded Assiduus Development, a com- sustainable buildings to increase signifi-
pany specialising in sustainable mixed-use cantly.
projects anchored by offices. “Like other
sectors, the real estate industry needs to The real estate industry is
deliver on its ecological responsibilities,” embracing ESG
says co-founder Gierth, explaining this
focus. “The issue of sustainability is on the
agenda of many real estate companies,”
But is this conviction shared by other in- says Natalie Wehrmann, associate partner
dustry players, given the challenges posed at EY Real Estate, discussing the results of
by the pandemic? Experience shows that the survey. “But it’s only really being fully
in times of economic crisis there’s a risk implemented by a small number of them.”
of supposed “luxuries” such as ecological In fact, experts believe that now is exactly
and social responsibility dropping down the right time to get serious about ESG.
the agenda. Even the Fridays for Future “Despite the coronavirus restrictions, we
Photo: EschCollection / Getty Images
movement has hardly had a mention in mustn’t lose sight of climate policy object-
the media lately, with Covid-19 dominat- ives,” says Maria Hill, Chair of the Energy
ing the headlines. Nevertheless, topics & Building Technologies Committee of
around ESG (Environmental, Social and the German Property Federation (ZIA).
Governance) clearly remain important “Taking action on this front could fuel an
within the property industry. That assess- economic upturn across many parts of
ment is supported by the trend barometer the economy.” Sophie Chick, Director of
published by real estate finance specialists World Research at real estate consultancy
Berlin Hyp in mid-2020. Just 18 percent of Savills, also calls on the industry to act:
the property companies surveyed agreed “The innovative approaches taken by ▶
Experts believe that now is exactly the right time to get serious about ESG.
That could fuel an economic upturn across many sectors.
22 places and spaces 02/2020 places and spaces 02/2020 23Cover story
Sustainability strategy (ESG strategy*) – implementing the various stages of development
Source: 2020 asset management study,
Orientation phase Development phase Establishment phase Excellence
“We are monitoring current “We are in the process of “We have set out our “Using sustainability
developments but do not drawing up a strategy sustainability strategy and indicators, we are regularly
EY Real Estate GmbH
have a sustainability/ESG paper, defining our specific goals, defined monitoring and managing
strategy as yet.” sustainability goals and internal processes for our progress towards
considering how to collect implementation purposes achieving the defined
data at property and and collected initial data at sustainability goals.”
the real estate sector during the pan- tancy firm specialising in the optimisation company level.” property and company
demic now need to be adapted to make of operating costs. Alongside the policy level.”
properties more climate-friendly in every environment, commercial considerations
phase of their lifecycle.” Susanne Eicker- play a not insignificant role. “Even though
mann-Riepe, Chair of the German branch sustainability is an important issue, prof- Percentage of companies**assigning themselves to each phase
of the Royal Institution of Chartered itability and return on investment remain
Surveyors (RICS), believes that “the cor- paramount,” says Natalie Wehrmann of
onavirus pandemic has acted as a catalyst, EY Real Estate. 27% 35% 23% 15%
it means that sustainability has gained in “Despite the
importance again.” In tough times in par- According to Wehrmann, sustainable
coronavirus
ticular, the resilience of properties against products have the ability to deliver higher * ESG: Environmental, Social
crises becomes more vital. Proof that ESG restrictions, we returns, “because investments can be ESG is now a mainstream issue. Nonetheless, 62% of the companies and Governance
surveyed consider themselves to still be in the initial phases of ** 40 asset management
is no longer a niche issue came in the mustn’t lose sight managed more efficiently and operation- implementing their ESG strategy. companies were surveyed:
spectacular announcement by the chair- of climate policy al costs reduced, and because a higher “How mature do you
consider your company’s
man and CEO of investment management sale price is achievable thanks to lower
objectives.” sustainability strategy
corporation BlackRock, Larry Fink, that risk discounts.” By contrast, property (ESG strategy) to be?“
the company would be focusing more owners who ignore sustainability aspects
on sustainable investments going for- Maria Hill, Chair of need to brace themselves for lower selling
ward. Another giant of the international the Energy & Build- prices, argues Susanne Eickermann-Riepe
finance world, KKR, launched a Global ing Technologies of RICS. But it’s about more than just a hit
Impact Fund in early 2020 that attracted Committee of the to asset values: “The cost of financing and
$1.3 billion and is intended to have a German Property insuring non-sustainable buildings is set to EY expert Natalie Wehrmann. “Hardly down criteria for properties, but doesn’t
positive impact on both the environment Federation (ZIA) to rise.” Accordingly, sustainability pays any asset managers have an overview of specify any concrete target values,” says
and society. off for investors who take a long-term the CO2 emissions produced by their indi- Jan von Mallinckrodt, Head of Sustain-
view, adds Alexander Happ, co- vidual properties or their overall port- ability at Union Investment Real Estate
Regulatory pressure plays a major role founder of development company folio,” she notes. She advocates using GmbH.
in implementation Assiduus. “Non-sustainable properties digital tools as an efficient means of
face growing risks and will thus lose in determining “which measures are being Proptechs are providing additional
This focus on ecological and social sustain-
ability is not happening on an entirely vol-
value,” he points out. implemented with what effect. In the
long run, it’s the only way of driving 85% impetus. US-based Truvalue Labs, for
example, is committed to making
untary basis, however – policymakers are Reliable figures that provide proof of forward portfolio sustainability.” of German asset relevant ESG data available by leveraging
ramping up the pressure. “The EU’s Green superior returns are still lacking managers believe artificial intelligence. In Europe,
Deal has given sustainability an additional Industry pioneers are already tackling meanwhile, numerous startups are
that investment in
boost,” says Susanne Eickermann-Riepe. There is a problem, however. Although this challenge. In 2019, Union Investment working with established real estate
sustainable prop-
Photo: Zentraler Immobilien Ausschuss (ZIA)
The reference is to the sustainable finance the arguments set out above are compel- introduced its “atmosphere” sustainability companies to boost sustainability.
initiative which the European Commission ling, there’s a lack of reliable figures to label. This already takes account of the erties will increase
is using to steer financial institutions in prove long-term superior returns. That taxonomy underpinning the EU’s Action significantly. Such alliances are important, particularly
the transition to a climate-neutral econ- applies in particular to the social aspects Plan on Sustainable Finance. Building on in the time of coronavirus, according to
omy. Part of the plan is a taxonomy, i.e. a of sustainability, which have only taken this, in 2020 the real estate investment Benjamin Rohé, founder of consultancy
classification system that defines criteria
for climate-friendly investment. The re-
sults are already being felt: “Institutional
centre stage quite recently. There is simply
no hard data available here. “Social issues
and good governance are harder to meas-
manager initiated the ESG Circle of Real
Estate in conjunction with Bell Manage-
ment Consultants. The aim is to create
18% GERMANTECH, which hosted the 2020
PropTech Innovation Summit together
with Union Investment: “This crisis could
believe that sustain-
investors and listed companies must – ure than the ecological dimension of sus- an industry standard for measuring the be turned into a major opportunity if
ability is taking a
and increasingly want to – demonstrate tainability,” concedes Happ. Even when it sustainability performance of properties the real estate industry becomes more
their sustainability,” says Simon Szpyrka, comes to energy efficiency, measurability and portfolios. “Our new initiative is clos- back seat due to the flexible and open to collaboration with
managing director of Argentus, a consul- is one of the great challenges, according ing a gap here because the taxonomy lays coronavirus crisis. proptechs.” •
24 places and spaces 02/2020 places and spaces 02/2020 25Real people
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Reliable
management
Thomas Röhrs is responsible for UniImmo: Deutschland, one of Germany’s biggest open-ended
real estate funds. His management of this classic fund is guided at all times by the needs of
distribution partners and investors. By Elke Hildebrandt (text) and Sebastian Vollmert (photos)
H
eading up management of the ensure the portfolio’s long-term viability.
UniImmo: Deutschland fund is a This enables him to deliver on the product
genuine mission for real estate ex- promise for the approximately 570,000
pert Thomas Röhrs. The experienced fund investors and also maintain the trust of
manager and business studies graduate distribution partners and of the customer
has been responsible for developing this advisers across the Volksbanken Raiffei-
classic fund since 2008. Launched in 1966 senbanken cooperative banking network
as one of the first open-ended real estate who sell the fund. Each Union Investment
funds in Germany and now the biggest open-ended real estate fund is man-
fund in the UniImmo family, it’s aimed at aged by a dedicated team that operates
investors with a conservative investment independently. The fund management
strategy who want to benefit from real es- team deals with all issues relating to the
tate in major German and European cities fund and makes the necessary decisions.
while keeping risks low. As such, Röhrs and his colleagues are the
gatekeepers of UniImmo: Deutschland. He
Thomas Röhrs visiting Röhrs, who has been “the face” of the fund sees himself as the guardian of product
the Ericus-Contor build- for twelve years now, has played a crucial quality and sets a high yet simple stand-
ing in Hamburg. The role in UniImmo: Deutschland’s impressive ard: “Because the team is responsible for
prime office property is growth and ongoing development. During performance, it has to have conviction.”
the most recent invest- his tenure, the fund has grown in size from
ment by open-ended €5.5 billion to over €13.4 billion. Röhrs has Management involvement along the
internalised the fund’s positioning: “I’m entire value chain
real estate fund UniIm-
in the fortunate situation of being able to
mo: Deutschland. The
follow my own convictions on real estate Eight years ago, the existing policy of giv-
high-profile deal is proof
investment in UniImmo: Deutschland, ing fund management units more power
that even in the time supported by excellent processes and sys- and full responsibility for performance
of coronavirus it’s pos- tems.” The fund’s helmsman has a complex was further reinforced, with the lead role
sible to acquire premium and multi-layered role. With 78 properties of fund management being embedded in
properties at an appro- held at present, Röhrs is continuously mak- workflows and decision-making pro-
priate price. ing strategic and tactical adjustments to cesses. “As a central unit, we work ▶
26 places and spaces 02/2020 places and spaces 02/2020 27Real people
Thomas Röhrs (left) and
Martin Schellein, Head
of Investment Manage-
ment Europe, pictured in
a meeting room at the
Ericus-Contor building;
the Union Investment
colleagues have a close
working relationship.
Schellein and his team
initiated acquisition of
the office property and
saw it through to com-
pletion jointly with the
fund manager.
with all departments across the organisa- enjoys high occupancy, thereby providing portant that our decisions are well found- committed funds,” says Röhrs, adding that
tion,” explains Röhrs. Röhrs’ involvement a reliable income stream. It’s an excellent ed and coherent, as they need to stand up this helps to ensure fund performance is
extends throughout the entire real estate fit with our requirements and fund pro- to scrutiny both internally and by custom- driven by investing in real estate. Another
value chain, starting with the acquisition file.” What’s more, Ericus-Contor is let to ers. Everyone involved in the success of challenge is the current impact of the
phase. “Every two weeks, we get to- multiple tenants, “which offers additional UniImmo: Deutschland needs to be aware Covid-19 crisis on the fund. For the Uni-
gether with our investment colleagues as diversification in the form of companies of the constraints and priorities,” stresses Immo: Deutschland portfolio with its focus
a panel,” reports Röhrs. New real estate from the shipping industry.” The acquisi- Röhrs, talking about his tried-and-tested on offices, retail/restaurants and hotels,
investment opportunities are presented tion marks the fruition of a plan to enter formula. “Over the years, this creates a de- risk management entails considering a
to all fund managers at the same time in the Hamburg office property market gree of predictability that allows us all to range of scenarios and strategies. “We’re
this forum as candidates for acquisition. again in 2020. Martin Schellein, Head work more effectively.” For handling acqui- engaging with tenants who are particu-
If an investment is of interest and com- of Investment Management Europe at sitions and ongoing management of the larly affected by the crisis to find a way
patible with multiple fund profiles, the Union Investment, naturally has a strong properties held by UniImmo: Deutschland, forward that makes sense for both par-
property goes through a sophisticated understanding of the fund’s strategy. Röhrs has structured his team by national ties.” Working in partnership and granting
and objective fund allocation process to He initiated the purchase, along with his markets and property type. His portfolio temporary concessions are central to the
Profile
decide which fund should take the matter investment team, and got it across the line managers also take on other special tasks, fund manager’s approach here, because
Thomas Röhrs (56)
further. “The relevant fund management in conjunction with the fund manager. in particular expert management of all post-crisis “competition for good tenants
team then works on the acquisition in started his property- parameters affecting the fund. This will hot up again.”
close consultation with colleagues on the Persuading and explaining are integral sector career in 1995 includes scenario analysis as well as de-
investment side,” explains Röhrs. to fund management at investment man- veloping strategic options in consultation As an indirect and broadly diversified
agement company with other relevant departments. real estate investment vehicle, open-
UniImmo: Deutschland’s most recent Röhrs firmly believes that sustainable Westinvest. The ended real estate funds like UniImmo:
investment is the Ericus-Contor building buildings are critical when it comes to holder of a degree Liquidity management is a particularly Deutschland have, in Röhrs’ view, repeat-
in Hamburg. “It’s an office property that future viability of a portfolio. Fittingly, in business studies, important responsibility. Inflows from the edly shown that they are “an indispens-
combines exceptional construction quality Ericus-Contor has DGNB Platinum certifi- he worked as a sales issuing of new units are carefully planned able allocation option for investors that
with an excellent location,” says Röhrs. cation, the highest level awarded under director, head of and managed in conjunction with the provides greater stability.” “We demon-
The deal reflects the fund’s diversification the German scheme. “But a sustainability Frankfurt-based product management strate that every single day,” says the fund
sales and fund man-
strategy: “As a high-quality investment in label on its own isn’t the deciding factor,” team. “UniImmo: Deutschland is still being manager, “and always seek to protect
ager before moving
an attractive long-term location between explains the fund manager. “Our long- marketed at present,” reports the fund and nurture our greatest asset – the trust
to Union Investment
the city centre and the vibrant HafenCity term aspiration is to digitally measure the manager. The aim is to invest new monies of investors.” Röhrs has a confident take
district, Ericus-Contor boosts the Hamburg energy performance of a building, in order Real Estate GmbH, swiftly through corresponding acquisition on the future: “We have a strict focus on
exposure of our portfolio.” to understand it and make improvements. Hamburg, in 2008 as planning. quality and a strong basic conviction in
Long-term tenant retention calls for build- head of fund man- our product going forward, we’re pulling
Röhrs highlights the other benefits: “The ings that are sustainable and have good agement for Uni- “In a low-interest environment we have to out all the stops to emerge safely from the
property is architecturally exciting and energy credential,” says Röhrs. “It’s im- Immo: Deutschland. keep a critical eye on returns from un- current crisis.” •
28 places and spaces 02/2020 places and spaces 02/2020 29You can also read
