ISSUE 1 | 2017-18

From

SEGRO Grenfell Tower Chief executive David Sleath, What might lie at the root Diversity is now a business discusses the future of of this tragedy? We ask necessity. Chris Grigg, industrial property the question chief executive, looks at the facts

THE NEXT GENERATION Our graduates discuss why they chose property as their future

Changing Policies Generation Z Local Authorities New pressures on valuers Do you know their work Investment is on the rise. that could cost you space demands? Should there be cause for concern? COMMERCIAL JOURNAL ISSUE #1 2017-18

A NOTE FROM...

“It was a year ago when we originally add value. What was happening in started thinking about what we wanted our world that might require specific to achieve from this publication. advice? We settled on the changes in Company magazines can often be very the rules for Red Book valuations and corporate, but clichéd as it sounds, EPC certificates. Two racy subjects? that’s not really ‘us’. So we decided to Let’s be honest, no, but essential for think about the taboo, yet important our clients to understand? Absolutely. subjects we have previously shied Finally one last thought dawned on away from discussing. Equality, gender us. At we are not only restrictions, social class limitations, the professionals, we are also people. Now Scott Harkness terrible Grenfell disaster. We decided that may sound like an odd statement, we had to tackle each of these sensitive but I think it is a fact which often gets HEAD OF COMMERCIAL subjects, knowing we would learn a forgotten in the corporate world. So we lot along the way. Then we started have also introduced you to some of our reflecting on who motivates us, both people along the way, including our very in our industry and outside of it. The colourful graduates. brilliant David Sleath of was So in short, here I present the first top of mind, as was the social enterprise edition of our Carter Jonas Commercial Debate Mate. Both inspirational, Journal. As Peter mentions below, we had but for very different reasons. Next great fun producing this publication, we we wondered how we could really hope you enjoy reading it.”

WELCOME TO A DIFFERENT WAY OF LOOKING AT CARTER JONAS: THROUGH THE EYES OF BOTH SENIOR AND“ JUNIOR STAFF IN THE 170-STRONG COMMERCIAL DIVISION. INTERVIEWING CARTER JONAS PEOPLE AND THE CHIEF EXECUTIVES OF BRITISH LAND AND SEGRO WAS A PLEASURE. I HOPE YOU FIND THEIR VIEWS AS INFORMATIVE AND ENTERTAINING AS I DID. Peter Bill ” CONSULTING EDITOR OF COMMERCIAL JOURNAL Contents 3

ISSUE #1 | 2017-18 Editorial Peter Bill Carter Jonas property specialists Contents Marketing & Production Marketing Manager, Kate Valentine Art & Design Head of Graphic Design, Laura Gale On the cover Thank you to our content contributors Benedict Sarhangian, Enayah Bramajee, Scarlett McCabe, Jessica 32. Commercial Spotlight: Dix, Debate Mate; Chris Grigg, British Land; David Sleath, SEGRO The Public Sector Photography Advice and potential warnings for Aurélien Langlais 06. councils looking to invest Thank you to all that contributed external photography Debate Mate, Completely Retail and 36. Commercial Concern Leisure Marketplace, SEGRO Pick your valuer carefully. New mandatory rules present loopholes CONTACTS Commercial Interview that you need to know about Commercial Property Agency Bath, Philip Marshall Chris Grigg, chief executive of British +44 (0)1225 747260 Land, talks diversity in property Cambridge, Will Mooney The rest +44 (0)1223 368771 Leeds, Chris Hartnell 04. COMMERCIAL NEWS +44 (0)1132 425155 10. Commercial Interview What’s certain and uncertain , Greg Carter Warehouses are now sexy. in our future? +44 (0)2075 183200 Oxford, Jon Silversides David Sleath, chief executive of +44 (0)1865 511444 SEGRO, explains why 08. COMMERCIAL INSPIRATION Meet Debate Mate. Their impressive Architecture & Building Consultancy Richard Love youths are coaching FTSE 100 chief +44 (0)2075 183200 14. Commercial Future executives on communication Valuations Generation Z have just arrived, Dudley Holme-Turner and their office demands are very 28. COMMERCIAL SPOTLIGHT: +44 (0)2075 183200 different from the millennials THE PUBLIC SECTOR Property Management Lil Houghton covers advice for Graham Pepper councils, Cycle to MIPIM and +44 (0)2075 183200 20. Commercial People supporting women in property Consultancy and Strategy Meet a few of our very Alexandra Houghton colourful graduates +44 (0)2075 183200 34. COMMERCIAL REGIONAL FOCUS Industrial Andrew Smith Leeds has big ambitions. +44 (0)2075 183200 We speculate as to what the International city’s future could look like Frédéric Schneider +44 (0)2075 183200 38. COMMERCIAL CHANGE A new EPC policy is on the horizon which could make your building unlettable by 2018 Carter Jonas LLP, One Chapel Place, 26. 40. COMMERCIAL EVENT London W1G 0BG It’s deals, deals, deals at Completely 020 7518 3200 Commercial Questions [email protected] Retail and Leisure Marketplace. carterjonas.co.uk We consider the question of the moment. Grenfell Tower. How could 42. COMMERCIAL RESEARCH To keep up to date with all our news, follow us on twitter: this tragedy have happened? Is the future steady? See our @CarterJonas predications for the market COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial News CERTAIN AND UNCERTAIN FUTURES By Peter Bill

THIS MEANS WAREHOUSES ARE SEXY, JUST AS THEY PRIVATE & PUBLIC DEVELOPMENT WERE“ IN THE 1930s The strength and direction of the currents affecting development are well ” understood by Carter Jonas. Watch out for INDUSTRIAL the need for energy certificates from April Convoys of nine or ten driverless 2018 (p 38). See how HS2 will transform trucks will swoop into urban Leeds (p 34). Be aware of new rules that warehouses. Their contents will will add more pressure on valuers from be mechanically extracted and February 1st (p 36) Understand how the sorted by bar-code reading robots. terrible fire at Grenfell Tower will impact These packages will be stuffed public sector procurement (p 26). See how into flotillas of electric vans and public sector property investment and delivered to home addresses within development is being reshaped (p 32). Into a day of ordering. This means these familiar currents, a fresh stream is sheds are now sexy, just as they surging. Build to Rent finally grew up in were in the 1930s when Britain’s 2017 with the full-blooded entrance of first big industrial estates were built by companies like Estates. David Sleath is the chief BUILD TO RENT FINALLY executive of re-named SEGRO, the GREW UP IN 2017 FTSE 100 company that dominates “ the sector. David’s vision (page 10) Blue Chip UK funds such as L&G, M&G” of the mid-term future includes and Hermes and US Giant Greystar. driverless trucks and electric vans. Labour leader Jeremy Corbyn scared In the nearer term he suggests investors with talk of rent controls in multi-storey sheds sitting September. Relax. Large-scale institution- alongside multi-storey housing will backed Build to Rent (BTR) developments arise. Why? Because land values are that offer up to 30% of their units to rising for the right sites in urban councils at 80% of market rent are here locations. Segro has one, perhaps to stay. The British Property Federation two, London authorities keen to say the current pipeline of 95,000 homes give the multi-storey flats and will lead to around 15,000 new BTR homes warehouse concept a go. The era being completed each year. of taller model warehouses is about to begin. Commercial News 5

Burns Night falls on Thursday January 25th 2018. Easter Sunday comes early, on 1st April. The Venerable Bede ABOUT PETER is celebrated on May 25th. These things are certain. Peter Bill is a journalist and author Predicting which economic and political winds that may of Planet Property. He edited rock property is a fool’s game. Guessing how long-term between 1998 currents are reshaping the office, industrial, retail, private and 2011 and Building magazine between 1990-97. From 2007 to development and the public sector is a little easier. The 2015 Peter wrote a weekly column views below are my own. But they draw inspiration from on real estate for City pages of the the Carter Jonas experts and the chief executives of London Evening Standard. British Land and Segro featured on later pages.

BANG. FLEXIBLE RETAIL OFFICE SPACE IS NOW Owners of the secondary shopping MAINSTREAM“ centres built in the 1960s to 1980s in secondary towns face a grim choice. Change or die. A small number are now ” worth little more than the land they

OFFICES stand on. Internet shopping has finally WeWork is a unicorn standing under a hit retail’s weakest point. As Bill Gates magic money tree in Silicon Valley. Imagine said; “We always overestimate the how Mark Dixon, boss of IWG, must feel. change that will occur in the next two The company formerly known as Regus years and underestimate the change has revenues of £2.2bn a year and operates that will occur in the next ten. Don’t let in 3000 locations worldwide. The Stock yourself be lulled into inaction.” Many Exchange values IWG at £2bn. WeWork is owners are taking action; valued by investors at $20bn. A value based increasing the amount upon hope (expressed by IWG as well) that INTERNET of leisure space; adding 30% of all office space will in the medium term be let indoor sports activities; SHOPPING HAS on rent-a-desk per month basis, rather than leased on a nibbling off bits of the FINALLY“ HIT square foot per decade. British Land boss Chris Grigg centre and selling the (p 06) has launched Storey, a similar concept. Bang. RETAIL’S WEAKEST land for housing. Those Flexible office space is now mainstream. But beware of POINT further up the retail making space too edgy. A worldwide survey (p 14) of chain have been shifting the shops/ attitudes among 22-year-olds, Generation Z, found them cafés mix to much more of the latter ” more conservative than 23-34-year-old Millennials. A over the past decade. The next decade? cadre indulged this past 20 years, thanks to the Tech A mosey round the Completely Retail boom. What do Generation Z workers want? Same as event at Old Billingsgate Market in late those over 35: a desk to call home in a non-edgy business. September was heartening (p 40). The hunt for space by the big value chains continues unabated. The number of nascent food chains would have pleased the producers of Dragon’s Den. There was lots of talk of High Street revival. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Interview

“FIRST, WE RECOGNISED WE HAD A PROBLEM”

Diversity pays, in many ways, including improving the bottom line, says Chris Grigg, chief executive of British Land (BL), who wants agents BL employs to adopt the creed. Commercial Interview 7

Trying to broaden your company’s Pathways to Property, an initiative set the commitment of our people. Over culture? “Start where you are. Use what up in 2012 by the Reading Real Estate 130 are members of our Pride group. you have. Do what you can.” A phrase Foundation to encourage young people Comments from Ruth Hunt, CEO of uttered by Arthur Ashe, the first black from more diverse backgrounds to take Stonewall, really resonate with me; tennis player to win Wimbledon, in 1975. up careers in property. Students receive It’s not who we are, it’s how we are The quiet American had been asked talks in school and can attend a summer that counts. Getting people to think how he achieved his goals. Today’s school where they are supported by differently and inclusively is how we diversity goal? Pushing the number of mentors, and through work experience. will allow different ideas to flourish. women in your firm to 50%; Aim for Bursaries, scholarships and internships That way, diversity becomes an national average of 13% BAME (Black, are also on offer. outcome, not a target.” Asian and Minority Ethnic) employees; Any firm with more than 250 staff Match the 2% average for LGBT is now required by law to publish AGENTS (Lesbian, Gay, Bisexual and Transsexual) gender pay gaps. But should firms staff. Kick off the game with a meeting. voluntarily embrace diversity? Isn’t WORKING FOR Write the Ashe maximum on flip chart. their business, their business, so to BRITISH“ LAND Discuss. Prepare for kickback. speak? “It is absolutely their call,” WILL HAVE TO This will come from the back of the concedes Grigg, adding a big BUT: PROVE THEY room. “All this Political Correctness “However, we too have a choice. Over is humbug. Our culture may be a bit time, we want to work with the best ARE PUSHING male. But it simply mirrors the sector. agencies and that takes us back to TOWARDS Lord help us if we start having quotas the business case above. Finally, if we EQUALITY GOALS for females and minority groups. It will don’t ‘call it out’ then we risk ourselves lead to resentment among staff and being seen as ‘tokenists!’ In other words, Still not convinced? EY say have clients wondering what has got agents working for British Land will companies with women on their ” into our heads.” Some, maybe, but not have to prove they are pushing towards management boards outperformed British Land, , SEGRO, Grosvenor equality goals, when they those with male only boards by or Lend Lease. All five have signed up pitch for instructions. 26%. Companies with one or more to the National Equality Standard, a “Promoting open environments women on the board deliver higher quota-free programme designed in 2014 where employees can be themselves than average returns on equity, lower by consultants EY to import practices also encourages happier, stronger gearing, better average growth and that instil the view that striving for and more productive teams. So much higher price/book value multiples. diversity makes business sense. so that the majority of initiatives in Companies in the top quartile for British Land chief executive Chris this space at British Land have been executive board diversity achieve Grigg set out to change the pale/male generated bottom up; from Pride (our returns on capital 53% higher, on culture among his 580 employees. “First, LGBT group) and Women’s Committee average, than those in the bottom we recognised we had a problem. Then I to mentoring programmes and the quartile. Profit margins at the most tried - from the top - to set out a simple recent introduction of equal pay for diverse companies were 14% higher on business case, rather than a ‘do the right employees choosing to take shared average. Diversity seems to pay in so thing’ case for promoting diversity,” parental leave. Britain’s second biggest many ways. says Grigg who had joined BL from property company has already reached / Chris Grigg is chief executive of British Barclay’s in 2009. “I picked ‘be more the diversity goal in terms of gender. Land, having being appointed to the board like our customers’, and ‘mitigate group Half the employees are now women. in January 2009. Chris has more than 30 think’ as the two important things to In 2015 Grigg was placed 11th in the years’ experience in the real estate and concentrate upon. Second, we tried to Financial Times “Top Ally” list, of CEO’s financial industries in a range of leadership hire and promote role models at BL. who promote and support diversity roles. Until November 2008, Chris was After that, we really tried to ‘work it’ among Britain’s biggest companies. chief executive of Commercial from the whole company perspective. “At British Land we asked staff Bank, having joined Barclays in 2005. Prior “I got some great advice from women, to complete a diversity survey. Over to that, Chris spent 20 years at Goldman in particular at British Land, about what 90% were happy to complete the Sachs. He is Non-executive director of BAE would and would not work,” says Grigg. survey – a very high number. I’m Systems plc, a member of the board of the “I think it also helped that people in convinced we wouldn’t have got to British Property Federation and a member the business knew I was serious about that sort of proposition even a few of the executive board of the European it.” British Land is the major funder of years ago. Momentum is key and so is Public Real Estate Association. COMMERCIAL JOURNAL ISSUE #1 2017-18

“DEBATE MATE PROVIDES ‘SAFE SPACE’ FOR DIFFICULT ISSUES TO BE AIRED”

Inarticulacy is as big a barrier to employment diversity as the social disadvantage of not being born either pale, male or a member of the comfortably-off classes. We talked to Debate Mate, a social enterprise not only looking to make a difference in schools, but also in the boardroom.

Imagine two scenes. Scene 1: A 22-year- volunteer university students under the Commercial old real estate graduate of West Indian supervision of Debate Mate, a social origin with a 2.1 from Reading shuffles enterprise founded in 2007 by barrister Inspiration into a job interview, fails to make Margaret McCabe. Debate Mate “isn’t eye contact and mumbles answers really about debating at all,” says chief to clear questions. They don’t get the executive McCabe. “Instead it is a job, however much the firm wants to skills and employability programme. increase diversity. Scene 2: the same We teach what are known as key 21st person walks into the room, grasps century skills: critical and creative the interviewers hand and engages in thinking, leadership, problem-solving a spirited debate about the pressures and entrepreneurship, while developing facing valuers. Hired. core confidence and self-esteem.” Between November 2016 and March But will these articulate youngsters 2017 more than 5,000 UK students in face a warm welcome? One of the 250 primary and secondary schools in trickiest issues facing companies’ areas of high child poverty took part is ‘diversity’. A catch-all phrase that in after-school debate clubs run by embraces the notions championed by Commercial Inspiration 9

Kelvin, aged 14, is a student in Year 9. He has been on the Debate Mate programme for three years. Here he is debating if performance related pay should be introduced for teachers in the UK. This debate was part of the London Launch event for the Debate Mate Programme, held at the Royal Geographical Society in London.

British Land chief executive Chris Grigg EVEN PREMIER both sides to argue the opposite of in this issue. Should we work towards what they believe. half our staff being women? What LEAGUE COACHES “What we are teaching is the resentments will surface amongst male HAVE“ BEEN ability to present a logical rather employees? How do we deal with that? TAUGHT TO than an emotional argument, and Should we try and up the percentage of DEVELOP THEIR the agility to debate the point from non-white staff – or will that spark talk either point of view,” says Benedict of tokenism? Read Chris Grigg’s article COMMUNICATION Sarhangian, Executive Programme for some answers. Maybe also look to ON AND OFF Director at Debate Mate. A couple of Debate Mate? THE PITCH trainers from Debate Mate are yours Debate Mate provides a ‘safe space’ for £2,500 for half a day. They will be for difficult issues to be aired. Debate programmes. Even Premier League skilled in showing you how to ‘listen Mate counts law firm, Slaughter & coaches have been taught” to develop to hear’ rather than ‘listen to respond.’ May, Deloitte, the Dorchester hotel their communication on and off the We put rigour into the building up of group, the BBC and Harrods among pitch. One technique is to put a motion arguments and try and make people its clients, providing each one with and ask those for and those against to be logical and have their arguments bespoke communications training divide – then ask representatives from supported by facts not by opinion.” COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial “THE FORCES Interview MAKING WAREHOUSES SEXIER ARE URBAN POPULATION GROWTH AND THE HUGE INCREASE IN ON-LINE RETAIL”

We caught up with David You need to be fit to run a FTSE 100 year. “David was a highly respected Sleath, chief executive of company, feels SEGRO chief executive President,” says chief executive Melanie David Sleath, who has lost 10kg since Leech. “He was a huge support to me SEGRO. SEGRO is a leading early 2016. “I’m now 56. At the beginning personally - always positive, clear- owner, asset manager of last year, I began to feel that I did minded and offering immense wisdom, and developer of modern not have enough energy. Since then insight and good advice. I never heard warehousing and light I’ve been eating more healthily. I’ve him raise his voice or appear upset – industrial property. The cut down on the number of business and yet more often than not his quiet company controls one of the dinners. I go to the gym regularly persuasion won the day. He is a true now. This summer I took part in the gentleman of the industry.” world’s biggest portfolios of property industry triathlon. To my great Sleath has been running SEGRO for so-called ‘mega sheds. satisfaction I not only finished, but beat seven years now. He took over from the my 27-year-old daughter, Becky!” late Ian Coull in April 2011, after five Getting fit also prepped Sleath for years as finance director. The trained doing two jobs at once in the year accountant had joined sixteen months to June 2017. He was president of before Slough Estates changed its the British Property Federation for a name to SEGRO in Spring 2007. In 1920 IF COUNCILS ARE GOING TO GIVE PLANNING FOR MULTI-STOREY“ FLATS, WHY SHOULD THEY NOT DO THE SAME FOR MULTI-STOREY WAREHOUSES? ” COMMERCIAL JOURNAL ISSUE #1 2017-18

founder Sir Noel Mobbs was virtually Amazon is dreaming about storing £7.3bn gifted the 580-acres outside Slough for stuff in balloons. A UK developer is £7.3 billion buying the war surplus stock stacked on promoting plans to build a 2 million SEGRO Portfolio the land. Today 17% of the value of the square foot underground warehouse value in 2017, up from £7.3bn industrial property company lies near Heathrow - after digging out 3 £4.6 billion in 2012 on that land, along with the main office million tonnes of gravel over the past of the 285-strong business. 15 years. For Sleath, the solution is to When Sleath presented his maiden look up. “Rents are now getting close to set of results in 2012 the portfolio making the economics of multi-storey £2.1 billion was valued at £4.6 billion. At the warehouses work,” he says. “We’ve seen 2012 AGM, shareholders were treated rises of 5% per annum in London over Borrowings in bn to tea and biscuits at the TUC the last two years. In places like Park 2017, down from £2.1 £2.4 billion in 2012 offices in Holborn, rather than the Royal the average is £14 - £15 per sq. ft.” traditional heavy lunch at Claridges. Sleath describes the sites SEGRO is Sleath admitted the company had seeking for these urban warehouses. “underperformed over the past decade”, A description worth noting. For the promising, “we have a clear strategy to company has already said its 2017 66.6% transform performance for the future” investment programme, billed at Two thirds of SEGRO’s In June 2017 gross assets stood at £7.3 £300m, will more likely end up at 68 million sq ft portfolio billion. Borrowings were down from £350m to £400m. “At the current rate of is located in the UK £2.4 billion to £2.1 billion. progress, we will be at the £350 million Sheds have become a hot topic since rate again next year,” says Sleath. The 2012, thanks to the rise of internet ideal site will be between 5-10 acres to shopping and falling delivery times, allow for a 100 000 sq. ft warehouse. driven down by Amazon. Developers “They are nearly always former £350 million are building a network of ‘last-mile’ industrial sites” says Sleath, “like the An estimate of what sheds all over Britain, with SEGRO at one we have at Hayes, a former Nestlé SEGRO’s annual investment the forefront. But the word “shed” is coffee factory .” programme will be worth £350m next year, it’s currently definitely not sexy at SEGRO. Nowhere Urban Warehouses have sexed up billed at £300 million does the four-letter word appear in the image of the industrial sector. the 176-page 2016 annual report. The But plain big boxes from 100,000 sq. word ‘warehouse’ can be found on 34 ft. upwards make up 40% of SEGRO’s different pages. “One of my colleagues portfolio – and get 25 mentions in the % describes what gets built these days as annual report. The Midlands ‘golden 40 robots with cladding,” says Sleath. triangle’ bounded by the M1, M6 and Percentage of Just over two-thirds of the 68 M42 motorways is being mined for SEGRO’s portfolio million square foot portfolio lies in the financial gold. SEGRO has a joint which are big boxes over 100,000 sq ft UK, the remainder on the continent. venture with Roxhill on the 120-acre “The forces making warehouses sexier Rugby Gateway site, bang next to are urban population growth and the Junction 1 of the M6. DHL and H&M huge increase in on-line retail. Forces are customers. Plenty of space left for that are shrinking the availability of more big boxes. industrial land. The customer now SEGRO and Roxhill have even more wants it delivered at best tomorrow and space next to Junction J24 of the M1. preferably tonight. You have got to have The 700-acre East Midlands Gateway intermediate ‘last-mile’ stations close park has permission for 6 million sq. to the consumer. “Inevitably people are ft. The development incorporates a 50- wondering how well we can intensify acre Strategic Rail Freight Interchange. the usage on that land.” This will include a rail freight terminal, Commercial Interview 13

Industrial units which Carter Jonas specialists have advised on in the last 12 months:

Photon Park, Normanton

Hawke Ridge Business Park, Wiltshire Oxford Industrial Park, Oxfordshire

capable of handling up to sixteen 775m SEGRO inherited one two-storey all-electric vehicles by 2040. By then freight trains per day, container storage warehouse near Heathrow when it the warehousing sector will be seeing and HGV parking for hundreds of big acquired Brixton in 2009, which took a second big change. “Driverless trucks. More diggers than you can count a very long time to let. The company technology is here today. What you were busy on the infrastructure works is building two on the continent, one will probably see is a platoon of in late summer 2017. in Munich, one in Paris. But getting lorries, with just one driver in the Back in London, homes are adding permission from UK councils may not front truck.” Gulp. spice to the urban warehouse market. be easy. “It will require a planning push / David was appointed Chief Executive At the 30-acre Hayes site, Barratt has to make it a level playing field,” admits of SEGRO in April 2011, having served as been selected as partner to build up to Sleath. “But if councils are going to give Finance Director since 2006. He is a Board 1400 homes next door to SEGRO’s 230 planning for multi-storey flats, why member of the European Public Real Estate 000 sq. ft. of warehousing. “We are keen should they not do the same for multi- Association, and Board member of the to do that,” says Sleath, meaning taking storey warehouses?” British Property Federation. His previous the planning risk on new homes. Those Planners need not fear homeowners roles include Senior Independent Director acting for sellers need to know urban will be disturbed by White Van Man. and Audit Committee Chairman of warehouses need a lot more than space “Battery technology will become a plc. He has also held a number of senior for lorries and vans. “Operations are 24- major factor in last mile delivery over finance roles, including Finance Director hour; you need double the parking space the next decade,” says Sleath, who of Wagon plc and partner at Arthur for staff to cope with shift changes.” points to government plans to have Andersen, where he worked for 17 years. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial “NOBODY OVER Future THIRTY CAN RISE FROM A BEANBAG WITH DIGNITY INTACT” Commercial Future 15

A new trend has been emerging in the office sector in recent years. Peter Bill considers why it is essential to listen to the emerging ‘Generation Z’ and ultimately, create offices which are fit for adults. Greg Carter, partner in the London Office Agency Team at Carter Jonas, considers Peter’s thoughts based on his recent experience.

PETER SAYS… “I am dancing a jig. Over the past Prepare for a Damascene two decades, three bad things have moment, that is, if you been happening with office design, believe bean-bags and ping pong tables and Apple Park puts all of them are essential requirements in a modern right. First we have lost confidence in office. Mine came on July 17th 2017 offices altogether as nomadic workers whilst reading an article in the FT by huddle in cafés and in their own Lucy Kellaway, who has now left the bedrooms. Jobs’ edifice is a hymn to the paper to become a teacher. A person importance of offices in general. who certainly understands the minds of “The second bad thing is the the young, proven by the results below confusion between home and work. of a report on Generation Z featured Fashionable office designers delight later. But first, a precis of her article. in making work spaces look like the “This summer, 12,000 Apple hideous apartments of imaginary employees will start to move into this hipsters — Airbnb’s office in San great disc of a building, which has Francisco is filled with spaces that look been eight years coming and is said to like funky sitting rooms, kitchens and have cost $5bn — making it the world’s even a “nerd cave”. most expensive office. Apple Park is “For the past two decades’ office Steve Jobs’ last, posthumous hurrah; as spaces have been built as if for primary a vanity project it is roughly on a par school children. Google has been with Nicolae Ceausescu’s People’s Palace a world leader in infantilising its in Bucharest. workforce with AstroTurf croquet lawns COMMERCIAL JOURNAL ISSUE #1 2017-18

An office in central London which the Carter Jonas Architecture and Building Consultancy team have been involved with over the last 12 months

and slides. This pernicious trend started in Silicon Valley and has spread. Apple Park is made for grown-ups.” Thank you Lucy.

CAUTION IS CLEARLY SHAPING THE“ EXPECTATIONS OF A GENERATION THAT DOES NOT FEEL AS ENTITLED AS MILLENNIALS WHO HAVE SURFED THE TECH BOOM

Three ‘F’s have shaped offices since” 1800, when the East India Company built London’s first purpose built block on Leadenhall Street, now site of the Lloyd’s Building: Function, Financing and Fashion. What occupiers get up to in the space and how much they are prepared to pay in rent are eternal forces. Fashion, however, fluctuates, moulded as much by the forces of worker supply and demand as by time itself. Imagine a world where the supply of young Tech workers was twice the level of demand. Would occupiers lure workers with bean-bags, ping pong tables and break out spaces filled with weird orange furniture and over intimate ‘conversation’ pods? No. They would be crammed into 60 sq. ft. hot desk spaces, a little like 19th century mail clerks or 20th century typists were lined up in typing pools. OK, a bit harsh. But nobody over thirty can rise from a beanbag with dignity intact. Ping- pong tables are an irritating distraction. Commercial Future 17

What do architects think of the evolving needs of the office environment?

“We have seen in recent years a different type of expectations from younger generations in an office environment. The youngest employees thrive in an open plan set-up with a high level of social interaction and visibility, possibly because they are more used to sharing their life, proudly showcase their achievements and expect instant kudos for that. The challenge from a designer and employer point of view, is to keep them interested as they are very information-hungry and they prefer communication to be snappy, imaginative and effective.” Alain Torri, Architect, Carter Jonas COMMERCIAL JOURNAL ISSUE #1 2017-18

GENERATION Z: What do you really want from a working environment?

“When I enter the working world I want to find the company and environment that is right for me, where I am happy to spend nine hours a day. Any company can use materialistic incentives to attempt to ‘buy’ employees loyalty.” Sam Pritchard, 21, Student at the University of Lincoln

“In my opinion, having a permanent desk area is essential. Carter Jonas: The open plan office is St James House, Bath important as it makes your colleagues and supervisors feel more approachable. Weird orange furniture is generally Z’, those born after 1995, so now Aside from that, I’m not uncomfortable. The next cadre of just starting work. A group more worried about what the recruits want their own desk, corporate conservative than the preceding break-out spaces look like, stability, and the ability to talk to a generation. a ‘fun’ area is nowhere near stable cast of those working on tasks of “Ping-pong tables and beer fridges the top of my list.” common interest it seems. may have been flashy recruitment Catherine Sinclair, 21, tools for Millennials, but gen z’-ers Part I Architectural Assistant THE NEXT won’t be sold as easily on flimsy CADRE OF perks,” says the report, which asked “When I come the same questions in 10 countries. to choose an RECRUITS“ “They need an environment where employer, I will be looking WANT THEIR they can be independent, competitive for a company which has OWN DESK AND and even territorial. Around 35% of really thought about my CORPORATE gen z-’ers would rather share socks needs. A gym membership than office space.” Why do they or healthcare is far more STABILITY sound like 50-year-olds? appealing than any “The workplace Generation gimmicks. The design of A view that chimes with the findings Z seeks has been largely shaped office space can absolutely of a major report. “Young” staff want by their jaded upbringing among be different, but not for peace and quiet at work, not free a recessionary economy and the sake of it. Expecting snacks,” was one headline over the mounting student loans,” says the an x-box or slide to be findings of a worldwide study of 4,000 report. Caution is clearly shaping important to me feels under 34-year olds published in 2016 by the expectations of a generation patronising.” HR consultants Randstad and Morar that does not feel as entitled as Georgie Dawson, 21, Student at Consulting. Half were ‘Millennials,’ aged Millennials who have surfed the Nottingham Trent University 23-34. The other half were ‘Generation Tech boom. Commercial Future 19

Carter Jonas: One Station Square, Cambridge

GREG SAYS… changing dynamic of the workforce Hot-desking started to which drives it. Following the perceived become popular 10 years trend for the sake of it is destined to ago, but has evolved dramatically end in misery. since. For tenants with peripatetic staff Trends continue to change. I have it remains a perfectly valid option. seen a considerable shift in the industry, However, for employers who have the more extreme or ‘fun’ office interiors office based staff who need to regularly are certainly falling out of fashion. interact, giving each person their own Our clients are more interested in staff desk, or at the very least, designated being able to work closely together in team zones, works better for both the a quiet productive environment where employer and the member of staff. It’s they have their own space, but can no secret that staff need to feel settled easily make eye contact and talk to and comfortable. each other either across the desk, or in Over the last decade the concept nearby break out spaces. For example, of hot-desking has transformed we recently met with a tenant whose FOLLOWING into agile workplaces, and the focus office space currently includes a slide THE PERCEIVED has shifted to providing the most linking the ground and the basement TREND“ FOR suitable environment for workers floor. The general feeling about the THE SAKE OF to complete the task in hand, be it installation of the slide now, is one of cognitive or collaborative. The key to regret; its only contribution today is IT IS DESTINED making the modern office work is a simply gathering dust. TO END IN clear understanding of the business / Greg Carter is a partner in the London MISERY needs and an acknowledgement of the Office Agency Team at Carter Jonas. ” COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial People “THE UNIFYING APPEAL IS ‘I LIKE TO GET OUT AND ABOUT AND MEET PEOPLE.’”

Real estate attracts high-calibre entrants, as the lives of the five Carter Jonas graduates demonstrates. The unifying appeal is “I like to get out and about and meet people.” The three men and two women featured here have one further thing in common; agile minds and outgoing personalities. Beyond that lie differing backgrounds. Hugo Hodgson comes from a political family. lzzy Vyvyan is from the Dales and rowed for Cambridge. Emilia Atkinson lived in till the age of 15 and came to building surveying via an administrative role. Tom Vecchione’s father is an agent. The son has a competitive streak. Lewis Ali was told at school in Cardiff to get a job as an electrician. Now he’s the top billing graduate at Carter Jonas. Commercial People 21 HUGO HODGSON

“Politics was not for Hugo”

While showing an investment client You get to do different things every day.” a building for sale in Leicester in Hugo joined Carter Jonas in the autumn 2016, Hugo Hodgson spotted a similar of 2015. “My oldest brother’s girlfriend property nearby that was not on the worked in our Wandsworth office. She market. Would the client buy the saw on the Intranet that graduates were pair if Carter Jonas could arrange an being sought. After an informal chat I off-market deal for the second? Dear went through a half-day assessment. reader, the investor bought both. “My A couple of weeks later I was told the parents always taught me to be open- job was mine. What followed was six minded” says Hugo. His father, Robin, months with the investment team, six and mother, Fiona, are both working in the development department and peers. Each ennobled separately for six gaining experience in public sector political services. Politics was not for work. So, does that early deal in Leicester Hugo, his two older brothers are both mean Hugo would like to specialise as accountants. The political gene surfaced an investment surveyor? Not necessarily. in sister Poppy, 27, a political journalist. By late 2017 he was halfway through Hugo chose geography at Oxford his six-month stint with the valuation Brookes, with half an eye on becoming department and busy organising a a residential agent. Answering the Dragon Boat race for fellow graduates phone in a lettings office during term to raise money for LandAid. “When I holidays put paid to that idea. So it was at college everyone said you should was back to Brookes for a masters in go for investment and steer away from commercial real estate, obtained in valuation, because it’s boring”. Well, 2015. “I’d previously met a few people no it’s not, at least not here, not under on the real estate course and realised Dudley (Holme-Turner). There never the sector ticked all the boxes for me. seems to be a dull moment. COMMERCIAL JOURNAL ISSUE #1 2017-18

IZZY VYVYAN

“I like the agency side of the business” to politics. In-between times there was says Isabella Vyvyan, 26, who works in sport. “At a Fresher Fair I was asked to the newly-occupied Cambridge office walk under a rope strung six foot from near the station. Here, more than 70 the ground. At dead-on six foot, I had to staff from the agency, development duck. They said, ‘congratulations, you’ve and rural departments occupy one made the rowing team!’” A dissertation level. “We used to be on three on the rise and fall of the British separate floors, in the old place. National Party did not enamour her to It’s really great that we are chosen subject. “I did not want to go now all together, as it opens into politics.” Father, Charles, a developer up the opportunity to and clearly patient Dad, said why not work across all teams,” says try property? So, it was off to Cambridge Isabella, who joined Carter in 2013. The Land Economy course has Jonas in 2016, after completing a a reputation for being a bit academic? three-year degree course in real “I enjoyed the course, especially the estate at the Department of Land human geography. Studying how Economy, in the very same City. human activity affects the growth and “I like the agency side because decline of cities gives you a deeper you get out and about and meet understanding of real estate.” A thesis really interesting people.” Does examining the usefulness of enterprise London beckon? A place where zones in stimulating investment in most Cambridge graduates gravitate. Planet Leeds came to the conclusion “I am from the Dales and prefer smaller that government intervention was less cities,” says the 26-year-old rowing than effective. In her spare time Izzy blue, whose mother Amelia used to enjoyed rowing on the Cam. In 2014 she run the music and arts festival in was selected for the University women’s their local village of Grassington. team. That year was the last time Brother George, 24, is newly the Cambridge team raced Oxford at employed by Natural . “He Henley. They lost. In 2015 Izzy was in is a bit of a hippy,” confesses Izzy, as the women’s eight that made history she is known to all. Prior to Cambridge, and took on Oxford on the Thames on Izzy started out on a European Studies the same day as the men’s race. The course in Newcastle, before swapping result? Don’t ask. Commercial People 23

Naples-born great-grandfather. “But at the last minute I changed my mind, as I didn’t fancy the seven-year training period.” Tom’s attraction to Carter “Tom’s negotiating Jonas was more than just the fact they had an Oxford office. “I applied for a few graduate roles online. The process at Carter Jonas was a bit more flair may have been personal than many. They wanted to know more about you, rather than asking you questions you have already answered in your finals. They want to know what you’re like and what inherited from you like.” Tom likes numbers. He has been working on portfolio valuations TOM VECCHIONE for University College, Oxford City Council and Warwick District Council. In 2015 Tom and six other Carter Jonas his father” graduates entered The Times Graduate Challenge. The team of seven found themselves in a malodorous scout hut erecting a gazebo among a variety of other exercises, trying not to shout Tom Vecchione joined the commercial at each other. They were competing valuation team at Carter Jonas in against nine other teams, from all Oxford as a graduate in September sectors of British industry. Part 2015, after studying at Oxford Brookes. two saw the septet split into But the 24-year old clearly has the three groups and hitchhike negotiating skills of a letting agent. between Carter Jonas’ In the summer of 2016 Tom and northernmost office in fellow graduate Clare Fleet were Kendal and head office charged with organising a in Chapel Place, just summer party for 200 clients on off Oxford Street. St John’s college sportsground The Times Graduate in north Oxford. “The catering Challenge is aimed company’s initial quote to test and improve was way over the top. We leadership skills managed to get them to cut whilst raising it in half by various means.” money for charity. Tom’s negotiating flair may Tom’s team raised have been inherited from £1,600 raised in father Christian, who owns pledges, matched by Witney-based commercial £1,600 from Carter property consultants, Benedicts. Jonas. The result? His mother, Sue, has just made a The Carter Jonas Seven meritorious mid-career move: from raised more cash than running a college IT department to any of the other nine studying nursing. Older brother Luke, teams. What did Tom learn 26, works for a residential lettings about leadership on the company in Oxford. Sister Beth, 22, is course? “Make sure the whole a social worker. Like father, like son? “I team is working well, don’t get wanted to be an architect,” says Tom, pulled into one specific area whose surname is derived from his and lose focus on the rest.” COMMERCIAL JOURNAL ISSUE #1 2017-18

the commercial side of property.” Why? “After A-levels I was looking for a business course. They all seemed too “None general. Property however looked like a good way to gain both business and professional knowledge. I didn’t really understand the difference between commercial and residential property at EMILIA ATKINSON of them first. But later came to enjoy studying the commercial side.” Emilia joined the Bath office in 2014 as an administrator, supporting the 30-strong team. She really clearly impressed. In the summer of 2016 her boss, building surveyor, Tom Lowe mentioned Carter Jonas was looking to hire a graduate to train up as a building surveyor. Would you believe I be interested? “I said yes.” Now Emilia is back at college. This time part time, doing a one-day-per week, can speak 2-year masters in building surveying at UWE. The other four days are spent keeping French” an eye on various refurbishment Emilia Atkinson gained more projects in and experience than most property degree around Bath. “The holders before being recruited to the contractors that I used Carter Jonas graduate programme in the to speak to on the phone summer of 2016 to train as a building as an administrator have surveyor. The 26-year old studied been really encouraging Property Management & Investment to me in my new role, at the University of West England saying well done. The between 2009 and 2012. “Reading and staff in our office have all Oxford Brookes were a bit close to been great. Except for one home” says Emilia, whose family live thing: none of them really in Peasemore, near Newbury. Between believe I can speak French.” three and 15, Emilia lived in the South Every other weekend Emilia of France. Her father, Chris, worked for goes home to Peasemore, Texas Instruments on a technology park not just to see her father, near Antibes. “After the degree at UWE, who now works for IT I knew I didn’t want to work in London company Synopsys, or her and wasn’t sure if I wanted a graduate mother, Denise, a special role. So I took a job at Bristol lettings needs teaching assistant. agency, Sarah Kenny. I really enjoyed “I go to see Apollo as myself. Those two years provided well.” Apollo is a 32-year- experience on how to deal with people. old, 14-hand horse. The job made me more confident and “We go for a plod made me realise I wanted to get into round the village.” Commercial People 25

