Summary: Findings from the WPA/CPA seminar included: the affordability gap creates barriers to strong communities; pre-fab pop-up houses in vacant commercial space can create cheaper housing; connectivity and agility of technology is paramount; landlords who embrace innovation and offer alternative structures to formal leases will put pressure on co-working players like WeWork; gender diversity is key to ensuring the property market thrives.
Rebecca Moore and Sheridan Treger attended the WPA/CPA Nextgen: Property Disruptors Reception. This evening seminar promised a discussion on the emerging trends influencing the future of Central London real estate.
Insights from a panel forum, consisting of the Chief Executive of Soho Housing, Transactions & Development Director at H B Reavis, Founder of CoCreations, Head of Product at District Technologies and Chief Digital Product Officer at Multiplex, into the current “disruptors” in the property industry included:
Community is at the heart of all necessary changes in the industry. Strong communities need amenities, public realm and organisations to manage crime, health and activities. London is a strong diverse community and is stable compared to other Cities. London is also a liberal City which is a key differential that attracts investors from across the world. We need to nurture community to sustain our competitive position.
The barrier to strong Communities is the affordability gap. This is a hard problem to solve. PRS and build to rent are new initiatives but spaces will have to become smaller as there is only a limited area in the City and they do not necessarily resolve the affordability gap as the higher level of service provision in build to rent than traditional renting models comes at a price. One answer to the cost of land and the cost of construction is pre-fab pop-up houses in vacant commercial space or warehouses. No crane is needed and construction costs are low as developers can use pop-up accommodation. In order to reduce prices and increase supply, there needs to be a different way to build. A key challenge to the industry is to fix the problem of supply and cost of urban housing but the event impliedly dismissed the traditional means of seeking to overcome this by way of redevelopment schemes brought forward through the planning system.
The panel also identified a market of current young professionals in London described as “Generation Nomad”, who would only want to live and work in the City for a few years before moving onto other World Cities.
Technology is the driving force behind change and is key to enable the industry to maintain pace with the rest of the World. We need to be able to communicate without having to be present but connectivity and agility is paramount. SMART buildings must be able to adapt to its users to facilitate the operation of real estate assets. Various platforms can already provide information about building or urban centre performance, or directly facilitate or control building services. Continual improvement in these systems is required. Simplicity is important and providers are currently trying to use Apps to allow occupiers to access buildings; change temperature; order food.
When considering changes, the industry must be flexible and innovative now as it is hard to retrofit buildings so developers need to be designing for future changes. An example of a building which is thinking ahead is 20 Farringdon Street where different floors are designed for different end users and can be scaled up or down.
Organisations should also consider sharing data more openly as common databases create efficiencies (such as Leverton).
Co-working is primarily aimed at spaces under 15,000 square feet for up to 100 people. This might change as co-working becomes more prevalent. This form of occupation provides an alternative to formal lease structures. It often provides for shorter term occupation, requires no fit out, does not take as long for tenants to find new premises and gives an all-inclusive rent so occupiers know what their monthly expenses will be. As more co-working providers are established, the price margin will compress. Landlords are being adversely affected by the change to the working model and to survive in the industry landlords might consider collaboration with entities such as WeWork or developing their own SMART technology and different methods for offering short term, all-inclusive rents for occupation. The more landlords do this themselves, the greater the pressure on co-working players like WeWork.
Gender diversity was mentioned by Vivienne King in the context of Real Estate Balance, which is trying to shift attitudes within the industry to ensure there are at least 33% of women on boards. There is a recognition at senior level that there is power in diversity.
Real Estate Balance’s diversity toolkit was highlighted. It provides practical advice and case studies on how to support gender diversity. Organisations should consider this as a starting point if they are not already focused on ensuring more women feel supported to progress in their chosen careers.