How is the capital returning from Covid?

Pre-pandemic London was bustling. It was busy, fast and some might say a little bit unfriendly. There is no denying that the coronavirus outbreak hit London hard. The UK capital became a ghost town for months. It was emptied of all that gave it the bright lights and the big smoke that make up so much of its character. Stories filled the newspapers of major occupiers downsizing. London was losing its sparkle. For a while anyway. But now London seems to be firmly back on track. And potentially on a path to something better. For Will Seymour, principal associate at Shoosmiths, London is a constantly evolving city and the pandemic merely served to speed up its evolution. “Evolution within the city is something that London has managed for centuries,” says Seymour. “It has always faced challenges, challenges specific to particular times, to particular global change. But what’s always striking about London is that with the strong fundamentals it has, it has always managed to take those and apply them both in responding to global change, but also into driving and shaping that change.” He believes that while London will of course be a changed city as a result of Covid, its fundamentals will bounce back to what they have always been. Solid. “In terms of its bedrock, it has terrific fundamentals,” says Seymour. “It’s got one of the most sophisticated and open financial systems and markets in the world, it’s got the most prestigious legal system in the world, it’s got the most established insurance markets in the world. And then, just in terms of its wider cultural and residential offering, it’s a world-class city. Those fundamentals will change, but we will always have that core offering.” Making London sparkle London and the real estate community will have to work harder, however, if the capital does want to retain and grow its dominance as a city people want to live, work and play in. Shoosmiths partner Paul Alger says property owners are going to have to become much more collaborative – with each other, with building users and with the public sector – if London really is to metamorphose into something better post-Covid. “Owners are going to have to work more collaboratively to try and create a space or a wider environment to attract people who want to come into the office,” says Alger. “Not every office is going to have its own café. You’re still going to need some sandwich shops outside.” Building a community, a reason not just to be in the office, but around it, will be vital for London to really get back its sparkle and, while Alger says the office demand is there, highlighting the long-term nature of real estate, he adds that workers always need more than just a place to work. Figures from Savills confirm the demand. According to associate director of central London office research Victoria Bajela, there is more than 10m sq ft of active demand in London today with some 28% of that demand coming from businesses looking upsize or new entrants to the market. But those space hungry occupiers won’t just take any space. They want the best. They need the best if they are to attract the very best talent. “Prior to the pandemic there was a real hunger from occupiers for space with sustainability credentials, or with anything thought to be an asset to the wellbeing of staff,” says Bajela. “All businesses are thinking about how they’re going to tackle their impact on the environment. That means that we’re seeing a massive growth in the amount of demand for newly developed space. So much so that, since the pandemic, 80% of take-up has been of grade-A space.” For Katrina Kostic Samen, head of workspace strategy and design at Savills KKS, the needs of the occupier have changed fundamentally – a change that was already taking place before the pandemic, but that has picked up speed since. She cites the work she has done designing a new HQ for law firm Kingsley Napley outside of the traditional legal neighbourhood of Midtown and on the edge of trendy Shoreditch. “A lot of occupiers were already thinking about the employee, already thinking about sustainability, already thinking about working differently and smarter, and what the pandemic has done is accelerated everything, says Kostic Samen. “We’re moving into a client-focused area when it comes to real estate,” adds Bajela. “It’s no longer build it and they will come, it’s about having a bespoke offering and something that’s unique to that particular client or user, or occupier. That’s the space that we’re moving into, especially with the growth of technology and sustainability and all of the major trends we’re seeing affecting every area of our life. It’s about translating that into our property.” Bajela says that over the past five years almost two thirds of occupiers across London have changed their submarket locations – an illustration, she says, of how product-driven occupiers are. “It’s all about the actual building on offer and what it delivers for them. Occupiers are becoming increasingly footloose and are thinking about how this affects their employees,” she says. Creating community Kostic Samen says the role of the office is different now. It is no longer just a place to work, it is a community for occupiers. It has to offer more than just a desk to put your computer on. “We should think differently about the way that we occupy space and that the building is not just a closed box for people to come in a suit to work nine to five,” says Kostic Samen. For her, the office isn’t just a building with desks in it, it can be many things, a place where work gets done, where people come together, where ideas are formed. “We’re taking a deep breath and asking what is an office? And it can be many things now,” she says. Bajela adds says the definition of offices is becoming blurred. “Spaces need to be adaptable,” she says. “They need to be flexible and to be future-proofed for a future where sectors are going to have bespoke needs for their space.” But this is where London can lead. It is a city that is constantly and has constantly evolved after all. And, after some 18 months of disruption, it is clear that the UK’s capital is very definitely on its way back to some sort of normal. But, if it really is to bounce back better from the impact of the pandemic, London will have to be more than what it was before. The new normal has to be different. It has to be more flexible, it has to be more focused on talent and on delivering places and spaces that attract people to it. The capital’s fundamentals will always be sound, but where the city really can prosper is through constant and thoughtful transformation. Expert speakers Paul Alger, partner, Shoosmiths Mike Auger, board director and head of residential, Muse Victoria Bajela, associate director, central London office research, Savills Katrina Kostic Samen, head of workplace strategy and design, Savills KKS Will Seymour, principal associate, Shoosmiths The glue of the gateway The importance of community was highlighted during the pandemic, with boroughs of London becoming real hubs for local people to call home. London became a city of a thousand villages and never has it been more important for the real estate community to deliver place – a space for people to live, work and play. And that is exactly what the team at Muse – with its partners the London Borough of Lewisham, the Mayor of London, Transport for London and Homes England – is trying to do in south-east London with its Lewisham Gateway project. The scheme, says board director and head of residential Mike Auger, is the glue that binds the redevelopment of Lewisham together. “This site was a big hole in the middle of the town,” says Auger. “We are providing a real neighbourhood here, mix of uses and new connections to bind everything together.” For him, that mix is exactly what Lewisham needs. “Lewisham doesn’t have a huge amount of workplaces, it doesn’t have a huge amount of retail and leisure amenity. This scheme is going to change all of that. There’s going to be more reasons for people to come here and to stay here.” The Gateway scheme will deliver more than 1,000 new homes (with a little help from BTR operator Get Living) and bring the town’s first multiplex cinema. It is about creating somewhere “distinctively Lewisham”, says Auger. A place where people want to live, shop, socialise and work. To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews