1. Occupier trend looks extremely positive with firms hiring, growing and moving to the UK

With the economy turning a corner last year, firms are now focused on hiring and preparing themselves for continued growth in 2014, with a knock-on impact on requirements for space (albeit many firms will look to occupy in higher densities). Additionally, the UK will benefit from the Coalition’s increasingly competitive tax regime, which should see many companies start to HQ in the UK. This will lead to upward pressure on rents.

Unemployement set to fall, with knock on impact for space requirements

Unemployement set to fall, with knock on impact for space requirements

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prptblog tackles the problem of wasted “dead” space in office to resi conversions. We took to the streets today to ask end users how developers could turn a liability into a social and financial asset.

dead space

What should this be used for?

Office-to-residential activity is up, and there has been a lot of interest in the subject. Most of the discussions to date (e.g. this report by EC Harris) have been around the viability of office to residential conversion, and suitability of floor plates. Generally people feel that you end up with lower value, low quality space than purpose-built resi.

Even if the building is suitable on the whole, there may well be dead space that is not suitable. And what should you do, for example, if the ground floor is retail (so no GPDO rights) or parts of upper floors are unsuited to resi because floorplates are too deep to allow natural light in.

The developer’s preference may be for residential, or income-producing commercial, but if this is not possible, then you may end up with a liability.

But this can’t be right. So we set about answering the question – how to make an asset out of dead space?

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I thought I would do a quick post to promote what I think is a really useful programme for young people in the industry.

ULI_logo

The Urban Land Institute is running a mentorship programme for its young members (under 35). Each mentee will be paired with either a senior industry figure (older age bracket), or a younger professional who is further advanced in his/her career (younger age bracket). Read More

With regular headlines of receiverships and administrations in the property press, investors would be forgiven for wanting to steer clear of secondary commercial property right now. Forgiven, but not praised.

Highest&Lowestyields

Popular sentiment against the secondary market has been well deserved. The regional occupational market performance has been dire, with space being given away (literally) to avoid empty rate liabilities, even in the more expensive regional towns such as Reading, where prime headline rents have been £25 – £30 / sf for years. With tenant administrations, overrented stock, and taxes based on rent levels in 2008, many secondary buildings are, from a financial perspective, nothing more than liabilities with a risky income stream up front. But many are not. Read More

Like many in the UK, I did not have a spare moment to watch the Budget this year. I picked up the key points from the national news providers, but the fallout from most of the customary policy tweaks did not make it from the Westminster village to my office in the West End.

The mortgage insurance policy was not one such gesture. It made the headlines as designed, but it was an act borne of political acuteness, not sound economics. Read More

Margaret Thatcher always said she was most productive when she was slightly cold, and slightly hungry. Her working environment had a great impact on the amount that she achieved on any particular day, let alone across the full term of her premiership.

When we think of commercial development values, a number of influencing factors might spring to mind: floor area, location, market rent, market supply, service charge costs, heat and light efficiency, rates liabilities. These are all valid – but employee productivity is a factor which often gets overlooked.

Cold offices in Westminster

Around the same time as Thatcher stepped out of her slightly cold 17th century office for the last time, across the pond, Barbara Lippiatt and Stephen Weber were writing a paper on the net benefits of good office design. The premise was that since employee salaries far exceed building costs, higher-priced office designs that enhance productivity may make sense. They noted that in a 1984 study, it was found that on a square foot basis, employee salaries are about 13 times building costs. This might mean that a 13% increase in construction costs could be justified if it results in a greater than 1% increase in productivity. Read More

I was asked to go along and chair an open debate at the inaugural Building Thought Leadership event this Halloween – the perfect excuse to be out of the house and avoid those Trick or Treaters. It was a chance to get some young property types together and meet some interesting people, share ideas to some soothing piano music, and raise some money for Love 146, a human trafficking charity.

NOT Mayfair

It was held at the London Sketch club, Chelsea (NOT Sketch, Mayfair) a fantastic venue that warrants a whole new post in its own right.

There were a couple of talks, one from Catharine Bedford from Stylus, on the future of cities and some fascinating ideas around how buildings and cities are changing. Among other things, she talked about Google’s augmented reality glasses which will add an extra layer of information between us and the built environment. In a similar vein, some have taken the first steps towards cyborgism by implanting computer chips into their eyes. We also saw plans for a house that would allow you to pull a u-ey in your home and keep your motorbike in a kitchen cupboard. Perhaps the ultimate modern living for all those Jamie Oliver fans who want to speed home, free of congestion charges and rising public transport fees, and eat fast home-cooked food. Read More

pretty much my only good investment so far…

I have a very small share portfolio which I have built up mainly as the result of hunches over the last few years. I dread logging on to see my portfolio – a sea of reds, from Standard Chartered and BP, to BSkyB. In property shares I have done rather better, and one in particular stands out – Capco (Capital and Counties plc).

Offspring of Liberty International (former #3 REIT in the UK which demerged a couple of years ago) Capco sacked in the tax transparent but rigid REIT structure in favour of the Propco model favoured by higher geared and development focused companies. Since then the firm has gone from strength to strength, roughly doubling its 2010 share price. Read More