places
and spaces 02/2020 The Real Estate Magazine of Union Investment
Safety first Real estate investors favour domestic markets Back to the office Use of space is under scrutiny Green deal Real estate industry embraces ESG
The uncertain market environment is forcing investors to adjust their strategies. It’s all about searching for stability Contents Editorial
14 6 A new industrial revolution
Cover Story The way ahead: Every crisis offers opportunities 4 Safety first: Focus on domestic markets 6 Dear friends and business partners, gathered can also be used to support Interview: Sven Bienert on decision-making in uncertain times 13 energy monitoring and manage- The back-to-the-office challenge: Use of space is under scrutiny 14 The world remains in the grip of the ment in buildings, thereby making Healthy spaces: Office Real Estate 4.0 21 coronavirus pandemic. Individuals an important contribution to greater Green deal: Sustainability strategies in the real estate industry 22 and businesses alike are concerned sustainability. 48 about the possibility of another lockdown, with sentiment in the real Digital ecosystems for tenants will Cover Story / Real People estate sector also being affected. play a major part going forward, Thomas Röhrs: Reliable management 26 Institutional real estate investors have Lars Scheidecker, as multidisciplinary collaboration made significant changes to their CEO of Union becomes the norm. Union Invest- Investment Real Estate Concepts investment strategy, as evidenced by ment’s first proprietary platform was the latest investment climate survey Digital GmbH launched recently. A digital ecosys- Smart cities: Opportunities for real estate investors 30 of European investment professionals lars.scheidecker@ tem for tenants creates new options Lamp posts: Rebooted for the 21st century 33 conducted by Union Investment. They union-investment.de and standards for the interaction Megatrend: Upping the pace of digitalisation 48 are generally taking on less risk and between employees, the workplace Interview: Faisal Butt on the future of proptechs 52 accepting lower returns as a trade-off and its surroundings. Digital solution (see page 55). components generate real added PropTech Innovation Award: Identifying new opportunities 54 value, making life easier for tenants Balconies: A blank canvas for architects and users 56 The survey also found that respond- driver is still sustainability. This is be- and users both during working hours ents are shifting their investment cause transparency around consump- and beyond. 26 Markets focus towards climate-friendly tion and emissions plays a crucial Retail & logistics: Two sides of the same coin 34 investment – more than half of those role, but is impossible without digital The first specific application will be a surveyed intend to invest more in this support. Accordingly, many compa- smart digital parking space service for Interview: Andrew Vaughan on strategies in retail 41 area in future. Policymakers also con- nies and industry initiatives already the Emporio office complex in Ham- Micro-apartments: Rethinking a niche market 42 tinue to push for greater sustainabil- involve digitalisation and sustainabili- burg, incorporated into the existing ity. Legislation, ordinances and build- ty teams working hand in hand. building app. This will form a nucleus Wide Angle ing regulations will all be tightened for further innovation. Whether the Let there be light: Artists illuminate urban spaces 62 up considerably in the coming years, Let me give an example: Union focus is on mobility, safety and secur- with penalties for failure to comply. Investment is currently looking at ity or energy management, the real At some point it will no longer be equipping all its fund properties with estate sector will need to work closely News 55 possible to let space if owners cannot smart technology to measure energy with other industries in order to make Additions to the Union Investment portfolio 63 demonstrate how a building performs consumption. Fitting sensors and con- progress. Digital ecosystems create Online & service, contact and publishing information 63 in terms of sustainability (see page necting different systems will make it precisely these connections and could 22). possible to combine building-specific mark the start of a new industrial and usage-specific data in a way that revolution. Cover picture: The Port House in Antwerp (Belgium) lit up at dusk. While the coronavirus pandemic enables user-oriented services. This The building is a former fire station with an extension designed by has massively accelerated the pace is an important stepping stone on Kind regards,
architect Zaha Hadid. Ross Helen / Alamy Stock Cover picture: shutterstock, Union Investment / Urban Zintel (2), Cushman & Wakefield, Sebastian Vollmert Photos: of digital transformation, the main the way to smart buildings. The data Lars Scheidecker •
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T S H D E A W E AY A H The way ahead
The search for stability is the key theme that connects all players in the property markets in these uncertain times. Our special feature seeks to provide answers:
Why safe harbours weather the crisis better and benefit from investment Page 6
How office properties will remain the core of any real estate portfolio Page 14
Why sustainability will become even more important for the real estate industry going forward Page 22
How fund managers are delivering stability and reliability Page 26 Photo: Arterra Picture Library / Alamy Stock Library Picture Arterra Photo:
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T S H D E A W E AY A H
Union Investment secured an exceptional property in Hamburg’s HafenCity district. Sold by Patrizia, the Ericus-Contor building was added to the portfolio of Safety first open-ended real estate fund Unilmmo: Deutschland (see report on page 26).
During the coronavirus pandemic, real estate investors shifted their focus to give greater priority to domestic markets. Because safety is what counts in a crisis. Germany, Austria and the Netherlands all offer compelling benefits in terms of risk mitigation. By Christine Mattauch
he asset class and location clearly effect of the crisis is that investors are ticked all the boxes: at the end of showing a preference for their domestic T June, Nuveen Real Estate bought markets (see interview on page 13). That’s the City Park warehouse complex in the not just because travel restrictions have Liesing district of Vienna for €65 million. made performing due diligence in other It was the US investment company’s countries more difficult. Safety is what first acquisition in Austria as part of its counts in a crisis and investors are more European Cities strategy, which is focused familiar with their own markets, which is on particularly resilient locations. Fund why “home bias” can actually be advan- manager Liz Sworn praised the “exciting tageous. Based on a sample of REITs be- opportunity” that the Austrian capital tween 2004 and 2015, researchers at the offers for investment. University of Florida demonstrated that institutional investors prefer to invest in Exciting, really? Vienna? That shows how local markets and that this asset alloca- much perceptions have changed dur- tion strategy “is associated with superior ing the coronavirus crisis. Solid, reliable portfolio performance”. locations – i.e. safe havens – are now in favour. Covid-19 has altered the prior- Re-rating of risk combined with ities of investors and developers alike. In social change addition to growth, liquidity and tenant demand, the quality of a country’s health- One thing’s for sure: the pressure on the care system now matters, along with the real estate industry to invest remains high seemingly banal question as to how good and is only likely to increase. Governments or bad a government is at crisis manage- are pumping huge amounts of money ment. Is enough capital being made avail- into the economy via support packages able, and quickly enough, to minimise the agreed at national and European level, impact of the economic slump? Is a long while central banks are likely to keep view being taken to limit the number of interest rates at a historic low for the infections and provide enough hospital foreseeable future. In a trend study con- capacity? Has enough confidence been ducted by Wealthcap in July of this year, instilled in companies and consumers to 60 percent of respondents expected on- stabilise demand, including demand for going high levels of investment in real es-
office and warehouse space? Another tate, with a fifth anticipating a further ▶ Sebastian Vollmert Photo:
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increase. Unlike in the last financial crisis, Germany from high unemployment dur- there’s no likelihood of a crash, according ing the financial crisis and the scheme has to Berlin-based rating agency Scope. Fi- now been made more flexible. “Overall, nancing arrangements have been robuster the German government is doing pre- in the past decade, it says, with other cisely what should be done during deep factors being more important: “Re-rating recessions,” says the IMF. On top of that, of risk and social change will accelerate the German healthcare system coped structural change instead, with the conse- well with the first wave of Covid-19. The quences becoming apparent at the level of investor view is that “as was the case after asset classes and locations.” In short, the the financial crisis, Germany will recover crisis is amplifying existing trends. fastest from the effects of the pandemic compared with other countries,” says Mar- In terms of mitigating risk, three coun- cus Zorn, deputy CEO of BNP Paribas Real tries stand out: Germany, Austria and Estate Germany. Savills’ ranking of resili- the Netherlands. Germany was already ent cities puts four German cities – Berlin, highly regarded by investors prior to the Frankfurt, Hamburg and Düsseldorf – in pandemic. According to CBRE, transaction the top ten. volumes in the German property invest- ment markets reached a new record of In the office segment, the country bene- €84.5 billion last year, with the country fits from extremely low vacancy levels in taking top spot in Europe ahead of the leading cities such as Berlin, Frankfurt UK, which has been hit by the uncertainty and Munich. If demand for space falls “The Ericus-Contor around Brexit. The pandemic seems to in the wake of the crisis, the German building proves be reinforcing this trend. Whereas the market is better placed to cope with it that it’s possible German share of European commercial than those elsewhere. “I regard declining for premium transactions was 26 percent last year, rents as pretty unlikely,” says Alexander figures released by Savills show the total Kropf, Head of Capital Markets Germany properties to rising to 32 percent in the first half of at Cushman & Wakefield. There is more change hands 2020 (see chart on page 10). prospect of rents moving sideways, he despite the feels, with logistics properties being a coronavirus Germany is exceptionally popular with winner from the crisis: “In the past, the real estate investors German logistics market has largely flat- pandemic.” lined.” Matthias Pink, Head of Research Deka acquired the Austro As Europe’s strongest economy, Germany at Savills Germany, also cites healthcare Martin J. Brühl, CIO Tower in Vienna. Due to can draw on formidable financial re- properties such as care homes and local and Management be finished in 2021, the sources to fight the pandemic. Although medical centres as possible winners. Board member, 135-metre building will the country’s public debt to GDP ratio is Union Investment Real Estate GmbH mark the completion set to rise to 68.7 percent this year based As was the case everywhere, transactions on an IMF forecast, that is still significant- in the commercial real estate market of a new urban district ly below France (115.4), the UK (95.7) collapsed in Germany, but the market (above). and the US (131.1). The picture is similar didn’t grind to a complete halt. For when it comes to economic performance. example, Swiss Life purchased The Cube, Segro recently sold the Germany took a major hit in the first half a skyscraper in Frankfurt that is home City Park Vienna complex, of the year, and the decline for the full to the German Stock Exchange, while comprising a cross- year could amount to 5 percent according Hamburg Trust acquired an office new to the Munich-based Ifo Institute, but build and a number of existing buildings dock facility, an urban economists expect both France and the in the Cologne area. Union Investment warehouse park and UK to see double-digit contractions. As a acquired the landmark Ericus-Contor development land, to Nu- damage limitation instrument, short-time building in Hamburg’s HafenCity district
veen Real Estate (right). Union Investment / Urban Zintel Germany, helmut Mitter / Segro VP, ZOOM Photos: working (“Kurzarbeit”) previously saved from Augsburg-based real estate com- ▶
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pany Patrizia. The property boasts DGNB percent. “By international comparison, La Française Group acquired the 21-storey Two Towers office skyscraper Platinum certification. The deal “proves that’s very good.” The Netherlands is also on Spittelmarkt in Berlin. The two buildings are connected by a central core that it’s possible for premium properties on Göttler’s shopping list: in August, he fi- and provide some 19,280 square metres of rental space. to change hands despite the coronavirus nalised the purchase of an office property pandemic,” said Martin J. Brühl, Chief in Amsterdam. The Dutch capital’s office Investment Officer at Union Investment. market, which suffered from oversupply for many years, has performed well more Other players equally convinced of Ger- recently. The vacancy rate at the end of “Due to latent many as a location include La Française 2019 was 6.2 percent, and at €460 per Group, which is headquartered in square metre prime rents are almost on a excess demand for Paris. “Germany is like a second domestic par with those in Berlin. core investments, market for us,” says managing director in Vienna it’s pos- Jens Göttler, who is responsible for La Deals continue to be done in the sible to achieve Française’s international investments Netherlands despite coronavirus and works out of Frankfurt. German a premium even investments account for two thirds of The Dutch economy is in good shape during a crisis.” the company’s non-French portfolio. overall. Public debt – which according to Among the properties acquired by the IMF forecasts will be 58.3 percent at the Matthias French company in the past are the Two end of 2020 – is lower than Germany’s, Brodeßer, Head of Towers office skyscraper in Berlin, an office while the economic slump will likewise be Transaction complex in Düsseldorf and – on behalf of moderate. The IMF’s view is that the risks Management South Korean investors – an e-commerce are lower in the Netherlands than in International at fulfilment centre in Mönchengladbach. other countries in terms of its public Warburg-HIH Göttler is confident that “Germany will finances and the effects of the pandem- emerge stronger as a real estate location ic on the economy. That’s despite the from the coronavirus crisis. We’re expand- fact the economy of this former colonial ing our presence further.” Among the power is highly connected and therefore market’s strong points, he emphasises susceptible to global shocks. This very the creditworthiness of tenants. In the openness and internationalism is also a first half of this crisis-ridden year, rental positive factor that drives demand for receipts from La Française’s German port- office space and logistics properties. folio were running at between 90 and 95 According to the most recent market ▶
Commercial transaction volume in Germany (EUR bn) 73.6 64.9 59.4 60.0 58.3 55.5
41.7 32.3 29.2 24.7 25.7 20.7 18.0 10.2
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Germany’s share of commercial transaction volume 32% in Europe (%) 26% 25% 22% 21% 20% 21% 18% 19% 19% 19% 14% 15% 13% Germany seen as safe harbour: share of commercial transaction * 1st half of 2020 Source: RCA/Savills, July 2020 volume in Europe up from 26% to 32% in first six months of year. Photo: Achim Reissner / La Francaise, Warburg-HIH Invest Real Estate GmbH Warburg-HIH Achim Reissner / La Francaise, Photo:
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report by Cushman & Wakefield, demand countries, including during the current exceeds the available space. Rotterdam crisis. In May, Deka acquired the 32,000 €460 in particular is popular with investors due square metre Austro Tower in Vienna for is the prime rent to its status as a hub for goods moving to its new office fund “Fokus Büro Wien”. per sq m and year and from Continental Europe. Deals con- The property is scheduled for completion for office space in tinued despite the coronavirus pandemic: in 2021 and has been pre-let on a long Aviva, Union Investment and Nuveen – lease. Zurich-based Eastern Property Amsterdam. “There’s an increasing focus which has its own office in Amsterdam as Holdings, meanwhile, secured an office of this year – all purchased major logistics building in the Austrian capital’s second centres in the Rotterdam area, while district comprising almost 30,000 square €310 is the top rate for on domestic markets” Union Investment also acquired a devel- metres. After refurbishment, its tenants opment project in Almere. will include the city authorities and state office space in Sven Bienert on making investment decisions in uncertain times police. What makes investment here so Vienna. Austria is popular with investors from attractive is a vacancy rate of 1.8 percent the German-speaking countries in Vienna’s CBD and of 4.7 percent across When times get tough, investors sitions abroad is to diversify and capture the city as a whole. As with many cities traditionally revert to their domestic good performance – with a tendency to Resilience is a quality also associated that have a lot of old building stock, mod- markets. Is that the case now? ignore certain downside risks. In a weaker with Austria, thanks to a low number of ern space is in particularly high demand economic environment, the focus is on infections, comparatively strong econom- and new builds have pre-letting levels As in previous crises, we expect the pro- risk management; diversification becomes ic data and a conservative fiscal policy. of significantly above 50 percent. Prime portion of cross-border transactions to less important. Especially as there are now Big international funds mostly ignore rents are moderate, at around €310 per decline considerably. In 2009, after the more opportunities in the domestic mar- the Alpine republic, but it’s popular with square metre, thanks to a combination financial crisis, the figure fell to a fifth ket to pick up a bargain and more prod- investors from other German-speaking of tradition and regulation. “We like the compared to the previous year. That’s why uct is becoming available. Staying close to market because it’s boring in a positive I believe there will be an increasing focus home is therefore completely rational. way,” says Matthias Brodeßer, Head of on domestic markets. Transaction Management International Where do you see the strengths of safe at Warburg-HIH. The Hamburg-based in- Are there differences between havens like Germany? vestment management company opened European investors and those from Sven Bienert is a an office in Vienna in 2018 and currently overseas? Even in times of crisis, the market con- professor at the has €488 million invested, with plans for tinues to function, albeit at a lower level. more. Brodeßer rejects criticism that the In times of crisis, the reflex is always to Transactions are still taking place, yields International Real market has low liquidity, pointing to a invest in your own backyard. Unless it’s on and rents are less volatile than in other Estate Business lack of properties rather than a lack of fire, that is. In some regions, the pandem- markets. There are also fewer risks at School of the investor interest. “Due to latent excess ic has led to elevated risk and – unlike occupier level. When you look at the job University of demand for core investments, in Vienna in 2009 – a tidal wave of capital seeking market in the US and compare it with Regensburg. it’s possible to achieve a premium even investment opportunities. As such, it’s Germany, there just isn’t the same kind of during a crisis,” he says. entirely possible that global investors will downward spiral here. continue to regard Europe as a safe haven, More caution, a stronger focus on familiar especially the “more boring” markets Will returns continue to fall if markets, a greater preference for core in real estate terms, like Germany and Germany becomes even more popular assets – in a downturn, that’s the obvi- Austria, which have been less affected by as an investment destination? ous response. Experts are unwilling to coronavirus. The German market is notable speculate as to how long such attitudes for very low risk, particularly compared I don’t see that happening, but there are will be a feature of the real estate market. with other countries around the globe. differences between the various property “The unprecedented nature of the crisis types. Many market players have serious makes any forecast highly uncertain,” thus People talk about home bias. Are the doubts about shopping centres, whereas the verdict from Scope. But regardless of decisions made in this kind of context retail parks are performing well because Swiss Life acquired The Cube office an understandable desire for stability, a always good ones? they cater for daily needs. As an asset building in Frankfurt/Eschborn, which wait-and-see approach isn’t the only or class, I also take a generally positive view is occupied by the German Stock even the best strategy. It’s also possible to You have to ask yourself why someone of logistics, especially when warehousing Exchange. regard a crisis as a buying opportunity. • ventures into foreign markets. When is used to support online shopping. When markets are booming, investors have typ- it comes to office buildings, we’ll have to ically exhausted the opportunities in their see how demand evolves structurally, but own country. In the process, prices rise it’s difficult to imagine there being any
Photos: Deutsche Börse AG, University of Regensburg / Margit Scheid / Margit University of Regensburg Deutsche Börse AG, Photos: and yields fall. The aim of making acqui- further yield compression. •
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T S H D E A W E AY A H Anyone who spent time in the office during lockdown, voluntarily or otherwise, often found themselves virtually alone. For many companies, enabling people to work effectively on site or at home was a key aspect of crisis management. he global pandemic has had a rad- work and how they operate and manage ical effect on what was previously their workplaces,” says Dr Marie Puyba- T seen as a fairly unassailable real es- raud, global head of corporate research tate concept: the office. While like all real at JLL. “Equally, employees will now have estate asset classes offices are in constant a different mindset about work as they evolution in line with the needs of their adapt to these unprecedented times.” end-users, many of the latest workplace Prior to the pandemic, just 3.4 percent trends, such as the rise of flexible space, of Americans worked from home. At have served to underline rather than the peak of the shutdown, an Upwork diminish their relevance. However, the report in partnership with MIT found that unique parameters of lockdown during nearly half of the workforce was working the pandemic introduced a drastic shift remotely. to home working, even across businesses that were poorly equipped to manage Similarly, in the EU, nearly four in 10 this change. people began working from home as a result of the pandemic, according to Euro- “Covid-19 has made a lot of companies found. More than half of respondents think very differently about how people from Finland, Belgium, Luxembourg ▶
The back-to-the- office challenge Exodus: deserted offices, locked conference rooms, unused kitchenettes. During lockdown, companies asked thousands of staff to work from home. Many businesses are now re-evaluating office environments and their use of space accordingly. New ways of working will also create opportunities.
By Isobel Lee / Stocksy Jetta Productions Photo:
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and the Netherlands said they had made staff, and Facebook recently joined Twit- the switch. ter in stating that employees could work from home forever. Google is pursuing As lockdown protocols are eased and a hybrid model. As one of the pioneers physical offices prepare for staff to come of talent-friendly offices more than 20 back, choice is returning to the workplace years ago, introducing table football, beer equation. How companies pursue that fridges and more to engage and inspire choice is likely to shape the world of real its workers, the search engine giant wants estate, technology and investment for key employees on its premises, while years to come. “It’s fair to say that the allowing partial home working for others. implementation of working from home Rather than heralding a significant home during the pandemic has been more working shift, these latest signs reflect a successful than many had anticipated longer term, emerging trend. While the and should lead to increased adoption of number of people in the EU working sole- more flexible work models,” notes Brühl. ly from home has remained at around 5.0 “The often-cited advantages are lower- percent over the last decade, according to to-no commute times, flexible working data from Eurostat, the percentage that hours and a corresponding improvement sometime work from home has been in work-life balance.” rising, climbing from 6.0 percent in 2009 to 9.0 percent in 2019. A new survey by “Especially for Traditional use of office space is under JLL backs up these findings. From an inter- employees who scrutiny view of 3,000 workers in July of this year, currently the firm found that while employees are commute from However, Nathalie Charles, deputy CEO of keen to return to the office, after missing BNP Paribas Real Estate, sounds a note of the human and social interaction, they the suburbs to caution. “Companies have had to adapt would like to keep the option of working an office in the everything from IT systems to signatory from home 1–2 days per week. city centre, the and authorising processes, and this in- commute time credible test has, on the whole, worked,” Pros and cons of city centre offices as a she says. “However, the pandemic’s social catalyst for new concepts [benefits of the experiment is not representative of what hub-and-spoke home working might look like in normal “An office environment is sure to offer model] could be conditions.” Nevertheless, it seems likely inimitable benefits with regard to prod- meaningful.” there will be a change in how offices are uctivity, creativity, motivation, corporate used in the short to medium term. Many culture and social interaction that will Tal Peri, Head of US businesses will look to the example of the remain relevant and important for em- East Coast & Latin world’s most powerful tech firms, which ployers and employees in the long term,” America at Union are seriously examining the possibilities underlines Tal Peri, Head of US East Coast Investment of remote working. Siemens has said it & Latin America for Union Investment will establish mobile working as a core Real Estate. “This explains why big tech component of its ”new normal”, and will companies create ‘office meccas’ with make it a permanent standard during the extensive amenities and company cultures global pandemic and beyond. that spur many of the aforementioned positive aspects.” Meanwhile, the likes of Microsoft and Amazon have extended work-at-home However, despite the draws of the office, protocols until the autumn for corporate commuting has never looked more ▶ Photo: Cushman & Wakefield, Union Investment / Adele Marschner Cushman & Wakefield, Photo: Returning to work with social distancing: Maintaining a distance of 1.5 metres forms the basis of the 6 Feet Office concept devised by workplace strategy experts at Cushman & Wakefield.
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unattractive. The environmental and survey, 67 percent of real estate decision practical issues of worker travel over makers are increasing workplace mo- the last decade have collided with virus bility programmes, while only 4 percent transmission fears today in packed public indicated they would be scaling back transport. such programmes. Providers are already mobilising. Hana – a flex-office subsidiary One solution is what Hamilton Place of the CBRE group – indicated it would Strategies calls a hub-and-spoke model, be launching new flexible work space lo- where company premises are physically cations in London from July. Meanwhile, dispersed with office locations spread BNP and French flex office operator Now across cities closer to where people live, Coworking have teamed up to launch a allowing users to often walk and cycle bespoke service for transforming regular to work. In this environment, flexible offices into co-working spaces. offices, which conspicuously emptied out during the pandemic, are likely to These coalescing trends seem set to have gain a new relevance. “As companies a short to medium term effect on office re-evaluate their office footprint, the take-up. As usual in a downturn, second- ‘hub and spoke’ model should gain more ary stock may well bear the brunt. In a traction. Especially for employees who report on the performance and outlook currently commute from the suburbs to for London offices, UK property consult- an office in the city centre, the commute ancy Carter Jonas suggests that vacancy “The pandemic’s time could be meaningful,” notes Peri. in the second-hand office market is likely social experiment to increase as businesses offload surplus “As a result, occupiers will likely retain space and introduce more efficient ways is not representa- their main headquarters – possibly at of utilising the real estate they plan to tive of what home reduced footprints in densely populated retain. Real estate often represents the working might city centres – while offering their employ- second-largest operating cost for look like in normal ees flexibility by granting them access to businesses after staff salaries, meaning a secondary office or co-working location that savings could be vital if there is a conditions.” closer to home. Especially for suburban downturn in the next 12 months. locations, co-working companies or Nathalie Charles, flexible office providers would offer a Traditional office investors are reassess- deputy CEO of BNP relevant solution, because a company in ing their strategies and exposure Paribas Real Estate a major city centre wouldn’t want to sign direct leases for a high number of office However, well-located, high-quality space, locations in multiple nearby suburbs,” which was already in short supply in key Brühl adds. global cities, should remain attractive. Traditional office investors may also re- Flexible office use an increasingly hot examine their exposure to the asset class. topic in the wake of the pandemic UK real estate private equity fund man- ager Moorfield had already embarked JLL research confirms this trend, predict- on a long-term strategy to offload its ing that 30 percent of all office space will office assets pre-pandemic, but as chief be consumed flexibly by 2030. According investment officer Charles Ferguson- to the firm’s occupancy benchmarking Davie notes, the timing of the firm’s ▶ Photo: Cushman & Wakefield, BNP Paribas Real Estate / Laurent Villeret Paribas Real Estate / Laurent BNP Cushman & Wakefield, Photo:
“Feet routing” in the form of clear signposting is part of the 6 Feet Office concept implemented by Cushman & Wakefield, which is designed to coordinate employee movements and keep people safe.
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final sale was textbook. “We actually sold housing, multifamily and senior residenc- the last of our offices in the first week es or healthcare. As interest in these asset of lockdown,” he says, “completing the classes rises, what will the effects be on disposal of a portfolio worth about £1 office investment? All evidence suggests billion. We have a great track record in that the long-term investment case for offices and would invest in them again, offices is strong. Flexible office but the result of the pandemic is that Healthy spaces solutions such as we are now in watch-and-wait mode.” Offices need to offer state-of-the-art co-working spaces Moorfield’s evolving investment strat- functionality disinfectants, a touch pen, guidelines and offer many benefits egy reflects a larger industry trend of a door opener, while new signage encour- in times of change, investors pivoting away from the hith- According to Nathalie Charles: “History ages movement flows. but social distan- erto traditional asset classes of offices shows that over the past 30–40 years cing is likely to and retail and towards recession-robust there have been a significant number of Looking forward, these kinds of specs are necessitate changes “living” segments, including student crises, for example the dot com bubble being applied to new-build offices too. to existing practice and the global financial crisis, but in International workplace provider HB here as well. parallel, total office stock has grown in Reavis launched a tech and sensory absolute terms. Megatrends including platform in the UK earlier this year called urbanisation and population growth, as Symbiosy, which assesses space utilisation, well as more people overall working in of- indoor environmental quality and in- fices than in factories, fields and hospitals, company collaborative networks. The firm have all contributed to this equation.” recently agreed to fit this smart solution into the office it is developing for global Equally, while corporate use of flexible energy company BP, Agora Hub Budapest. offices has its benefits in times of tran- Meanwhile, Skanska’s new “care for life” sition, it is unlikely to prove a long-term office concept, while leading with fix. “Companies are prepared to pay pandemic-appropriate protocols, is Edge Suedkreuz for flexibility right now, but will seek deemed a long-term strategy by the firm in Berlin will be balance. The bottom line is that leasing he design of office buildings is in in line with industry wellness trends. completed in 2021. a classic office building costs a lot less in constant evolution, influenced by The generation 4.0 the long term,” she adds. “Looking at the Tend-user needs as well as urban It has become clear that the pandemic bigger picture, megatrends matter more office complex will planning visions and environmental has not diminished interest in topics than the crisis.” offer open space benchmarks. But the pandemic has in- such as ESG but created a focus for their that promotes com- jected a new sense of urgency into fit-out application. Innovative construction “For office investors, it will remain rele- munication as well and layout debates, driven by scientific techniques, such as timber frames and vant to focus on the location – strong as dedicated quiet data and the search for a new comfort modular builds, will continue to grow in micro-locations vs. fringe, urban vs. spaces, meeting and wellness paradigm. popularity. Evidence suggests that issues suburban – plus building quality, build- rooms and areas for like air quality played a role in virus trans- ing age, amenity package, tenant roster informal network- Innovative office developer and re- mission rates during the health crisis, and and many other factors that define the ing, combined with developer Edge has already modified its this knowledge – alongside an increas- attractiveness and value of an office Amsterdam and Berlin workspaces to ingly interconnected sense of global lounges and cafés. building,” says Brühl. He concludes: “The create flexible and reversible offices with responsibility towards health and well- jury is still out with regard to what the a 1.5 metre protocol ready for employees being – means that sustainable recovery future of office work will look like, but to return. Before Covid-19, Edge Amster- strategies are more relevant than ever in investors will focus more than ever on dam was certified as the healthiest office the provision of commercial buildings. • functional obsolescence and how to in the world, achieving the first Well V2 price risk as a result of the new health certification at Platinum level. Covid-era and safety considerations.” • changes include minor software adapta- tions to sensors to now monitor aspects such as meeting room occupancy and live air quality scores, as well as adding extra ventilation breaks after conference room use. Employees have also been educated with a welcome-back pack containing Photos: Djokovic Photography / Stocksy, EDGE Technologies / Stocksy, Photography Djokovic Photos:
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T S H D E A W E AY A H Green deal For property companies, sustainability is a prerequisite for business success – especially in the wake of the coronavirus pandemic. By Christian Hunziker obert-Christian Gierth and Alexan- with the proposition that sustainability der Happ could hardly have chosen issues are taking a back seat due to the Ra tougher time to set up their own economic fallout from the coronavirus company. Together, the two senior real crisis. An asset management report by EY estate industry managers have a wealth Real Estate paints a similar picture, based of experience (one previously worked on a survey conducted in the first quarter for Colliers International, the other for of 2020. It found that 85 percent of asset Buwog), and almost exactly at the start of managers active in the German market the coronavirus outbreak in Europe they expect the proportion of investment in founded Assiduus Development, a com- sustainable buildings to increase signifi- pany specialising in sustainable mixed-use cantly. projects anchored by offices. “Like other sectors, the real estate industry needs to The real estate industry is deliver on its ecological responsibilities,” embracing ESG says co-founder Gierth, explaining this focus. “The issue of sustainability is on the agenda of many real estate companies,” But is this conviction shared by other in- says Natalie Wehrmann, associate partner dustry players, given the challenges posed at EY Real Estate, discussing the results of by the pandemic? Experience shows that the survey. “But it’s only really being fully in times of economic crisis there’s a risk implemented by a small number of them.” of supposed “luxuries” such as ecological In fact, experts believe that now is exactly and social responsibility dropping down the right time to get serious about ESG. the agenda. Even the Fridays for Future “Despite the coronavirus restrictions, we movement has hardly had a mention in mustn’t lose sight of climate policy object- the media lately, with Covid-19 dominat- ives,” says Maria Hill, Chair of the Energy ing the headlines. Nevertheless, topics & Building Technologies Committee of around ESG (Environmental, Social and the German Property Federation (ZIA). Governance) clearly remain important “Taking action on this front could fuel an within the property industry. That assess- economic upturn across many parts of ment is supported by the trend barometer the economy.” Sophie Chick, Director of published by real estate finance specialists World Research at real estate consultancy Berlin Hyp in mid-2020. Just 18 percent of Savills, also calls on the industry to act:
Photo: EschCollection / Getty Images Photo: the property companies surveyed agreed “The innovative approaches taken by ▶
Experts believe that now is exactly the right time to get serious about ESG. That could fuel an economic upturn across many sectors.
22 places and spaces 02/2020 places and spaces 02/2020 23 Cover story
Sustainability strategy (ESG strategy*) – implementing the various stages of development
Orientation phase Development phase Establishment phase Excellence
“We are monitoring current “We are in the process of “We have set out our “Using sustainability developments but do not drawing up a strategy sustainability strategy and indicators, we are regularly have a sustainability/ESG paper, defining our specific goals, defined monitoring and managing strategy as yet.” sustainability goals and internal processes for our progress towards considering how to collect implementation purposes achieving the defined data at property and and collected initial data at sustainability goals.” the real estate sector during the pan- tancy firm specialising in the optimisation company level.” property and company demic now need to be adapted to make of operating costs. Alongside the policy level.”
properties more climate-friendly in every environment, commercial considerations Source: 2020 asset management study, EY Real Estate GmbH phase of their lifecycle.” Susanne Eicker- play a not insignificant role. “Even though ** mann-Riepe, Chair of the German branch sustainability is an important issue, prof- Percentage of companies assigning themselves to each phase of the Royal Institution of Chartered itability and return on investment remain Surveyors (RICS), believes that “the cor- paramount,” says Natalie Wehrmann of onavirus pandemic has acted as a catalyst, EY Real Estate. 27% 35% 23% 15% it means that sustainability has gained in “Despite the importance again.” In tough times in par- According to Wehrmann, sustainable coronavirus ticular, the resilience of properties against products have the ability to deliver higher * ESG: Environmental, Social and Governance crises becomes more vital. Proof that ESG restrictions, we returns, “because investments can be ESG is now a mainstream issue. Nonetheless, 62% of the companies surveyed consider themselves to still be in the initial phases of ** 40 asset management is no longer a niche issue came in the mustn’t lose sight managed more efficiently and operation- implementing their ESG strategy. companies were surveyed: spectacular announcement by the chair- of climate policy al costs reduced, and because a higher “How mature do you man and CEO of investment management sale price is achievable thanks to lower consider your company’s objectives.” sustainability strategy corporation BlackRock, Larry Fink, that risk discounts.” By contrast, property (ESG strategy) to be?“ the company would be focusing more owners who ignore sustainability aspects on sustainable investments going for- Maria Hill, Chair of need to brace themselves for lower selling ward. Another giant of the international the Energy & Build- prices, argues Susanne Eickermann-Riepe finance world, KKR, launched a Global ing Technologies of RICS. But it’s about more than just a hit Impact Fund in early 2020 that attracted Committee of the to asset values: “The cost of financing and $1.3 billion and is intended to have a German Property insuring non-sustainable buildings is set to EY expert Natalie Wehrmann. “Hardly down criteria for properties, but doesn’t positive impact on both the environment Federation (ZIA) to rise.” Accordingly, sustainability pays any asset managers have an overview of specify any concrete target values,” says
and society. off for investors who take a long-term the CO2 emissions produced by their indi- Jan von Mallinckrodt, Head of Sustain- view, adds Alexander Happ, co- vidual properties or their overall port- ability at Union Investment Real Estate Regulatory pressure plays a major role founder of development company folio,” she notes. She advocates using GmbH. in implementation Assiduus. “Non-sustainable properties digital tools as an efficient means of face growing risks and will thus lose in determining “which measures are being Proptechs are providing additional This focus on ecological and social sustain- value,” he points out. implemented with what effect. In the impetus. US-based Truvalue Labs, for ability is not happening on an entirely vol- long run, it’s the only way of driving 85% example, is committed to making untary basis, however – policymakers are Reliable figures that provide proof of forward portfolio sustainability.” of German asset relevant ESG data available by leveraging ramping up the pressure. “The EU’s Green superior returns are still lacking managers believe artificial intelligence. In Europe, Deal has given sustainability an additional Industry pioneers are already tackling meanwhile, numerous startups are that investment in boost,” says Susanne Eickermann-Riepe. There is a problem, however. Although this challenge. In 2019, Union Investment working with established real estate The reference is to the sustainable finance the arguments set out above are compel- introduced its “atmosphere” sustainability sustainable prop- companies to boost sustainability. initiative which the European Commission ling, there’s a lack of reliable figures to label. This already takes account of the erties will increase is using to steer financial institutions in prove long-term superior returns. That taxonomy underpinning the EU’s Action significantly. Such alliances are important, particularly the transition to a climate-neutral econ- applies in particular to the social aspects Plan on Sustainable Finance. Building on in the time of coronavirus, according to omy. Part of the plan is a taxonomy, i.e. a of sustainability, which have only taken this, in 2020 the real estate investment Benjamin Rohé, founder of consultancy classification system that defines criteria centre stage quite recently. There is simply manager initiated the ESG Circle of Real GERMANTECH, which hosted the 2020 for climate-friendly investment. The re- no hard data available here. “Social issues Estate in conjunction with Bell Manage- 18% PropTech Innovation Summit together sults are already being felt: “Institutional and good governance are harder to meas- ment Consultants. The aim is to create believe that sustain- with Union Investment: “This crisis could investors and listed companies must – ure than the ecological dimension of sus- an industry standard for measuring the be turned into a major opportunity if ability is taking a and increasingly want to – demonstrate tainability,” concedes Happ. Even when it sustainability performance of properties the real estate industry becomes more their sustainability,” says Simon Szpyrka, comes to energy efficiency, measurability and portfolios. “Our new initiative is clos- back seat due to the flexible and open to collaboration with
managing director of Argentus, a consul- is one of the great challenges, according Immobilien Ausschuss (ZIA) Zentraler Photo: ing a gap here because the taxonomy lays coronavirus crisis. proptechs.” •
24 places and spaces 02/2020 places and spaces 02/2020 25 Real people
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T S H D E A W E AY A H Reliable management Thomas Röhrs is responsible for UniImmo: Deutschland, one of Germany’s biggest open-ended real estate funds. His management of this classic fund is guided at all times by the needs of distribution partners and investors. By Elke Hildebrandt (text) and Sebastian Vollmert (photos)
eading up management of the ensure the portfolio’s long-term viability. UniImmo: Deutschland fund is a This enables him to deliver on the product Hgenuine mission for real estate ex- promise for the approximately 570,000 pert Thomas Röhrs. The experienced fund investors and also maintain the trust of manager and business studies graduate distribution partners and of the customer has been responsible for developing this advisers across the Volksbanken Raiffei- classic fund since 2008. Launched in 1966 senbanken cooperative banking network as one of the first open-ended real estate who sell the fund. Each Union Investment funds in Germany and now the biggest open-ended real estate fund is man- fund in the UniImmo family, it’s aimed at aged by a dedicated team that operates investors with a conservative investment independently. The fund management strategy who want to benefit from real es- team deals with all issues relating to the tate in major German and European cities fund and makes the necessary decisions. while keeping risks low. As such, Röhrs and his colleagues are the gatekeepers of UniImmo: Deutschland. He Thomas Röhrs visiting Röhrs, who has been “the face” of the fund sees himself as the guardian of product the Ericus-Contor build- for twelve years now, has played a crucial quality and sets a high yet simple stand- ing in Hamburg. The role in UniImmo: Deutschland’s impressive ard: “Because the team is responsible for prime office property is growth and ongoing development. During performance, it has to have conviction.” the most recent invest- his tenure, the fund has grown in size from ment by open-ended €5.5 billion to over €13.4 billion. Röhrs has Management involvement along the internalised the fund’s positioning: “I’m entire value chain real estate fund UniIm- in the fortunate situation of being able to mo: Deutschland. The follow my own convictions on real estate Eight years ago, the existing policy of giv- high-profile deal is proof investment in UniImmo: Deutschland, ing fund management units more power that even in the time supported by excellent processes and sys- and full responsibility for performance of coronavirus it’s pos- tems.” The fund’s helmsman has a complex was further reinforced, with the lead role sible to acquire premium and multi-layered role. With 78 properties of fund management being embedded in properties at an appro- held at present, Röhrs is continuously mak- workflows and decision-making pro- priate price. ing strategic and tactical adjustments to cesses. “As a central unit, we work ▶
26 places and spaces 02/2020 places and spaces 02/2020 27 Real people
Thomas Röhrs (left) and Martin Schellein, Head of Investment Manage- ment Europe, pictured in a meeting room at the Ericus-Contor building; the Union Investment colleagues have a close working relationship. Schellein and his team initiated acquisition of the office property and saw it through to com- pletion jointly with the fund manager.
with all departments across the organisa- enjoys high occupancy, thereby providing portant that our decisions are well found- committed funds,” says Röhrs, adding that tion,” explains Röhrs. Röhrs’ involvement a reliable income stream. It’s an excellent ed and coherent, as they need to stand up this helps to ensure fund performance is extends throughout the entire real estate fit with our requirements and fund pro- to scrutiny both internally and by custom- driven by investing in real estate. Another value chain, starting with the acquisition file.” What’s more, Ericus-Contor is let to ers. Everyone involved in the success of challenge is the current impact of the phase. “Every two weeks, we get to- multiple tenants, “which offers additional UniImmo: Deutschland needs to be aware Covid-19 crisis on the fund. For the Uni- gether with our investment colleagues as diversification in the form of companies of the constraints and priorities,” stresses Immo: Deutschland portfolio with its focus a panel,” reports Röhrs. New real estate from the shipping industry.” The acquisi- Röhrs, talking about his tried-and-tested on offices, retail/restaurants and hotels, investment opportunities are presented tion marks the fruition of a plan to enter formula. “Over the years, this creates a de- risk management entails considering a to all fund managers at the same time in the Hamburg office property market gree of predictability that allows us all to range of scenarios and strategies. “We’re this forum as candidates for acquisition. again in 2020. Martin Schellein, Head work more effectively.” For handling acqui- engaging with tenants who are particu- If an investment is of interest and com- of Investment Management Europe at sitions and ongoing management of the larly affected by the crisis to find a way patible with multiple fund profiles, the Union Investment, naturally has a strong properties held by UniImmo: Deutschland, forward that makes sense for both par- property goes through a sophisticated understanding of the fund’s strategy. Röhrs has structured his team by national ties.” Working in partnership and granting and objective fund allocation process to He initiated the purchase, along with his markets and property type. His portfolio temporary concessions are central to the Profile decide which fund should take the matter investment team, and got it across the line managers also take on other special tasks, fund manager’s approach here, because Thomas Röhrs (56) further. “The relevant fund management in conjunction with the fund manager. in particular expert management of all post-crisis “competition for good tenants team then works on the acquisition in started his property- parameters affecting the fund. This will hot up again.” close consultation with colleagues on the Persuading and explaining are integral sector career in 1995 includes scenario analysis as well as de- investment side,” explains Röhrs. to fund management at investment man- veloping strategic options in consultation As an indirect and broadly diversified agement company with other relevant departments. real estate investment vehicle, open- UniImmo: Deutschland’s most recent Röhrs firmly believes that sustainable Westinvest. The ended real estate funds like UniImmo: investment is the Ericus-Contor building buildings are critical when it comes to holder of a degree Liquidity management is a particularly Deutschland have, in Röhrs’ view, repeat- in Hamburg. “It’s an office property that future viability of a portfolio. Fittingly, in business studies, important responsibility. Inflows from the edly shown that they are “an indispens- combines exceptional construction quality Ericus-Contor has DGNB Platinum certifi- he worked as a sales issuing of new units are carefully planned able allocation option for investors that with an excellent location,” says Röhrs. cation, the highest level awarded under director, head of and managed in conjunction with the provides greater stability.” “We demon- The deal reflects the fund’s diversification the German scheme. “But a sustainability Frankfurt-based product management strate that every single day,” says the fund sales and fund man- strategy: “As a high-quality investment in label on its own isn’t the deciding factor,” team. “UniImmo: Deutschland is still being manager, “and always seek to protect ager before moving an attractive long-term location between explains the fund manager. “Our long- marketed at present,” reports the fund and nurture our greatest asset – the trust to Union Investment the city centre and the vibrant HafenCity term aspiration is to digitally measure the manager. The aim is to invest new monies of investors.” Röhrs has a confident take district, Ericus-Contor boosts the Hamburg energy performance of a building, in order Real Estate GmbH, swiftly through corresponding acquisition on the future: “We have a strict focus on exposure of our portfolio.” to understand it and make improvements. Hamburg, in 2008 as planning. quality and a strong basic conviction in Long-term tenant retention calls for build- head of fund man- our product going forward, we’re pulling Röhrs highlights the other benefits: “The ings that are sustainable and have good agement for Uni- “In a low-interest environment we have to out all the stops to emerge safely from the property is architecturally exciting and energy credential,” says Röhrs. “It’s im- Immo: Deutschland. keep a critical eye on returns from un- current crisis.” •
28 places and spaces 02/2020 places and spaces 02/2020 29 Concepts
The impact of the Covid-19 pandemic is likely to accelerate the trend towards smart cities, bringing new opportunities for real estate investors, but also greater uncertainty. One way to Smart city future-proof investments is by investing in energy and data networks and the digital platforms that will underpin innovation. opportunities By Karel Beckman
here has been no shortage of digital mute to the office, delivery vehicles are innovations to cope with the fallout necessarily electric and the slow process T of the coronavirus crisis. Technology of reimagining the High Street gets companies Cradle Point and Rigado have speeded up, notes Kleinman. presented the Safe Workplace Solution. Real estate agent Cushman & Wakefield The smart cities of the future involve came up with a concept for the Six Feet many unknowns Office. US startup Globe launched an app that lets users buy time in empty flats, In the face of this uncertainty, Paul Blake- offering an escape for those who want to man, Head of Innovation at UK-based work for a while without children under- smart city consultancy Urban Foresight, foot or need a change of scenery. advises investors and developers to focus on the backbones of the future city: the Digital and online innovations will likely energy networks, the 5G data networks, emerge as winners from the Covid-19 the charging infrastructure for electric shake-up, as people have become more mobility. “The innovations and use cases comfortable with remote video confer- that will be developed are hard to predict, encing and e-commerce purchases have but if you have the backbones in place, rocketed online. There will be losers as “What was pre- you will have the flexibility to deal with well. The long-awaited “sharing economy” viously greatly unforeseen changes,” he says. may take a hit. In a report on the impact desired – crowds, of the pandemic on mobility, Deloitte proximity, connect- Blakeman said there will be a future noted that the use of shared modes has massive dependence on charging infra- declined in favour of privately-owned op- ivity, openness – is structure that builders will have to come tions. A broader question is how Covid-19 now feared.” to terms with: “Many public transport might impact cities in general. “Almost services may struggle to survive in their overnight, many of the benefits of large, Mark Kleinman, Pro- current form and as people don’t go into global cities have become vulnerabilities,” fessor of Public Policy the office as often as before, they may be writes Mark Kleinman, Professor of Public at King’s willing to commute further.” The concept Policy at King’s College London. “What College London of the smart city was originally built on was previously greatly desired – crowds, another type of “backbone” – the digital proximity, connectivity, openness – is now platform. This was expected to become Helsinki’s RobobusLine experiment takes passengers on five-minute feared.” the hub around which smart startups journeys in the Kalasatama district and serves four stops. would build “use cases” that would trans- Cities may become very different places, form the urban environment. Blakeman where, for example, knowledge workers observes that the smart city has not lived
Photos: Jussi Hellsten / City of Helsinki, King‘s College London Photos: work from home as much as they com- up to this promise. “Cities have in- ▶
30 places and spaces 02/2020 places and spaces 02/2020 31 Concepts
vested heavily, but the returns have been van der Heijden, programme manager at disappointing. It’s been too much about Digital City Rotterdam, explains. providers pushing platforms instead of meeting real needs.” The digital twin will offer users, includ- ing real estate companies, amazing new The lamp post rebooted Helsinki’s “innovation company”, the possibilities. “Think for example of how smart city developer Forum Virium, is try- new buildings fit into the existing city. ing to avoid this pitfall. Pekka Koponen, Developers can use the digital twin to he Dutch “smart cities investor” Armed with this insight, Primevest CP set Director Smart City at Forum Virium, said show how their projects will impact the Primevest Capital Partners in up the “Smart City Nederland” initiative, it is of crucial importance digital platforms neighbourhood. This will make communi- T Utrecht has come up with a unique in partnership with state-owned BNG are based on open-access standards if cation with residents much more trans- concept for municipal authorities to make Bank. The Dutch bank offers munici- they are to perform their task of enabling parent. They can also use the digital twin their cities both sustainable and smart, palities a practical roadmap to help make the growth of new businesses. to discover new opportunities in the city,” based on one of the oldest and most trus- their cities more sustainable and smart Van der Heijden adds. ted urban technologies – the lamp post. at the same time, all based on the re- Open-access standards and a digital imagining of one of the oldest street twin are driving progress in smart cities Like Helsinki, Rotterdam will be using “Cities have to meet a number of de- technologies – the lamp post. • common interfaces and open data stand- mands. They are required to make their One of the Finnish capital’s showcases is ards. “The most important thing for us is infrastructure available to telecom oper- the “smart neighbourhood” of Kalasata- trust. Every one of us will both be a source ators to accommodate 5G antennas. They ma, where multiple smart housing auto- and a user of data. It has to be absolutely have to measure levels of fine particulate mation and energy solutions are being “It’s been too clear how this data is managed,” Van der matter and other pollutants. They need Smart Public Nodes deployed. Think of self-emptying rubbish much about Heijden says. to manage traffic flows. They must reduce bins and two-way smart grids that can their energy use. They have to provide in- providers pushing 0 Air quality transport both energy and information. The biggest challenge is gaining the frastructure for electric vehicle charging. Camera The ideal location for security antennas, measuring Most of the heating, lighting and safety platforms instead trust of users And they are responsible for public safety. 0 services 0 equipment, charging services used in Kalasatama are based on of meeting real We have a solution that allows them to infrastructure and open-access standards, Koponen says. needs.” Marcel van Oosterhout, Associate Director tackle all these tasks at once – the smart Public cameras. Lamp posts are This allows small and medium-sized enter- at the Erasmus Centre for Data Analytics lamp post,” Bart Pierik, Managing Partner WiFi not just light sources, they are evolving into a prises to offer new services to households, in Rotterdam, who headed a research at Primevest CP, says. Paul Blakeman, 0 0 multi-purpose solution for example apps to manage energy and team that published a study on Urban for the smart city – Head of Innovation water consumption, without having to Data Platforms in Europe earlier this year, Primevest hit on the lamp post as a multi- P thanks to their height, at UK-based smart connection to the power deal with Big Tech companies. agrees: “As part of the EU-funded project purpose solution when they were trying city consultancy grid and near ubiquity. Ruggedised we conducted a survey of 100 to find the ideal location for 5G an- Urban Foresight 0 Smart Smart 0 Rotterdam in the Netherlands is tak- cities in Europe about their smart city ac- tennas. “The rollout of 5G means an- lighting 0 Potential ing the idea of open access and citizen tivities and found that trust is the number tennas will have to be installed throug- parking 0 involvement one step further. The city is one challenge.” hout the country every 500 to 800 met- Business value (€) developing an interactive “digital twin” res,” Heimen Visser, Fund Manager Com- positive / negative Cooperative of the entire city. “Most platforms being Van Oosterhout, whose Centre works munication Infrastructure at Primevest CP, Crowd Electricity Intelligent used today facilitate the exchange of with the private sector on data projects, says. “We found that lamp posts are ideal control Data Transport data. They are essentially marketplaces. says real estate companies should as- for this, because of their height, their Systems Small cells Source: TNO Information & Communication Technology, 2018 The digital twin we are building will offer sume a new role in the city of the future connection to the power grid and becau- a 3D representation of all objects in the – helping to manage areas, to keep se there are so many of them. Then we fi- city, from lamp posts to buildings to roads cities liveable, sustainable and safe. “But gured that they are also an ideal location and park benches. These will be combined to do this they need to be able to work for cameras, sensors and charging points with real-time information on their use with data and that means they need to for EVs, enabling cities to perform a lot of
Photo: Urban Foresight Photo: provided by sensors and cameras,” Ronald be trusted.” • other tasks,” Visser concludes.
32 places and spaces 02/2020 places and spaces 02/2020 33 Markets
Analogue or digital shopping? While bricks- and-mortar retail bore the full brunt of the coronavirus pandemic, the logistics sector is benefiting from growth in online shopping. Real estate yields have already responded. Photos: ddp / intertopics, Tritax Photos: Two sides of the same coin The online shopping boom triggered by coronavirus is pushing yields from logistics properties in Europe down past sagging retail for the first time. By Judi Seebus
34 places and spaces 02/2020 places and spaces 02/2020 35 ▶ Markets
he coronavirus lockdown boost to Amazon is the poster child for this online shopping from millions of development: at the end of July, the Thouseholds across Europe and the e-commerce giant reported Q2 revenues UK has coincided with the convergence were up 40 percent year-on-year, while of logistics and battered retail real estate its online grocery sales tripled during the yields for the first time ever on the Con- period. In its earnings release, the com- tinent. The historic tipping point in the pany said it had doubled its investment diverging fortunes of the two property on property in the second quarter and Sole tenant DHL occu- sectors is graphically illustrated by the used capacity that it didn’t think it would “Some stores are pies some 64,000 sq m shuttered store fronts multiplying on need until 2021. After already increasing combining sales of space at the Ham- European high streets and the acceler- network square footage by approximately burg-Allermöhe logistics ation in repurposing retail properties for with deliveries 15 percent in 2019, chief financial officer other uses, while demand for warehouse or a pickup func- Brian Osalvsky now expects a “meaning- centre. The property is space heads relentlessly higher. tion… clearly, the fully” higher year-over-year square foot- part of the Union Invest- ment portfolio (top). final mile is still age growth of approximately 50 percent Research from international real estate in 2020. advisor Savills shows that the average evolving.” According to its own spread between prime industrial (main- Logistics sector a clear beneficiary of figures, Amazon em- Nick Preston, fund ly logistics) and prime shopping centre the crisis ploys 1,500 people at its yields across continental Europe “crossed manager at Tritax EuroBox DTM2 logistics facility the Rubicon” in the first quarter of 2020, The logistics market’s enviable funda- in Dortmund, Germany. with average prime logistics yields dip- mentals in a Covid-19-battered world The distribution centre ping to 4.95 percent, below prime shop- have also attracted the attention of boasts 45,000 sq m of ping centre yields at 5.04 percent. equity investors, with listed companies space (centre). like Prologis, SEGRO, Tritax Big Box and The crisis is hurting bricks-and-mortar EuroBox, and London Metric Properties retail and boosting e-commerce able to maintain their dividend payments The Zalando logistics from the mostly steady flow of rents from centre in Erfurt, Ger- Hamid Moghadam, president of Prologis, tenants. many, supplies domestic the world’s largest logistics real estate and European custom- company, described the global logistics The performance of logistics real estate ers. The warehouse market in the first months of 2020 as companies contrasts sharply with that space totals 120,000 sq the “tightest” he had ever seen, with the of most retail landlords, particularly in m (bottom). Covid-19 crisis accelerating pre-pandemic the UK. London-based shopping centre trends towards expanding e-commerce manager Intu was already collapsing at the expense of hollowed-out retail under a mountainous debt pile before districts, particularly in smaller towns and the pandemic, but Covid-19 dealt it a cities. fatal blow. The company’s shares were ▶ Photos: Philip Gatward / Tritax, Daniel Paulmann / Zalando SE, action Press bildstelle / ImageBroker / Stefan Ziese, Benne Ochs / Stefan bildstelle / ImageBroker / Zalando SE, action Press Daniel Paulmann / Tritax, Philip Gatward Photos:
36 places and spaces 02/2020 places and spaces 02/2020 37 Markets
suspended at the end of June at a fraction the UK in the first half of 2020, up from of its net asset value, prompting Jefferies 65% 21 percent at the start of the year, but it is In August 2020, depart- analyst Michael Prew to comment in the of participants in not a given that the pace of e-commerce media that shopping centre valuations growth will be sustained, especially with ment store operator the latest invest- among its sector peers in the UK could fall consumer confidence and behaviour con- Galeria Karstadt Kauf- by as much as 50 percent. Intu’s UK rival ment climate survey tinuing to reflect the ongoing uncertainty hof, the anchor tenant Hammerson is also flailing; in early Au- by Union Invest- of the Covid-19 crisis. of the Limbecker Platz gust, it sold off its 50 percent stake in Via ment expect more shopping centre in Outlets to Dutch pension fund APG and “The question is: How long will the peak capital to be chan- Essen, Germany, ex- announced a rights issue in a bid to shore that we have seen during the lockdown tended its lease with up its severely dented financial position. nelled into logistics. last? We think the 20 percent penetration Union Investment by level in the UK before Covid is a good ten years (top). Retail is being battered by collapsing benchmark for the rest of Europe, which sales and store closures is far behind the UK with an average of The Mercado de San 40% about 11 percent. There are some excep- is the increase in Miguel wholesale So far, their European counterparts have tions in northern Europe, like Germany food market in Madrid been faring somewhat better, but they revenues reported and the Netherlands, but other countries, too are suffering. At the end of July, particularly in southern and eastern opened 100 years ago. by online giant Europe’s largest retail property owner Europe, are still well below 20 percent,” Today, the historic build- Amazon in Q2 2020. Unibail-Rodamco-Westfield reported a Savills’ commercial research director, Eri ing is one of the world’s 27 percent drop in first-half earnings, Mitsostergiou, said. most important gastro- prompting it to devalue its portfolio by 5 nomic markets (centre). percent over the period. Earlier this year, “Different countries in Europe are travel- German department store giant Galeria ling at different speeds towards the fore- The Westfield Ham- Karstadt Kaufhof announced it is closing cast of 18–20 percent by 2025. It may go burg-Überseequartier 62 of its 172 stores after incurring heavy up a bit if the pandemic accelerates again, development is due to sales losses, and other countries across but certainly not to 50:50,” she added. open in 2023. Designed Europe have their own examples of strug- as an integrated district gling department stores and mid-market Surging e-commerce is propelling the offering innovative fashion chains. logistics sector to new heights shopping and entertain- As retailers and retail landlords try The good news for logistics specialists is ment, it will be a central to regain their footing following the that online retailers are intensive users part of Hamburg’s lockdowns, a glimpse of the new normal of warehouse space, as Dirk Sosef, Vice- HafenCity (bottom). is starting to emerge. Data released by President Research & Strategy at Prologis market research company Forrester in Europe, explained: “Online retailers use early July indicates online sales accounted three times more real estate than trad- for 33 percent of all retail purchases in itional retailers. Our research shows ▶ Photos: Union Investment / Barbara Seyerlein, Luis Hevia / Redevco, moka-studio (simulation) moka-studio Seyerlein, Luis Hevia / Redevco, Union Investment / Barbara Photos:
38 places and spaces 02/2020 places and spaces 02/2020 39 Markets
that every 100 basis points of e-commerce rents and asset prices and increasing adoption in Europe is equivalent to two failures among its retailer tenants. The “Covid-19 is a real stress test” million square metres of logistics real repurposing of obsolescent retail prem- estate demand.” ises is slowly getting under way and may Andrew Vaughan on strategies in retail be spurred by emerging evidence that The logistics sector’s buoyant long-term e-commerce tenants are paying higher The impact of the Covid-19 crisis on Undercapitalised businesses and less prospects are being further underpinned rents for converted spaces. In the UK, an the retail sector was immediate and known or weaker brands will be among in Europe and the US by ongoing inter- online grocer is believed to be forking out dramatic as lockdowns took hold, with the potential losers, but they probably national supply chain reconfiguration “Different coun- more for a former retail property in the supermarket sales surging and a string wouldn’t have survived anyway. Retail- amid a trend towards ”near-shoring” tries in Europe south London suburb of Merton than the of bankruptcies surfacing in the fash- ers that are doing well are those that among manufacturers and rising base previous tenant, a DIY chain store. ion and department store segments. describe themselves as ethical, like Pata- are travelling at inventory levels after a decades-long What will the market have to look like gonia, but also independent stores and practice of just-in-time supplies. These different speeds The favourable rental repricing of previ- post-virus to survive? strong local brands. trends are predicted to intensify follow- towards the ous retail properties as warehouses may ing the supply chain disruption caused forecast of 18–20 well facilitate the growth of “last mile” Covid-19 is a real stress test of our busi- The market shake-out could pave the by the pandemic. logistics centres in urban peripheries, Nick ness and will accelerate macro trends way for new and existing players to percent online Preston, fund manager at Tritax EuroBox, that were already visible. The shift to step in to buy, revitalise or repurpose Investors need to rethink and reassess penetration by says: “Amazon recently leased an old Toys online and omnichannel will speed up obsolete assets, a research report from what is driving the market 2025.” R Us store in Croydon to the south of Lon- in the next year or two instead of taking the Urban Land Institute (ULI) concluded don and we’re seeing more examples of place gradually over a period of five in June. Do you think a fall in valuations Andrew Vaughan, The retail real estate investment sector, Eri Mitsostergiou, conversion of tertiary retail. Some stores to ten years. A number of companies, will be an important trigger for the CEO of Redevco. meanwhile, faces mounting hurdles in its Commercial Re- are combining sales with deliveries or a including Redevco, were already shifting sector to adapt to a "new normal"? traditional operational model, including search Director at pickup function… clearly, the final mile is the emphasis from their retail specialism a restructuring of standard leases, falling Savills still evolving.” • to retail-led urban real estate. Covid-19 So far (in the crisis) there has been a has accelerated that process. dearth of retail real estate transactions so it’s hard to say where values will end How is the dramatically increased use up, but nobody thinks they will increase. of online shopping affecting the retail We believe this will throw up opportun- sector in general and Europe’s high ities and are positioning ourselves as an streets in particular? organisation to repurpose space and further diversify our portfolio. Comparison of asset class yields I’m not convinced that all of these Average yields on prime logistics changes – like the stronger demand for Where do you see opportunities? 8% properties dip to 4.95%, falling below online grocers – will be lasting. There has prime shopping centre yields at 5.04% been a generational shift and some Residential is an obvious candidate for for the first time. 6% people are getting more used to shopping retail property conversions, given the online at home, but supermarkets also very positive market dynamics in many Logistics give people a reason to go out. Between large cities across Europe struggling with 4% Shopping centres 40 percent and 60 percent of consumers soaring demand for affordable housing Offices still bought their groceries in store during that is not being met by sufficient supply. Average EU bond the initial lockdown period. Technology Offices also offer alternative potential use 2% yields may change the way we shop, but we’re for retail premises, but there is a ques- also seeing a lot more people buying tion mark hanging over how the sector * Q1/2020, data for 0% mainland Europe locally, in particular local produce and will be configured in a post-pandemic
2012 2013 2014 2015 2016 2017 2018 2019 2020* Source: Savills, 2020 artisan goods. During the lockdown, there world. Logistics is on a roll thanks to the were long queues outside my local bakery growth of e-commerce and we have been in Hoxton. The shift to online is not biting looking at urban logistics fulfilment and significantly into food, but it will bite into the potential for converting obsolescent commoditised goods such as electronics retail properties. Investing in sectors with
Photos: Jon Paul Ladd / Savills, Redevco Jon Paul Photos: and sporting equipment sold in stores. tailwinds makes good financial sense. •
40 places and spaces 02/2020 places and spaces 02/2020 41 Markets
Planned development by Commerz Real: a 39,000 square metre residential complex with 1,133 student apartments and furnished serviced apartments is set to be built in Frankfurt by 2023.
welcome bit of good news amidst it’s now facing its first acid test – and has the coronavirus lockdown: Stayery proved remarkably resilient. The slump Areported the signing of a lease in in demand has been less dramatic than Mönchengladbach. The Cologne-based feared, with many operators sticking to company plans to offer 53 micro- their expansion plans and investor inter- apartments for business travellers on est holding up well. Some new concepts Kapuzinerplatz square in the city centre. have also emerged. Having said that, it’s “Great locations don’t come along that apparent that operators and investors are often,” says Stayery managing director now more cautious. The pandemic has Hannibal DuMont Schütte. He’s convinced shown just how vulnerable some propos- that “demand for the product will bounce itions are. From temporary accommoda- back in the medium term.” Is it really busi- tion for young professionals to student ness as usual, in the middle of a crisis? rooms and serviced apartments for busi- ness travellers, the segment is extremely First acid test makes operators and varied. The consequences of Covid-19 investors more cautious differ accordingly. The general rule is that less fluctuation equates to fewer voids. Micro-living is seen as the real estate Leases on small, furnished apartments for industry’s answer to increasingly flexible commuters, for example, who tend to use working and living arrangements. Initially them as second homes, have rarely been regarded with mistrust, the segment terminated. “Players catering for long-stay quickly became an investor favourite. The needs have been better placed to wea- backdrop of the coronavirus crisis means ther the crisis,” confirms Andreas Polter, ▶
Rethinking a niche market Less fluctuation equals fewer voids: micro-apartment offerings designed for longer stays are weathering the crisis better. This niche market remains popular with investors. By Christine Mattauch Photo: iLive Group GmbH (simulation) iLive Group Photo:
42 places and spaces 02/2020 places and spaces 02/2020 43 Markets
Head of Residential Advisory at Cushman Nittka puts occupancy of its “Smartments & Wakefield in Berlin. The main impact Student” product at 90 to 95 percent in of lockdown was on short stays. Stayery, the summer semester. Amos Engelhar- founded in 2016, saw occupancy rates fall dt, managing director of Aalen-based i first to 50 percent and then to below 40 Live Group, likewise reports good occu- percent in its Berlin pilot project, while its pancy rates. On the one hand, bookings Bielefeld site, which opened at the begin- from overseas students were down, “but ning of the year, had fewer than one in demand from German students who four beds occupied at times. “Neverthe- were unable to spend their planned year less, we navigated the crisis better than abroad increased accordingly.” the hotel industry,” says DuMont Schütte,
looking for positives. He sought to cush- But what does the future hold? “It’s a GmbH iLive Group Photos: ion the effects by listing the apartments huge challenge for this relatively new on the Immoscout website and offering industry to adapt to changing demand,” The i Live Group them as an alternative to working from says Polter. In Germany, the start of the offers a host of home, but “that didn’t make much dif- university term has been pushed back to amenities in its ference in the end.” The attempt to focus November; some seminars will be taking micro-apartment more on the long-stay sector proved more place online. Will the recession and online buildings and successful, aided by a special three-month teaching mean that students end up liv- attaches great deal at a discounted rate of €1,000. Faced ing at home with their parents for longer? importance to a with the same difficulties, some providers How many international students can In a city like Cologne, he could “let each micro-living properties in Hamburg and community vibe. resorted to desperate – and damaging – be expected? They currently account for apartment three times over.” Despite this, Düsseldorf and according to von Bothmer Managing director measures in their bids to be more flexible. around 13 percent of students at German for the first time i Live will not be raising is on the lookout for further opportun- Amos Engelhardt universities and Berlin-based rating rents at the start of the winter semester. ities: “We’re ready and willing to make ac- believes that the Henrik von Bothmer, Senior Investment agency Scope doesn’t anticipate the With transaction volumes in Germany quisitions at any time if the price is right.” desire for commu- Manager Micro-Living at Union Invest- situation returning to normal until the totalling €1 billion in 2019, micro-living is ment, notes that companies are invading 2021/22 winter semester. still a niche market for investors, albeit a Investor interest remains high, with nity hasn’t been each other’s territory. “Hotels are selling very popular one. The fundamentals are some players still pursuing expansion diminished by their empty rooms to students, and ser- Student numbers have risen consider- unlikely to change any time soon. “The coronavirus. viced apartment providers are suddenly ably after previous economic crises world may have been transformed by Von Bothmer notes that in the past, the selling their rooms to traditional hotel coronavirus, but there’s still a shortage of rush to expand meant that not all com- guests.” Hotel chain 25hours, for example, Scope believes that the longer-term pro- one- and two-room apartments in major panies took enough pains to cover their offered students temporary accommoda- spects are positive, however: “Historically, cities,” says von Bothmer. costs on individual investments and leases, tion at a discount price of €999. Von Both- the number of students has always risen especially in the serviced apartment mer: “This behaviour is driven by necessity considerably after economic crises, with For his part, Ulrich Haeselbarth, Head of segment. He takes the view that “some and hopefully won’t last.” employees eager to improve their quali- Investment at Hansemerkur Grundver- brands and operators won’t survive.” fications and parents investing more in mögen (HMG), believes that “flexibility That is likely to be one reason why many There was also a slump in the student their children’s future.” The i Live Group, will remain a key issue when it comes investors have adopted a wait-and-see accommodation market, although it was whose properties are targeted at stu- to demand for residential space.” HMG, approach in recent months. Felix Embach- less drastic than first feared. “Our ten- dents as well as young professionals and which has acquired around 1,300 micro- er, Head of Master Planning and Spe- ancy agreements with students generally commuters, with room types ranging from living units for the various special real cialist Accommodation at Munich-based continued as usual,” says Reiner Nittka, Comfort to Penthouse, sees itself in a com- estate funds it manages, still has faith in research company Bulwiengesa, has seen board spokesman for GBI Unterneh- paratively strong position. Amos Engel- the sector’s prospects, although Haesel- comparatively few deals taking place. mensgruppe, which has a presence in the hardt comments: “If fewer students come, barth expects “a degree of consolidation”. “And most of those were negotiated back micro segment via its Smartments brand. we’ll simply take more professionals.” Union Investment recently secured two when the world was still normal,” he ▶
44 places and spaces 02/2020 places and spaces 02/2020 45 Markets
says. Greater caution and closer scrutiny name is Smartments Eco. “We’ve been are exactly what operators like Stayery working on this concept for quite some are planning. “In the future, we’ll want to time. Coronavirus gave us the final push,” double-check that location and demand says Nittka. No reception, hardly any are both right,” says DuMont Schütte. On communal areas; this eco range is not just the whole, however, he remains optimis- pandemic-proof, with a monthly rent of tic. Occupancy has been rising since the around €650 it’s also positioned at a price end of lockdown. Stayery properties are point significantly below the Smartments “I’m convinced set to open in Frankfurt and Cologne in Business range. Further expansion in the 2021, to be joined by Mönchengladbach budget sector is a smart move because that demand and Dresden the following year. The higher-priced segments are already for the product company’s largest property to date, with viewed as overcrowded and experience will bounce back 153 apartments, is scheduled to open in shows that many companies slash their in the medium the Stuttgart area in 2023. Like with many travel budgets in a recession. The pilot others in the industry, digital transform- project is planned for Frankfurt, with term.” ation is high on his agenda – contactless construction due to start this year. checking in and out could soon be stand- Stayery managing ard practice. “Those who were expanding Cologne-based company Pantera, mean- director Hannibal are still expanding,” says market expert while, in which French property develop- DuMont Schütte Polter. That includes the i Live Group. er Nexity recently acquired a stake, has Engelhardt intends to double the number come up with a proposition for the eld- of micro-apartments in the portfolio from erly who feel they have too much space the current total of around 4,000 and to but aren’t ready to move into a retire- work with Commerz Real to complete ment home. Pantera is developing small, Germany’s largest ever micro-apartment centrally located apartments for them, complex in Frankfurt, as planned, which barrier-free and with a menu of optional will offer more than 1,100 units. services such as shopping and cleaning. The first property will be in Ratingen, in A balance between community experi- Germany’s Rhein-Ruhr region, and is cur- ence and pandemic-proofing rently at the planning stage. The scheme will provide 90 apartments. “Our experi- What’s more, the trained architect hasn’t ence of constructing similar micro- given up on his dream of a cosmos that apartments will be hugely helpful,” says combines residential, working and leisure Pantera CEO Michael Ries. The company space. He believes that “the desire for has developed some 2,500 units over community hasn’t been diminished by recent years, aimed at business travellers coronavirus,” it’s just got more difficult to and students. At the same time, there’s The Smartments Business project achieve. Community apps are currently no shortage of newcomers to the market already under construction in central popular, offering at least a virtual com- with copycat concepts, often involving Vienna will comprise 162 serviced munity experience in these times of social risky strategies based on excessive rents, apartments and is tailored to guests distancing. By contrast, developer GBI is as consultancies are finding. “We spend looking for a place to stay in Vienna for taking a very different line by launching a lot of time urging realism and looking between one and six weeks. a new long-stay budget brand that is for alternatives,” says Felix Embacher of designed for space efficiency, offers a Bulwiengesa. The market will continue fully digital service and is located outside to offer opportunities going forward, expensive city centres but benefits from but the right expertise and approach are
Photos: Stayery, GBI (simulation) Stayery, Photos: good local transport links. The chosen essential. •
46 places and spaces 02/2020 places and spaces 02/2020 47 Concepts
Upping the pace of digitalisation
The global coronavirus pandemic is also creating opportunities, with the acceleration of key megatrends being one example. Digital transformation of the real estate industry has gained added momentum. By Isobel Lee
he global Covid-19 pandemic has safeguards,” suggests Kitty Sullivan, Dir- shaken the foundations of busi- ector of Investment at proptech venture T ness and society, denting the GDPs capital firm JLL Spark. Before the property of nations and stressing governments world had even heard of coronavirus, the around the globe. While the real estate real estate industry was on an evolution- world reels from its impact, the brightest ary path defined by some big-picture industry minds are seeking upsides from trends. Themes such as urbanisation had the crisis. switched investors on to assets including flexible offices, last-mile warehouses, resi- The industry is now charged with under- dential and student housing. In parallel, standing how the long-term megatrends the experience imperative and techno- that have been shaping its evolution may logical change were altering the way that be accelerated or even put into reverse people shop and spend their free time. by the pandemic. Equally, real estate’s own cutting-edge problem solvers in the Countrywide lockdowns, requiring burgeoning proptech sector are eager to citizens to shelter in place and limit their find out if this is their time to grow. movements, have served to both re- “The global pandemic is driving the inforce and defy some of these long-term prioritisation of health and safety across trends. Experts are now asking if they commercial and residential real estate. As could derail or even halt the urbanisation we navigate how we work, play and live shift, although JLL research suggests it is in this new reality, technology will be key more likely to provoke a rethink in urban
to building the proper infrastructure and design, increasing the need to develop ▶ / Getty Images Piranka Photo: Digital tools have the potential to provide new solutions for dealing with the current crisis. AI technology could help to facilitate the return to office normality.
48 places and spaces 02/2020 places and spaces 02/2020 49 Concepts
truly scalable smart city solutions. More particular had been taking the fight to premium for flexibility, quality of office class. H1 investment volumes into multi- specifically, while quarantine measures e-commerce by offering highly social, space and core central locations. But of- family reached €33 billion, up 37 percent have underlined the value of residential in-person experiences, from increased fices are not expected to suffer the same on the same period last year, compared and logistic assets, they have arguably F&B provision to a greater leisure offer. level of negative capital growth that to a transaction volume of €41 billion for altered perceptions of the role of work- Social distancing and hygiene protocols retail is, due to structural shift, as the offices. Investment into logistics reached places and deeply impacted bricks-and- have deeply compromised that socialising sector is much more adaptable and €15 billion, a 5 percent increase on the mortar retail. trend. underpinned by alternative use options.” same period last year.
Analysing the different impact on Yet the outlook isn’t all negative for com- Equally, human desires to socialise and Meanwhile technology, a key player in our asset classes mercial real estate. “Claims that Covid-19 the experience trend aren’t likely to go lockdown lives, now has a golden oppor- will be the beginning of the end for the away, creating a blueprint for the revival tunity to prove its place in the property Although there have been some winners office as we know it are largely overdone,” of retail. A study of consumers in China world. “Pre-pandemic, there was a lot in the latter category – namely amongst suggests Zachary Gauge, European real by Kantar during the height of the of hype around proptech,” notes Chakra grocery and essential goods retailers – the estate analyst at UBS Asset Management. Covid-19 lockdown asked what people Banerjee, co-founder of data aggregation overall picture has been bleak. Retail in “We expect occupiers to pay an increasing most looked forward to doing once specialists Tower360. “It was frequently restrictions lifted, with “dining out” the seen by the industry as a nice-to-have, most popular choice at 65 percent. “Shop- rather than a must-have. There’s going to ping” (58 percent) and “entertainment” be a much sharper focus now on asking: Is (55 percent) were also high on respond- your solution going to help me save costs “Our new ents’ wish-lists. Jonathan Doughty, Global or generate more rent? We have been cre- challenge is Head of Foodservice, Leisure and Place- ating solutions for rent relief requests and connecting the making at ECE, thinks that such experi- tenant relationship management, as the dots in a disrupted ences will remain central to retail success. costs of losing occupiers and prolonged “We have all had to spend time away vacancy are higher than ever, particularly and distributed from friends and family and the natural in a stagnant, post-pandemic market.” real estate meeting point is around food and drink,” industry.” Digitalisation is he notes. “We expect the growing import- “Covid-19 will have lasting effects on how benefiting bricks- ance of options such as local and healthy people live, work, and play,” suggests Erik Kitty Sullivan, and-mortar retail. food, serviced restaurants, casual dining Guertler, founder and CEO of artificial Director of The Centro Colombo and entertaining concepts to continue.” intelligence experts Edge AI. “Investment Investment at mall in Lisbon, which managers may realise that the transition venture capital firm is managed by So- Meanwhile, shopping centre landlords back to normality will require greater JLL Spark who work with their occupiers to support use of AI technology to early identify nae Sierra, provides their digital dimension, as Sonae Sierra real-time market developments and what lockers in the car did during the lockdown by creating may be permanent changes for the in- park for contactless e-stores for its mall tenants in Portugal, dustry before making any new decisions.” collection of items will help the industry bridge difficult Says Sullivan: “Digitalisation of commer- ordered online. A times. cial buildings through tools that support free drive-in ser- social distancing, increase sanitation, vice for picking up Proptech companies have a host of and improve health and safety needs will shopping is also possibilities be critical for recovery. Technology and available. digitalisation enable data-driven deci- Looking at the upsides of the crisis, funds sions, simplify collaboration and improve that have shifted allocations to residential automation for more seamless experi- and industrial in recent times have largely ences. “The world has changed so much seen their faith repaid this year. Euro- in the past six months, but it has also pean transaction data from CBRE for the uncovered how proptech can expand first half of 2020 found that logistics and beyond physical offices and buildings. multifamily assets outperformed other Our new challenge is connecting the dots sectors, with the latter closing the gap in a disrupted and distributed real estate
Photos: Sonae Sierra (3), JLL Spark Sonae Sierra Photos: with offices, traditionally the largest asset industry.” •
50 places and spaces 02/2020 places and spaces 02/2020 51 Concepts
Faisal Butt, A big step forward CEO of Pi Labs. Founded in 2014, Pi Labs is a global venture capital firm investing in the future of the built world. CEO Faisal Butt spoke to places and spaces about his mission to create a “Made in Europe“ global proptech giant and explains how the tech sector is rising to the real estate industry’s challenges and crafting solutions to overcome the crisis.
The pandemic has forced property diffuse workplace concept. Tech will be What kinds of proptechs are creating firms to rethink their relationship with the glue that holds this together. While post-pandemic solutions today? technology. Might this help accelerate tools like Zoom and Slack are already in the industry’s digitalisation? use, I think we will see the emergence of We have a company called Built ID that more sector-specific digital tools. We have helps local communities to vote on de- Prior to the pandemic, there was already already invested in a number of systems velopment schemes happening in their increased tech adoption. Even traditional and apps to drive everything from virtual area, replacing physical consultations bricks-and-mortar operators were keen platforms to digital signatures. to address the generational divide in to learn more, appointing digital teams Looking at the retail industry, the empty planning participation. Another, Plentific, to stake out tech solutions. The pandem- high streets phenomenon that pre-dated helps apartment block residents log small ic appears to be accelerating the pace of the pandemic has accelerated and ques- maintenance issues on an app, so both change. Our in-house view was that the tions will arise about how to use empty property management and tradesmen next 10 years would be transformational; retail spaces. We might also ask if retailers can pick them up. Those kinds of tools we now think that could be compressed should switch to shorter or flexible leas- are gaining traction in the current crisis, into the next 3–5 years. Our new Fund 3 ing models, as has happened in the office allowing different individuals to track a plans to invest in 50 proptech companies sector. Equally, as retail becomes more process digitally. over the next five years, almost doubling granular, you are going to need tech As we all return to the office, workers Pi Labs’ portfolio to 100 startups. We platforms that aggregate the space, with Pi Labs Photo: will want more transparency about user scan thousands of companies every year booking platforms even for quite short densities, air quality, lifts, etc. There are and want to continue to make invest- windows of time. Perhaps a unit could be lots of IoT sensors already being provided ments in the sector’s most promising a yoga studio in the morning, a shoe shop in offices, but we may need new apps to firms, while scaling what we are in. I in the afternoon and an events’ space in collate this data from a wellness perspec- would love to create a globalised, Euro- the evening. international giants in the proptech tive, as well as for contactless access. One pean star for the world stage. In the industrial sector, supply chains are space? of our portfolio companies, Office App also getting messier and tech will again from Amsterdam, is working on this kind What property sector trends are prove crucial. Because Amazon has a It used to be the case that property was of idea. emerging due to the pandemic? strong hold over e-commerce, they are largely a local game; however, global The tech for virtual property viewings is responsible for a lot of innovation in that champions like Blackstone have changed now experiencing a major upgrade. We One of the key pandemic trends has been space, so we don’t see too many startups all that. Proptech firms that provide invested in Decology, which uses video remote working. As we start returning to in that area. But they would make an services to such giants can piggyback game-type tech to help developers sell work, we won’t have the same power of interesting investment opportunity. off their global footprint. Further inter- residential units to a global audience. concentration in large offices, and more national proptech growth is likely to Bright Spaces, meanwhile, offers visual- companies may distribute their work- Isn’t property too much of a local busi- result in greater M&A activity in the isation technology for the commercial forces differently, thereby creating a more ness to permit the evolution of truly future, as we have seen in fintech. property market. •
52 places and spaces 02/2020 places and spaces 02/2020 53 Concepts News
ECOWORKS Union Investment Real Estate GmbH expands management team PropTech Innovation Net zero modernisations – prefabri- cated, modular, highly efficient. nion Investment Real Estate GmbH PARK HERE Uhas strengthened and reorganised Award 2020: 18 finalists – its management team in preparation Parking solutions for efficient and sustainable mobility. for further expansion of its business. 18 winners CAALA The new CEO is Michael Bütter. Jörn The plugin for building optimization. Stobbe is taking responsibility for asset PROXIMI.IO management, while Volker Noack now heads up fund management for retail Unified access to all mobile positioning. products. CIO Martin J. Brühl remains PLACENSE responsible for investment manage- Real-time anonymous insights for physical places. ment. As COO, Christoph Holzmann is EC charged with developing and improv- EO OW L S PA O _BLAENK PA RE RK R A A E H K Union Investment / Urban Zintel Photo: ing business processes. L M C E S • O O AA R transforms retail spaces into lifestyle N H E I E SM LA marketplaces. The senior management team with CEO Michael Bütter (middle). From left IM D A L TE SUS R EC TY TA T N LI B IN & to right: Martin J. Brühl, Volker Noack, Christoph Holzmann, Jörn Stobbe. N TA UIL A ASK PORTER O PI D B C S IN L O G E The AI manager and concierge service H for any space. S E S I E M G C R I A COMYDO O O A F O C S L O
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N F a significant shift in the invest- their own country. pate rising inflows into this segment.
I Innovative furnished rooms in T
H FINALISTS T residential communities. ment strategies of institutional S T M N A IE THING TECHNOLOGIES real estate investors. “Lower risk, Health care and logistics are the The majority of European real R C N T FI IO R EF IS G lower return” is the mantra of the most favoured asset classes among estate investors (57 percent) expect ET C IN E connects all stakeholders with a AIL DE K R _B A A building and with each other. moment. 58 percent of the 150 European investors in the current the German property market to P L M U E L A Q T P A E KS A R C NK C V 0 professional investors in Germany, market phase. 65 percent of re- recover fastest from the coronavirus O E LO TI 36 ROOMHERO X NS B N R IM E RE E France and the UK surveyed by spondents expect that more capital pandemic. “Germany benefits from I.I OW O T Digital turnkey outfitter for residential Union Investment for its investment will be channelled into these cat- its economic strength and the gov- and commercial property. climate study are currently pursuing egories. “Both these property types ernment’s successful crisis manage- TWOSTAY such a strategy. The figure was just are less prone to crises and help to ment to date. Berlin and Frankfurt, turns restaurants and bars when 35 percent prior to the outbreak of stabilise cash flow in a portfolio,” like other German locations, have they are not needed into co-working the pandemic. The shift is especially said Olaf Janßen, Head of Real Estate a modest pipeline of new office spaces. pronounced in the UK, where secur- Research at Union Investment. Hav- space, giving them a good chance TOWER360 ity is the main investment motive ing said that, the residential asset of getting back to normal faster,” Integrated asset and portfolio for 79 percent of those surveyed. class also remains attractive: 55 added Janßen. • On 19 May, around 600 participants logged in to the first-ever digital management software. Before the pandemic, it was 50 edition of the PropTech Innovation Summit organised by Union Investment RENTIVATE percent. Nonetheless, there is no The B-2-B online platform for renting general reluctance to invest. Only and GERMANTECH. Under the slogan “Building perspectives in challenging * commercial spaces. five percent of the European invest- European real estate investment climate index times”, they discussed the current challenges facing the real estate and ors in the survey intend to avoid 75 Germany BLOCKSQUARE France startup sectors across six think tank sessions. The participants also worked to all investment in real estate in the Real estate tokenization for secure and UK find answers and identify innovation potential. Centre stage were the prompt online payments. current phase. 70 18 finalists competing for the PropTech Innovation Award 2020, whittled APALEO The coronavirus pandemic has also 65 down from the original 150 entrants from 29 countries. In an exceptional The most open property management triggered a significant shift to- gesture, the organisers divided the total prize money of €40,000 equally system for hotels. wards climate-friendly investment 60 among the finalists, without pitching. Applications open soon for the INOLARES by institutional investors, with 54 Intelligent supply management and PropTech Innovation Award 2021. percent of respondents planning 55 sustainable construction. to invest more in this segment. 49 More information: proptech-innovation.de 2015 2016 2017 2018 2019 2020 LIMEHOME percent are aiming to acquire more * Index in points, survey takes place twice a year Steep falls recorded in France and UK, core properties as a result of the Source: Union Investment, Apartments run like premium four Germany an anchor of stability. star hotels. virus, while 42 percent indicate investment climate study, August 2020
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A blank canvas
Balconies are a remarkable hybrid. Outside, but an extension of inside. Part public stage, part ringside seat, depending on the mood and occasion. As an outdoor space, they are truly multi-talented and highly popular, not just since the coronavirus lockdown. Architects find these exterior attachments a source of special inspiration. By Elke Hildebrandt
L’Arbre Blanc – the white tree on the banks of the river Lez in Montpellier – has become an attraction in itself thanks to its 193 irregular, leaf-like balconies. They offer residents an enviable lifestyle under the open sky and provide stunning views over the sun-drenched city. Photo: Cyrille Weiner (simulation) Cyrille Weiner Photo:
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rench joie de vivre on a balcony? In fact, people with balconies have been There’s certainly a lot to like about privileged since long before coronavirus Fthe generous open-air living spaces reared its head; outdoor space not only of L’Arbre Blanc. The distinctive white offers convenience, it also boosts the building in Montpellier, southwestern value of residential property. Balconies France, pays tribute to balcony architec- are considered a luxury and thus come ture and is ideally suited to the Mediter- with a price tag. Property platform Im- ranean lifestyle of its residents. With its mowelt.de decided to crunch the num- filigree platforms, this elegant residential bers and compared the rent on German building resembles a fairytale tree with apartments with and without balconies in slender, sun-seeking branches. A total of 2018. The results showed that tenants pay For those with a 193 irregularly arranged balconies create up to a third more for apartments with head for heights, a unique appearance. Locally, the 56- a balcony in Germany’s 14 biggest cities. the super-sized bal- metre-high building on the banks of the And that’s despite the fact that only 25 to cony known as The river Lez provoked much head-shaking 50 percent of a balcony counts as living Edge protrudes 20 about the excesses of modern architec- space and generally makes very little metres from the 30 ture. After all, the balconies at L’Arbre difference to the overall floor area. “The Hudson Yards office Blanc have very little in common with additional cost tells us a lot about the the traditional French variant, which only high value placed on a private refuge,” tower at a height protrudes minimally from the façade. concluded Immowelt.de, before going on of more than 330 to say that “balconies have now become a metres above New These balconies, by contrast, extend sev- standard feature on new builds.” York (top). eral metres from the white tower block. Each of the 113 luxury apartments has at Balconies are a marker of a high- White concrete least one of these extraordinary outdoor quality home balconies snake spaces, which measure up to 35 square around the Aqua metres. With its fluid boundaries between Peter Friedrich Berchtold, Head of Sales at Tower in Chi- indoors and outdoors, the Franco- Austria’s Buwog Group, shares that assess- cago. They lend the Japanese team of architects behind ment. “Every new-build home we offer tower a sculptural L’Arbre Blanc designed the perfect now has its own outdoor space. This strat- quality and make building for this sun-drenched city. The egy is a direct response to extremely high balconies don’t just offer outstanding demand,” he says. Nevertheless, a Buwog it a local landmark views and a stylish external living space, development in western Vienna sounds (bottom left). they also provide shade and cooling. As rather unusual. At the Kennedy Garden such, they’re a delight for anyone want- complex, four of the six buildings will be The appearance of ing to enjoy proper downtime at home. based on a “garden frame” design. Rather the Lè Architecture than having a balcony or open-air space office block in Tai- A balcony – a structure that juts out for each apartment, there will be one for wan is reminiscent from a building and is surrounded by a each room. “Generous and individually of a river pebble. railing, balustrade or parapet – typically configurable outdoor spaces are a core The accessible promises a superior living experience. criterion for high-quality apartments,” outdoor areas are That’s something tenants and home- explains Love Architecture and Urbanism, a key feature of owners very much appreciate in urban the project planning team behind the the façade (bottom environments. Particularly in these times garden frames. To go one better than of coronavirus, self-isolation and social such a luxurious specification, you prob- right). distancing, such spaces are highly prized. ably need to consider social balconies. The Back in spring, balconies were the ultim- term refers to a balcony system designed ate place to be for many city dwellers, to bring neighbours together, which was providing a taste of outdoor normality developed by Edwin Van Capelleveen. during the crisis. Using modular components, existing ▶ Photos: Courtesy of Retaled Oxford (simulation), Steve Hall © Hedrich Blessing 2009, Aedas Courtesy of Retaled Oxford Photos:
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balconies can be linked to create urban “For overhanging parts of the building, several inviting external areas into the shrubs and 800 trees growing on their spaces for shared activities. such as balconies, it’s necessary to apply façade of the 18-storey Lè Architecture balconies. Their purpose is to provide a for the right to encroach, which many building in Taiwan. The unique architec- better microclimate for the apartments, The significance of balconies for quality cities are unwilling to grant,” reports ture and accessible outdoor spaces make to filter out dust from the air and to pro- of living becomes apparent when repur- Mühlena. this office building on the Jilong river in duce oxygen. The 1.3-metre-deep con- posing office buildings, which rarely if Taipei an exceptional work environment. crete tubs on the balconies provide ideal ever have such features punctuating the That’s why the Kolb 13 apartment block Balconies often lend a sculptural quality living conditions. façade. There’s a variety of reasons for on a main traffic artery in Frankfurt’s to a building, as with the Aqua Tower in this, as Bent Mühlena, Head of Real Estate Sachsenhausen district was converted Chicago. The slow-rippling, white con- For those wanting more of a kick from Project Management at Union Invest- without adding balconies; instead, the crete balconies also help to break up wind an urban balcony, observation decks are ment, explains: “In many countries, office plans featured loggias. These “were vortexes and minimise the effect of wind popular and iconic locations. New York buildings have sealed façades to ensure carved out of the interior of the former shear. City is home to several well-established efficient functioning of ventilation and office block and now offer residents a favourites and also new hotspots, like the air conditioning systems. Safety aspects high quality, private, open-air space,” ex- Balconies additionally play a major part platform on the 30 Hudson Yards office also play a role, as does the question of plains Jürgen Steffens, founding partner when it comes to combining nature and building, which opened earlier this year. how far balcony areas should be taken of Cologne-based JSWD. The treatment of architecture. The Bosco Verticale build- The Edge protrudes 20 metres outward into account when calculating rent and exterior spaces attached to a façade has ing by architect Stefano Boeri has been from the office tower at a dizzying height whether they’re necessary at all in office often inspired architects to come up with setting standards in this regard since of more than 330 metres and features “For overhang- scenarios.” Accordingly, conversion of innovative and exciting designs. Archi- 2014. The twin green towers in Milan are a glass floor opening. The super-sized ing parts of the offices into homes often requires retrofit- tects Aedas, for example, incorporated famous the world over for the 20,000 balcony is open to the public. • building, such ting of balconies. as balconies, it’s Office buildings can be repurposed as necessary to apply homes by adding balconies for the right to The concept of encroach when In the former Thyssen Trade Center in social balconies was Düsseldorf, now known as Living Circle, building right up developed by Edwin the conversion of an entire site is imme- Van Capelleveen. to the boundary diately apparent from the new balconies. Using modular line.” When it proved impossible to let the around 33,000 square metres of office components, exist- ing balconies can Bent Mühlena, space, some 340 residential units were be linked for more Head of Real created in this ensemble of commercial shared activities. Estate Project buildings, featuring new, partially unsup- Management at ported balconies. Union Investment It was a similar story with the former headquarters building of the Federation of German Industries (BDI) in Cologne, which has been converted into a residen- tial high-rise and renamed Flow Tower. “The curved lines of the new balconies mimic the dynamic shape of this land- mark building,” comments JSWD, the firm of architects responsible for design and conversion. Architects and clients have considerable flexibility when there’s ad- equate room for balconies, but things are rather different in cramped city centres. In expensive core locations, the aim is usual- ly to make the best possible use of a plot
by building right up to the boundary line. Union Investment / Urban Zintel, Edwin van Capelleveen Social balconies Photos:
60 places and spaces 02/2020 places and spaces 02/2020 61 Wide angle Additions to the Union Investment portfolio Contact
Neubaugasse 49a and 51, Graz Union Investment acquired a property in Graz’s Lend dis- Online & Service Let there be light trict for immofonds 1. The residential development is due www.places-and-spaces.com to be completed in spring 2022 and comprises 255 units Take advantage of the additional options of the In the dark winter months, artists regularly turn our cities into performance spaces and alongside office and retail space. online edition: • Comprehensive archive transform the urban environment with their light art. By Elke Hildebrandt • Search and filter functions • Print texts • Order in print • Subscribe to online newsletter 1 Amsterdam You can download the archived print issues of 1 The Amsterdam Light Festival sees places and spaces from the media library: artists illuminating Amsterdam’s www.realestate.union-investment.com canals with exceptional light instal- Click here for the second Union Investment portal: lations. Admire the illuminations www.sustainable-realestate-investments.com in the historic city centre from 26 November 2020 to 17 January 2021. Contact Union Investment Real Estate GmbH 2 Lyon Fabian Hellbusch Light artists transform the buildings, Head of Real Estate Marketing Neukölln Carrée, Berlin and Communication streets, squares and parks of Lyon Union Investment acquired this local shopping centre Valentinskamp 70/EMPORIO, for four whole nights. The Fête des 20355 Hamburg, Germany with 13,364 square metres of rental space for one of its Phone +49 (40) 34919-0, -4160 Lumières will again create a unique institutional property funds. Three quarters of the rental [email protected] atmosphere across the city from 5 to income is generated by providers of daily essentials. 8 December 2020, with more than Publishing information 40 light installations on show. places and spaces The Real Estate Magazine of Union Investment 3 Durham Published by Union Investment Real Estate GmbH 2 3 The Lumiere festival in Durham cele- Responsible Editor Fabian Hellbusch Articles by named authors reflect the opinion of the brated its 10th anniversary in 2019. respective author. Over four evenings, its magical light Editor-in-Chief Fabian Hellbusch installations in iconic and unexpect- Planning and Final Editing Elke Hildebrandtt Art Direction Frauke Backer/[email protected] ed locations drew 165,000 visitors to Picture Editing Annegret Strauß this city in northeastern England. Infographics Lena Teuber Proofreading Christiane Barth Lithography PIXACTLY media GmbH 4 Hamburg Publishing House C3 Creative Code and Every two years, light artist Michael Content GmbH, Heiligegeistkirchplatz 1, D-10178 Berlin Batz transforms Hamburg harbour Procession House, London Printed by optimal media GmbH, into the “Blue Port”. A parade of UniImmo: Europa continues to grow. This multi-tenant Glienholzweg 7, D-17207 Röbel cruise ships – dubbed Hamburg building on Ludgate Circus in the City of London, enjoy- ing uninterrupted views of St Paul’s Cathedral, was fully places and spaces first appeared in 1995 Cruise Days – provides the backdrop and is published in spring and autumn in German 4 and formed part of the sparkling modernised prior to completion of the acquisition. and English blue sea of light in 2019. Current print run 13,000 copies
The paper and printing of this magazine are FSC® certified. The printer, optimal media, guarantees an ecofriendly production chain.
The next places and spaces is
Photos: mauritius images / Yuliya Mykolaïvna Heikens / Alamy, Michael Batz / VG Bildkunst, Bonn / Hamburg Cruise Days / CHL PhotoDesign Christian Lietzmann, InterTopics / Martin Harris Cruise Days / CHL PhotoDesign Christian Lietzmann, InterTopics Bonn / Hamburg Michael Batz / VG Bildkunst, / Alamy, Heikens Mykolaïvna mauritius images / Yuliya Photos: Neubaugasse GmbH, Union Investment / WPN Wohnprojekt Union Investment / Holger Peters, - Les Anooki / Moetu Batlle & David Passegand, REUTERS / Emmanuel Foudrot Capital Pictures, Union Investment (simulation) scheduled for March 2021
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