Carter Jonas graduates are given billing credits, unlike at many firms, where fee income is usually credited to senior members of the team. Lewis is the top billing graduate in the Carter Jonas “I always wanted commercial department. Not bad for a 25-year-old who joined the firm in April 2015, passing his Assessment of Professional Competence (APC) to work with exams in June 2017 to gain full RICS membership. “I always wanted to work with buildings. At my comprehensive in Penarth I was drawn to the subject.” Today Lewis works as a building buildings” surveyor in the Chapel Place office, across from the shimmering flank of the Oxford Street Debenhams. Lewis travels east, to Woolwich, one day a week. He is on secondment to Greenwich council works department. More than once

he travelled to Brighton to help draft LEWIS ALI a planned maintenance schedule for Roedean, Britain’s top girls school. “We had to survey the whole estate and put together a programme. Fascinating job.” Lewis endured two weeks of less Father Steve has been a than fascinating work experience with ship-broker in the docks an electrician while at school. “When I all his working life. Sheila was 17 and started looking at university used to work for an courses my careers advisor suggested . Where interior design or architecture,” says Steve works, up to Lewis. Neither appealed. But working 45 different races on buildings still fascinated. “I didn’t of seamen once want to be office-based.” So, it was off congregated, in to Nottingham Trent between 2010 what was known as and 2014 to gain a first-class honours Tiger Bay. In the 100 degree in building surveying. His time years up to the 1920s including one year out, working at coal was king in Wales and building surveyors, the Watts Group. millions of tons were exported Here, he met Richard Love, now Head around the world. Lewis’ great- of Architecture and Building Surveying grandfather on his Dad’s side at Carter Jonas. After graduating he sailed into Cardiff from Yemen. joined Watts in 2014. But only for a Hence the Ali surname. “I’d like year. In 2015 Lewis joined Richard at to progress to Associate at Carter Carter Jonas. Give it time and Lewis Jonas” says Lewis. “I also have a may return to Cardiff, where he grew hankering to work abroad. But, up alongside two brothers and where after that, it might be nice to set his parents Steve and Sheila still live. up Carter Jonas Cardiff.” COMMERCIAL JOURNAL ISSUE #1 2017-18

“FAILURE TO PROPERLY CONSIDER THE DETAILING WILL ALWAYS RESULT IN FUTURE PROBLEMS”

Communities Secretary, Sajid Javid, has ordered re-examination of the Building Regulations, following the Grenfell Tower fire. Review chair, Dame Judith Hackitt is due to report by Spring 2018. Carter Jonas Head of Architecture and Building Consultancy, Richard Love, says that “procurement issues and cost savings” may lie at the root of this tragedy.

“The Grenfell tower inquiry team question, with some obvious answers. Commercial will need to delve more deeply than Two – ‘international regulation and Questions the remit suggests in order to fully enforcement issues’. Clearly worth understand the chain of events that a few trips to find out how other led to the Grenfell tower cladding jurisdictions manage. Three – ‘related turning the 22-storey block into a compliance and enforcement issues.’ I’m blazing inferno on the night of June not quite sure if that phrase has been 14th. Dame Judith Hackitt is charged left deliberately vague. But it could with examining three facets. One - provide an entry for Dame Judith’s team how the regulatory system failed and to examine the force that will, in time, how it could be improved? An obvious warp whatever rules are put in place to Commercial Questions 27

and alteration or a replacement maintenance? Which brings us to cladding system – are all too familiar. the second money question: what In our client’s eyes, success hinges part does value engineering play in on delivering that interface without reducing building safety? All too often unwarranted costs. Savings can be in Value Engineering exercises, the spent on other improvements is the need to stick to a programme and rationale. Two related questions tend ‘show progress’ can mean that carefully to come up long before works starts. considered design information gets The first often arises after the tenders replaced with a hastily prepared are received: What do you do when a contractor-led solution, proved by project is over budget? means of manufacturers specification “Because of the bespoke nature and examples from previous projects. of projects like the re-fit and Failure to properly consider the refurbishment of the Grenfell Tower, detailing will always result in future estimating costs before the contractor’s problems, sometimes these will be prices are obtained can be tricky. It more tragic than others. is common for tender prices to come “In order to Value Engineer properly, in over budget. Tenderers are often the modification to the design has asked to produce bespoke designs to be properly considered from a to loose performance specifications. performance perspective, as well as There is little information on the base a cost one and sometimes the haste building. It is no wonder that tender of the value engineering process prices can vary widely. The scarcer means this gets overlooked. I have the information, the higher the price. no doubt that the detailing I referred Much has been made of the decision to to previously such as the cavity replace the originally specified zinc- protection and window interfaces will coated product with an aluminium have been surveyed, reviewed and faced product to save money. For specified in the original tender by the the reasons given, this is a common project architect. What I am intrigued occurrence. The evaluation is simple to know is how this information was enough. Does the substitute material developed when a different system was have sufficient fire rating, thermal introduced, and was the same level of performance, weight etc.? However, the diligence applied in order to properly external cladding panel is just one part consider that ‘system performance’? Editorial credit: of a whole system, and what interests If so, how did the flame spread so Thabo Jaiyesimi / Shutterstock.com me is how we, as an industry, approach quickly across the cladding with the getting this right. necessary cavity fire barriers in place, “Some of the other details which and how did the fire get outside to the prevent a future conflagration - that would have needed readdressing as insulation component of the cladding force being money and a re-think of part of this substitution of a product in the first place, if this area was construction costs. would include fire breaks within properly detailed?” “I’ve been a Building Surveyor the cavity and between the original / Richard Love has over 15 years of for over 15 years now. As building structure and the cladding. The way building surveying experience working surveyors we spend our lives engaged the cladding interfaced with the with a variety of clients across the in refurbishment and maintenance windows and the effects on automated UK. His specialisms include: priority projects, such as the one at Grenfell ventilation systems. Is there flexibility strategic procurement advice, advising Tower. The challenges of interfacing to accommodate other penetrations on refurbishment and maintenance an existing building with a new through walls - now and in the management approaches and project design – whether that is an extension future - and what about ease of future management. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Spotlight: The Public Sector

Say hello to Alexandra Houghton, or ‘Lil’ as everyone at Carter Jonas calls the partner in charge of Consultancy and Strategy. Peter Bill looks at what makes this world class triathlete tick when it comes to mentoring other women in the firm. Then Lil provides her views on how councils can benefit from a property audit under the One Public Estate

“I HOPE MY EXAMPLE TO YOUNGER WOMEN IN CANTHE COMPANYENCOURAGE THEM TO PROGRESS” COMMERCIAL JOURNAL ISSUE #1 2017-18

A PROPERTY AUDIT CAN BE ONE OF THE“ GREATEST OPPORTUNITIES FOR DRIVING EFFICIENCY FROM THE OPERATIONAL ESTATE ” Commercial Spotlight 31

Lil Houghton is an athlete, the suit. Lil is the most honest, warm, review of all Buckinghamshire County mother, board member, smart and, of course appropriately Council property under a Location Asset inappropriately humoured person I Strategy Review (LASR). Something partner and public sector know,” says the journalist, who has Houghton feels can help other councils, specialist. An inspiration been known to run up the side of Table including those seeking grants under to men and women of the Mountain in Cape Town and cycle the One Public Estate (OPE) programme. property world alike, we put down the length of Britain for charity. “I the serious subjects aside blame Lil entirely for getting me into briefly to find out a little all things cycling and triathlon. HOUGHTON more about her. Property is a “We were famous among the Cycle ALSO FEELS people business after all. to MIPIM crew for our infamous THAT“ CRITICISM Bedroom Diaries, a roughly filmed Alexandra Houghton is in her late debrief of the days riding, which saw us OF COUNCILS thirties. The head of Consultancy & go from entirely professional to insane BUYING Strategy at Carter Jonas guesses she messes,” says McClary, who has also INVESTMENT will save £250,000 on Virgin Active competed many times alongside her PROPERTY IS gym membership fees after winning friend in the annual property triathlon. a competition in The Times in 2002 In Spring 2015 Houghton did something MISPLACED offering free lifetime membership. at that year’s event she is unlikely to Boy, does she take advantage. “I swim repeat: Swim the 2.2km Dorney Lake “An audit can be one of” the greatest three or four five times a week in the while six months pregnant with first opportunities for driving efficiency Virgin Mayfair or Strand pools. I aim for child Eddie, now a lively two-year-old. from the operational estate,” she says 100 lengths, or around two and a half She came third overall. on page 32. “Consolidating services can kilometres. Takes about 45 minutes. In early 2014 Houghton moved from offer a meaningful and sustainable Usually before work. Sometimes I can Deloitte to Carter Jonas, after 11 years. reduction in the size of the council sneak a swim in before an out of town In late 2014 came two bits of good portfolio.” Houghton also feels that client meeting.” news. “I found out I’d made partner, criticism of councils buying investment Trying to work out if you can one day before I found out I was property is misplaced. “I think one match that pace? Don’t fret. You are pregnant.” More good news came after should look at this in context. Even comparing your fitness level with a the swim. In June 2015 she joined the if public sector were to double this woman who represented Great Britain six-strong commercial board of Carter year it would still make up only circa three times in the world triathlon Jonas, chaired by Scott Harkness. The 5% of total funds invested,” she says championships. Alexandra, known by commercial division has grown from on page 33. all as Lil, came 11th in the women’s 65 staff to over 150 staff over the past Between swimming and working 30-35 age group in Beijing in 2011. She five years. Today this board supervises with clients comes collaborating with then competed in New Zealand in 2012 operations in five commercial ‘hubs’; Carter Jonas staff. Houghton helped and London in 2013. Cycle rides from London, Bath, Cambridge, Leeds set up a company diversity network. London to Cannes for MIPIM, rather and Oxford. “I hope my example to younger women than using EasyJet, have been regular Houghton’s work is currently “100% in the company can encourage them occurrences. Most alongside EG deputy public and third sector”. After studying to progress.” Her example has won editor Sam McClary. geography at Leeds and doing an Houghton a shortlisted place on the “Numerous Cycle to MIPIMs means MA in property and law at the Cass RICS Young Surveyor of the Year I’ve really gotten to know Lil and am Business School, she joined Drivers Awards. No, Houghton has not lied proud to call her one of my best friends,” Jonas in 2002, which was taken over by about her age. The category is “Mentor says McClary. “Doing events like that Deloitte in 2010. Carter Jonas does much of the Year’. Clearly a woman you can you get to see the real person behind public sector work, lately completing a talk to, if you can catch her. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial COUNCIL Spotlight: PROPERTY The Public Sector TEAMS HAVE A Christmas comes early for councils who have convinced government to hand over CHALLENGING grants and loans to kick-start projects designed to gather MANDATE public employees together under the One Public Estate The other is to look to what you location in the wrong catchment area? (OPE) policy. have. “Council property teams have a If the move is to be viable, what will challenging mandate,” says Houghton. be the future of the existing site? Or December 8th is “D” day. Grants of “Given the determination to search for is this all too difficult and we’ll just let up to £500,000 will be ladled from an commercial investments, are their eyes the unit to a local coffee shop as it is so £9m pot to winning OPE applications. being taken off the operational service much easier? Since 2013 the initiative has aided 350 property portfolio? Resource is often “Forming a detailed understanding projects in 255 local authority areas directed towards these ‘quick win’ of the service needs and property and helped deliver £27.6m in capital opportunities. In some circumstances supply is a monumental task,” she receipts and £20m in cost savings. The greater financial gain and service can warns. “But an audit can be one of target is to raise £615m and cut costs be made from the existing stock.” the greatest opportunities for driving by £158m by March 2021. Searching for such savings is efficiency from the operational estate. The entry price councils pay is an not easy, she warns. “The complex Consolidating services can offer a obligation to prove revenue savings, nature of local authority services meaningful and sustainable reduction capital receipts, new residential units can represent a significant hurdle. in the size of the Council portfolio.” Not and number of jobs. In Houghton’s Success only occurs when either the just for the council. “The audit should view, council’s should run a complete property team properly understands also embrace the service need of other property audit before entering into the business operation, or the business organisations including, the NHS, OPE initiatives. That’s where Carter operation fully understands property. police, central government, district and Jonas can help. Carter Jonas has a In a reactive local authority scenario, parish authorities. Location Asset Strategy Review it can often fall to the operational “Geography and convenience are not (LASR) team to help with both the service teams to understand property at the core of the OPE ethos,” cautions property audit and OPE applications. dynamics. This can cause difficulties Houghton. “In some circumstances, Head of public sector focused and frustrations in the change when considering a new OPE project, Consultancy & Strategy Alexandra implementation process.” Houghton councils will benefit from looking Houghton says the audit also has quotes an example: inwards to their operational estate wider benefits. “With the central “A council may be deciding which rather than outwards. Carrying out government Revenue Support Grant services should locate to a retail unit a full property audit can also assist being phased out, councils are now which has become available within a in faster decision making when looking to be financially self-sufficient, newly proposed town centre scheme. regeneration and development projects part of this is investigating new ways Will the library move from its old are being conceived. This helps ensure of finding income.” location into the new scheme? The old Council services are at the front of the One way is to borrow cheaply from library may have shared space with a queue and have the opportunity to the Treasury and invest in income children’s centre. Should they move select the right location for them rather producing commercial property. into the new scheme too, or is the new than taking what is left. “ Commercial Spotlight 33

make up only circa 5% of total funds invested. COUNCILS Mike Prosser of the Carter Jonas Investment & Asset Management Team says “I believe it is a trend which BUYING is set to continue, given the arbitrage currently available between commercial PROPERTY property yields and the cost of public borrowing. It is also unlikely that the direction of travel of government FACE funding will be reversed any time soon. Where local authorities acquire appropriate assets which are defensive CONFLICTING in nature and whose value could be realised relatively quickly, there should not be an issue over investing NEEDS in the sector.” Councils able to borrow money at 2.4% interest fixed for Councils buying property face 10 years are being tempted to buy commercial property conflicting needs, says Houghton. yielding double or more the interest rate. “There is voter pressure to invest in

Councils able to borrow money at 2.4% interest fixed for 10 years are being tempted to buy commercial property yielding double or more the interest rate. In the year to March 2017 Public Works Lending Board loans jumped 20% to £3.6bn. How much was borrowed to buy real estate is hard to say. The Board “does not require information on the purpose for the loan.” But a rough tot up of the investment purchases made by local authorities shows nearly £700m of deals were done in the first half of 2017 alone. Significant deals include Surrey County Council’s acquisition of Malvern Carter Jonas are advising Hertfordshire Shopping Park in Worcestershire for County Council on the procurement of a £74m. The biggest ticket deal so far was new strategic development partner in 2016, when Spelthorne Council paid £350m for BP’s R&D establishment in by the Chartered Institute of Public local schemes, particularly retail centres. Sunbury. What is driving this trend? Finance and property fund manager There is financial pressure to invest The prime motivation appears to be Lord Oakeshott. “English councils elsewhere for long term income. Some the need to tap new revenue streams to punting on property is an accident form of regulation on lending will likely supplant government regional support waiting to happen.” Alexandra be instigated. I don’t believe this would grants, which will be turned off in 2020. Houghton thinks the concern overdone. be detrimental, as it might well steer But a separate consideration can be “In my view, whilst it is prudent to note councils away from some of the higher supporting a shopping centre within these concerns, I think one should look risk assets. But if councils are truly the council’s bailiwick. at this in context. Even if public sector seeking to build an investment portfolio Alarm bells have been rung by investment in commercial property they should be free to seek assets Liberal Party leader, Sir Vince Cable, were to double this year it would still outside their own boundaries.” COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Regional Focus “IMAGINE LEEDS AND THE SURROUNDING CITY REGION IN 2036” Predicting the future is like peering into fog. But Leeds City Region has published a route map showing how the shape of the City and surrounding region could look in 2036. Head of Northern Agency, Chris Hartnell, takes a look. Commercial Regional Focus 35

Predicting where Leeds property firm footings. ’s conversion same day deliveries. The 142-hecatre values will be in 2020 takes an of the 12-storey City House to provide Leeds Enterprise zone at Junction 4 of element of guesswork. But it’s what 120 000 sq. ft. of new workspace re- the M1 is one obvious growth point. we do at Carter Jonas. Guessing branded Platform is a good example There is room for another 4m sq. ft. of which locations will prove profitable of development designed to meet this distribution space in the zone minutes in 2036 in the Leeds City Region of growth in demand. The office has been from the city centre. 1.9m may sound a wild exercise. But designed to provide a platform where some guesswork has been removed. businesses of all shapes and sizes can TOMORROW’S WORLD In 2016, a 20-year plan was published connect physically and digitally. London Imagine Leeds and the surrounding by the Leeds City Region Enterprise is not the only city with a firm plan to City Region in 2036. HS2 has been open Partnership. The 96-page report maximise on opportunities. three years. The combined station is identifies growth spots in ten council Furthermore the largest ever now handling double the number of areas, which are, Leeds, Bradford, commercial letting in Leeds has just passengers than it was is 2018, over 60 Barnsley, Wakefield, York, Harrogate, been announced with HM Revenue million, as many as Gatwick Airport. Kirklees, Craven, Calderdale and Selby. & Customs (HMRC) and NHS Digital Promises to double the size of the city Here we have the biggest regional taking a 378,000 sq ft Government HUB centre and build over 4,000 homes economies outside London, worth £62 at Wellington Place, Leeds. This move on the South Bank have been nearly billion, 5% of England’s output. will provide jobs for 6,000 Civil Servants fulfilled. Two local IT start-ups have Summer 2017 saw clarity on HS2, and can hopefully provide a catalyst for turned into global ‘unicorns’ and employ stated to fully open by 2033. The further new development to focus on 5000 staff between them. The sector has Leeds High Speed terminus will be the South Bank. matured along with the staff. Bean-bags conjoined with the existing station. While Permitted Development and table tennis tables at work have To the south, over the River Aire, Rights remain, the conversion of long gone, replaced by adult desk slots of lies 185 hectares of under-developed secondary offices to residential will no more than 50 sq. ft. per person. land. The Enterprise Partnership continue, particularly in Leeds, York and Over 90% of all vehicles on the roads suggests extraordinary growth. “The Harrogate. In all three cities residential are electric, including lorries. Many regeneration of the South Bank area capital values are higher than the cars and most trucks are effectively will be the biggest change the city has commercial existing use. In Leeds we driverless. Ten HGV vehicles in quiet seen in more than a hundred years. have just moved offices to Bond Court, convoys, nine with no driver have We aim to double the size of Leeds into a space four times larger than our become routine. Hard to imagine the city centre by transforming South old offices in Carlton Tower. Shortages roaring M62 falling virtually silent isn’t Bank into a distinctive European of good quality, Grade A space will it? Great for noise-blighted property destination.” There will of course remain, as long as build costs and rental prices. In-town retail is now 75% food be ups and downs - and periods of levels make new office development and 25% shops. The care sector is in stalled growth over the next 18 years. prohibitive. I expect a continued decline as the population of baby- But certainty over the HS2 station squeeze in supply in smaller towns in boomers decreases. Sheds have become brings the certainty of a long term particular for much the same reasons. “robots with cladding.” The world now rise in values and economic output SME’s will find office and commercial hums rather than roars. One final for the City Region. space hard to find however this will prediction. An unknown, unknown, result in rental growth in towns such as will also have come along by 2036 to TODAY’S PICTURE Harrogate and York in particular. surprise everyone. The Leeds office market has always The trend for large warehousing / Chris joined Carter Jonas in 2009 as been strong in the financial & space known as the big box revolution part of the Leeds Commercial Agency team, professional services sectors. The is beginning to diminish despite providing disposal advice to landlords and next decade will see a strengthening Amazons recent completion of a brand office search and lease negotiation advice of the city’s regional dominance in new 1 million sq ft warehouse at I-Port, to tenants across Yorkshire and the North the new technology sector. Leeds is Doncaster. The sector will continue to of England. Chris has acted on behalf of already home to around 3,500 digital be dominated by the online retailing a number of key clients during his time at and IT companies, with a workforce sector with the likes of Amazon leading Carter Jonas, including Vp plc, DWP, Hitachi of 45,000, around 10% of all jobs in the the way with far greater importance Rail, Schindler Group, Munchkin and CEG. city. The swift growth of companies placed on ‘last-mile’ delivery hubs as Chris was promoted to Head of Agency in the such as Sky Betting & Gaming has laid customers’ demand next day, or even North in November 2016. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial “WE Concern SPOTTED LOOPHOLES THAT OTHERS MIGHT BE TEMPTED TO JUMP THROUGH”

Valuers are used to having others disagree with their opinion. But today, the profession is under pressure like never before. Head of Valuations Dudley Holme- Turner explains why.

Choose your valuer carefully. Today professionals are under pressure as never before. Performance driven fund managers push hard to maintain values and so risk distorting the market. The principle of a free market valuation faces a burden imposed by those who wish to use the Red Book as a base to regulate the property cycle. From January 1st 2018 valuers will have to abide by rules on conflicts of interest, rules that are less than clear. Let’s take the last point first. Carter Jonas spent a day examining and discussing the conflict, published by the RICS in May 2017. The 12-pages of rules are mandatory for RICS members and RICS regulated firms. Drawn up following long-held concerns that, the larger the firm, the more danger there is of a client not being given impartial advice. Commercial Concern 37

Particularly where they have recently purchased a property and, effectively, being told they have over-paid for it by a significant percentage. It is also likely to be an issue for those who are trying to secure deals in an already competitive market. One ignored issue is that only 40-45% of to ‘smooth’ the property cycle by the the £54bn of loan originations in 2016 introduction of the “Adjusted Market came from UK Banks and Institutions. Value.’ Put simply, this means, “never Which overseas lenders are going to mind what the valuer is asserting, knock heed the Bank of England? 15% off the value of the asset, as history tells us the market is 15% above its long- term average.” It will a make a mockery MY VIEW IS THE of the principle of Market Value, based RICS WILL NEED A RICS regulated firm: on transactions prevalent at the time. TO“ CLARIFY AND • Must not have a contractual This is a serious suggestion put relationship with both the seller and forward after several years of research TIGHTEN THE buyer under any circumstances: what’s by an eminent group of industry GUIDANCE called the “dual agency” ban figures. The rationale is sound. The • Must not act for buyers and sellers methodology is not in question. I can My final concern is ”the monthly, of property owned by parties holding see lending banks may take heed an quarterly and annual valuations an interest in the agent: the so-called AMV warning, when calculating loan- undertaken by fund valuers. While not “related firms” ban to-value ratios. But cutting LTV ratios is all, some are severely out of kilter with • Must warn potential clients if surely a simpler and easier way when it actual values. This is due principally they are already acting for clients comes to lending? to valuers being pressurised by funds seeking similar stock: the “multiple Also, who gives the warning? That’s and institutions not to lower their introductions” caution not been made explicit. Unless it’s the asset values unduly, when the market • Must set up a barrier between Bank of England nobody will care. The is declining - and to push for increases dealmakers and those providing Old Lady of Threadneedle Street could when the market is prospering. planning or valuation advice: the so wave a red flag, sector by sector, region As in banking, performance-related called “incremental advice” rules. by region, quarter by quarter. Fine. The remuneration increases pressure Bank did not acquit itself well in the run amongst a few to warp the numbers. up to the great crash of 2007-9 when Over time this has led to a significant TO US, THE RULES values fell by 45%. disengagement of fund valuations SEEM OPEN TO The group that put together the and, therefore, also the revered IPD INTERPRETATION“ AMV model made retrospective Index, because of the unrealistic and calculations for the decade leading up compounded adjustments made over AND QUESTION to June 2007. The AMV brake should time. As I said at the start, choose your have been applied in 2004. What did valuer carefully. Carter Jonas is rarely conflicted,” by the Bank of England say that year? / Dudley is a Valuer and LPA Receiver way of our size. But, to us, the rules seem “Commercial property lending provides with over 20 years’ experience of working open to interpretation and question. little cause for immediate concern.” In across London and the South East. As head of The more we looked during our day May 2007 the Bank warned of “potential Valuations at Carter Jonas, Dudley manages long gathering, the more we spotted vulnerabilities.” a 33-strong team based across the UK. His loopholes that others might be tempted Beyond these uses for AMV, I previous roles at Lambert Smith Hampton, to jump through. My view is the RICS worry. The PIA is “exploring how DTZ and Cushman & Wakefield were will need to clarify and tighten the the methodologies could be used in focusing primarily on the commercial sector, guidance. practice.” My view is that they need however he is also a specialist in development My second concern is the plan by the to be very careful. We do not see and strategic land appraisals on residential Property Industry Alliance (PIA) group borrowers taking kindly to interference. and mixed use schemes. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Change “A BUILDING THAT CANNOT BE LET HAS NO VALUE”

From 1st April 2018, any You know how it is as a commercial rules will tighten further. From that day landlord with a building landlord: the deal is almost done, the “landlords must not continue letting a tenant has agreed terms, the lease is non-domestic property which is already covered by an EPC certificate about to be signed. Almost time to let” if it falls in the F & G bands. that falls into the gas-guzzling celebrate. At the 11th hour the tenant’s There is a well-established industry F & G categories will be solicitor throws a legal spanner in the in supplying EPC’s since they came unable to grant a new tenancy works and soon a new spanner marked into being in 2008 amid rising tide or extend an existing lease. EPC becomes available for throwing. of concern about global warming. Head of Commercial Property The topic of Energy Performance All responsible landlords had long Certificates (EPC’s) is about to get a lot ago taken steps to comply with the Management Graham Pepper less boring. Landlords have known for legislation. Many have gone far further says be prepared. years that the day would come when than required. Energy efficiency is now an EPC listing below an E would cause a selling point for the best landlords, issues for a building. just as much as it is for the best The day in question is Sunday April manufacturers of fridges or washing 1st 2018. Afterwards any landlord with machines. But the rules for commercial a building falling into the gas-guzzling building are a lot more complex than F & G categories will be unable to they are for white goods. grant a new tenancy or extend an Delve into the Simplified Building existing lease. There are penalties for Energy Model (SBEM) rules to see how non-compliance, fines that could rise you reach your MEES – the Minimum to £150,000. Realistically, compliance is Energy Efficiency Standard. Rating an likely to be semi-voluntary. Five years office block or shed is anything but later, on Saturday April 1st 2023 the EPC simple. Please hire an expert. Commercial Change 39

THE TIMELINE The government says 60% of today’s offices. They can serve a penalty notice non-domestic buildings will still exist on the landlord imposing financial 2018 in 2050, representing around 40-45% of penalties. The authority may publish From April 1st 2018 the total commercial floor space. Plenty details of the breach. The landlord may displaying the energy of non-certified gas-guzzlers remain. ask for a review of the penalty notice, efficiency certificate Many smaller-scale landlords are in and go to a Tribunal if refused. for every commercial danger of being caught out, if not in I’m not convinced Trading Standards building becomes law. Any landlord with a 2018, then in 2023. has the manpower or budget to building falling into At Carter Jonas, the property effectively police the EPC system. The the gas-guzzling F & management business has worked fines and appeals system doesn’t look G categories will be with many landlords over the past set to be tested often. A more effective unable to grant a new tenancy or extend an decade to produce energy plans. Each police forces is at the ready. Tenant’s existing lease client will have their own priorities. solicitors will raise EPC issues you The general process involves an initial might want to ignore. The second force, portfolio survey, followed by the this one armed with real guns, are 2023 production of an energy efficiency valuers. Valuers are recommended to plan and costed investment projects to use the following standard wording to From April 1st 2023 landlords must not ensure the stock reaches the required qualify their valuations: continue letting a standard. Landlords should consider “The existing EPC certificate that non-domestic property whether the costs can be recovered has been provided indicates that this which is already let if it through the service charge, or whether property may not meet the minimum falls in the F&G bands they are non-recoverable, or whether acceptable energy performance they can form part of a terminal standard for the purposes of this dilapidations claim. Act. Unless the property qualifies THE DEFINITIONS as exempt, capital expenditure may be required in order to upgrade the EPC ENERGY property to an acceptable EPC rating Energy Performance EFFICIENCY standard. Failure to do this may Certificates (EPC’s) IS“ NOW A result in renting this property being provide a record of unlawful, with an associated impact on the energy efficiency SELLING POINT marketability and value.” rating of a building. The building is FOR THE BEST In April 2023 a commercial building assessed on a scale LANDLORDS with an F or G EPC certificate may only from A (most efficient) be as valuable as the land it stands to G (least efficient) Some landlords can relax.” A fair upon. Therefore in my view, we have to number of properties are exempt conclude that a building that cannot be SBEM from the regulations. These include; let has no value. listed buildings, industrial sites, non- / Graham has over 26 years of property Simplified Building Energy Model (SBEM) residential agricultural buildings with and asset management experience. During is the National low energy demands and tenancies of that time, Graham has been involved in Calculation Method less than 6 months (with no renewal investment strategy, rent reviews, valuation (NCM) for the rights) – and those with leases of over and agency as well as his core skill of Energy Performance of Buildings Directive 99 years. There is a so-called ‘Golden property and asset management. The (EPBD) Rule’ that exempts buildings where no portfolio of properties on which Graham pay-back from energy savings could be has worked have been spread throughout achieved in seven years. the UK and represented every sector. MEES Owners who fail to appreciate Graham has been Head of Commercial The Minimum Energy the danger of falling foul of the EPC Property Management at Carter Jonas Efficiency Standard regulations would be wise not to hope for four years. He has previously work at (MEES) is a guide to the rules will be observed in the breach. Dohertybaines as Head of Property Asset the minimum energy efficiency standard for The EPC regulations are to be policed Management, and Fletcher King as Head of commercial buildings by local authority trading standards Property Asset Management. COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Event

“ONCE IT WAS ABOUT TRADING COD AND HERRINGS. AT THIS EVENT IT IS ABOUT

tradingspace” Forget fish, it’s retail space on sale at Old Billingsgate Market these days. Peter Bill sniffs around the Completely Retail and Leisure Marketplace on a glorious late September day, when 1,800 folk came along to do deals, gossip and, after 4pm, imbibe. Commercial Event 41

“The weather gods have been onside Lidl, Aldi, Asda and Co-op booths were again” said Dom Millar, organiser of artfully dispersed between landlords the 11th Completely Retail and Leisure such as British Land, Intu, Legal & Marketplace in London which was General, Peel and The . taking place on a halcyon September The football-pitched sized covered day at Old Billingsgate Market. I was market feels familiar, if oddly old- chatting to the MD of the Completely fashioned. Billingsgate was designed by Group on the mezzanine floor of the Horace Jones in 1873, the City of London Victorian fish market, listening to the architect of Smithfield and Leadenhall buzz from 1,800 delegates doing deals markets and of course Tower Bridge. below. “When the bar opens at 4pm, The smell of fish is absent. But the many will flood out on to the terrace smell of commerce lingers under the for drinks. The weather is perfect. It vaulted wood and wired-glass roof. seems to be every year; I don’t know Billingsgate has the atmosphere of a why. Anyway, the view across the river place where deals are done. Once it business. Retailers don’t want to miss a to The Shard, fantastic.” An electric was about trading cod and herrings. site that their competitor might snap blue carpet had been laid on Victorian At this event it is about trading space. up.” Carter Jonas had a nine-strong team flagstones in preparation. This is a The mezzanine has a ‘soapbox’ room, circling the event. The mood this year? no-nonsense, no frills, one-day event. where those looking for space can try “It feels like it is 10% down on the April Grey-walled booths, no fancy stands, and convince retailers to do a deal. I edition,” said Mooney with admirable no fancy lunches. Hot dogs from Dog & just missed a pitch from “Chuku’s ‘the frankness. “Some of those who took Bone and Indian wraps from Zabardarst world’s first Nigerian Tapas restaurant.’ big booths in April have taken smaller were provided free on the mezzanine But I did catch a slim earnest Irishman space this time around. But that’s the from noon. The smell was enticing. Said called Julian Shovlin make the case for craziness of the property world in providers were clearly happy to offer iSmash. He wants another 40 locations September for you. It’s still busy, as you nourishment in return for the chance of 300-350 sq. ft. to set up phone and can see.” of doing a deal to take space in retail tablet repair booths. “We have venture / Completely Retail and Leisure locations across the land. No drinks, capital money” said Julian. “I think Marketplace London takes place in beyond beer, were on offer. Hold off there is potential for 120 outlets.” It was April and September. Find out more at: until 4pm was the unstated message. hard not to disagree. crmarketplace.com The rules of engagement are clear Downstairs Carter Jonas was for the event, which is repeated in making a softer pitch to a stylish Amsterdam, Dublin and Stockholm, but unidentified man, who seemed Our national Retail, Leisure then again in April in London. Only interested in the regeneration and Hotels team operate agents, landlords and retailers allowed. proposals for Great Yarmouth, which throughout the UK. Brands Retailers come for free. About one partner, Steve Norris, displayed. Steve, we have worked with in the third of each cadre attends. Agents and and colleagues Kate Lea and Katya last 12 months include: landlord pay for space enough to hold Samokhvalova, were heads down over Co-op / Costa / Starbucks one round table and no more than six a well-handled illustration of what the / McDonalds / / chairs, plus a standard branding board future shape of the Norfolk seaside Cineworld / White Stuff / no bigger than a tray. What more do town might look like. Meanwhile I was Greene King / Travelodge you need to hold a series of pre-planned talking to Carter Jonas partner Will Hotels Limited / Molton meetings? Cocktail tables and perch- Mooney, who was fronting the booth. Brown / Pizza Hut / Gap Kids upon stools for unplanned meetings “We’ve been coming since 2015. You’ve / O’Callagan Hotels / Betty’s populate the aisles. Weaving through got every household name you’d like to and Taylors / Rick Stein the throng was not easy. At 11.00am on get hold of, all here on the one day. It’s / Gonville Hotel / Cancer September 26th there was hardly a seat great. Property is still a people business. Research UK / Samsung to be had in the entire house. Subway, Retail is the fastest moving part of the COMMERCIAL JOURNAL ISSUE #1 2017-18

Commercial Research THE MARKETS Commercial Edge is the flagship annual report series collated by the property specialists at Carter Jonas. The Commercial Edge six-month update is released every September, just in time for the property world to awake from the August 3 slum. Here, we present a snippet of the research focusing on the rents and yields of the core Carter Jonas specialist cities. To view the full reports visit carterjonas.co.uk/insights

Office: Rent (psf) & Yield Industrial: Rent (psf) & Yield Retail: Rent (ZA psf) & Yield Year-end 2018 outlook

1. OXFORD

Office rent £30.00 4 yield 5.50% Industrial rent £10.00 yield 5.50% 1 Retail rent £300.00 yield 4.00%

Market insight by: Jon Silversides, partner 5 2. BATH 2

Office rent £23.50 yield 4.75% Industrial rent £11.00 yield 5.00% Retail rent £205.00 yield 4.50%

Market insight by: Philip Marshall, partner Commercial Research 43

3. LEEDS BEHIND THE RESEARCH Office rent £30.00 Research is a game which almost yield 5.25% every company plays, but not all Industrial rent £6.25 yield 5.00% play it well. What sets the good Retail rent £250.00 research aside from the bad? Or yield 4.75% the great aside from the good?

Market insight by: Chris Hartnell, associate partner We caught up with Andrew Heard, commercial research analyst at Carter Jonas, to find out his views. 4. CAMBRIDGE “There are two schools of Office rent £38.00 thought in the real estate yield 4.75% research world; ‘Market reporting’ Industrial rent £13.00 in the form of hard data and analysis, or yield 5.75% genuine ‘thought leadership.’ Andrew Heard, Retail rent £290.00 34, is the new commercial research analyst yield 4.25% at Carter Jonas, joining from Cushman & Wakefield in September 2017. What does Market insight by: Will Mooney, partner Andrew think after three years at one of the largest real estate firms on the globe? “In the real estate industry there are many 5. LONDON interpretations of the term ‘research’. In this CITY day and age the ability to provide an off- the-shelf suite of data-based intelligence is Office rent £67.50 certainly becoming a necessity. Meanwhile yield 4.25% there is a growing requirement for thought Industrial rent £13.50 leadership which is a little harder to get yield 4.50% right. Thought leadership productions Retail rent £300.00 require researchers to look beyond the here yield 4.00% and now, challenging market realities and taking on board the thoughts of leading WEST END experts, says Andrew who’s first job after Office rent £115.00 university was as a member of the EG yield 3.50% research team, between 2007 and 2010. “At Industrial rent £16.00 the same time it is essential that researchers yield 4.50% remain engaged with the ‘road-runners’, Retail rent £2,250.00 deal makers and most importantly clients 5 yield 2.25% in their individual businesses ensuring outputs are digestible, pro-active, timely Market Insight by: Michael Pain, partner and where possible tailorable by geography or industry. Achieving the right balance is / To view the rent and yield information for a range not always easy. In my experience the most of UK cities, visit carterjonas.co.uk/insights successful projects come when the research department is closely aligned to those ‘doing and download our Commercial Edge Update reports. the business’ as it were, working together

Source: Carter Jonas as one entity and challenging market Office: Estimated prime rents, based on a NIA basis for a typical Grade A/refitted prime located office space (excluding rents payable on upper and ground floors in tower buildings in Central London) perceptions and realities where appropriate.” Industrial: Estimated prime rents, based on 10,000 sq ft (GIA), brand new unit in prime location, with 45-50% site cover and 10% office content, and a lease of 5-10 years Retail: Estimated prime rents, based on Zona A rental cost for a standard A1 use retail unit CLOUDS WE KNOW WHERE TO FIND THE SILVER BITS

When the forecasts get gloomy, our team of extraordinary people can draw on years of expertise to provide enlightening wisdom.

Silver linings are as sure as rain, when you know where to look. carterjonas.co.uk/commercialjournal

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