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How tech has powered up London’s success PAGE 03

ISSUE 01 • 2018 FEATURE SET • 12 IN CONVERSATION • 25 TRENDING • 30 Twitter: Alternatives Theo Blackwell Pavegen @CushWakeUK London’s CDO Welcome What’s Inside

Welcome to our June edition of Capital ALTERNATIVES Watch! We’ve timed the launch of this • Student accommodation edition to coincide with London Tech Week, • The central London private celebrating creativity, talent and innovation healthcare market in London’s tech scene. Over the past five years, tech has • Self storage become of incredible significance to London’s property market and industry. As well as being the sector driving large-scale office requirements, it is also helping to change both the form of property and how we do business. Known from the start PAGE 12 as an innovator in the design of workspace, the tech sector can also largely take credit for the emergence of one of the biggest real estate trends in recent years: office as a service. From humble roots in co-working facilities for tech start-ups in the East End to the major disruption that WeWork (‘a tech company’) is now having on the market, tech is reshaping the built environment. Meanwhile PropTech is now starting in earnest to deliver vehicles for LONDON DNA #TRENDING change in how we manage and transact Elephant & Castle: Down the garden path real estate assets. We discuss these and Authentic & dynamic other issues in the pages which follow. As well as technology, we also look at PAGE 19 PAGE 30 Alternatives, a real estate sector that has witnessed considerable form of late, and COVER STORY THE HOT ISSUE a category from which new mainstream How tech has powered Risk, communities and sectors might soon emerge. Finally we take up London’s success PropTech a look at the development of Shoreditch and Elephant & Castle. PAGE 03 PAGE 08 As always, drop me a line if you’d like to discuss any of these topics further. ROUND-UP SPOTLIGHT ON... London at a Glance Capital gains – the winners Richard and loser of the local elections

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LONDON IN FIGURES IN CONVERSATION Richard Pickering London’s tech scene With Theo Blackwell, Head of Futures Strategy, Editor of Capital Watch London’s Chief Digital Officer [email protected] PAGE 21 PAGE 25

PAST, PRESENT, FUTURE VILLAGE LIFE Find us online: cushmanwakefield.co.uk/london Shoreditch Clerkenwell Twitter: @CushWakeLDN

Photography page 25-29: Tom Campbell Design: Ascend Studio PAGE 34 PAGE 39

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COVER STORY

COVER STORY

How tech has powered up London’s success The growth of the tech sector in London has been one of the capital’s recent success stories.

ack in in 2010, the emergence is now one of the top three global tech of space in central London, second Bof a cluster of fast-growing tech cities alongside San Francisco and only to banking and financial services. startups in east London was brought New York, having become a magnet This equates to more than 13% of to attention of the then Prime for startups and programmers. Since total leasing volumes – a doubling Minister David Cameron. Winding Tech City was launched, technology on the preceding five years – as forward, this sector is now feted as has become more integrated tech behemoths such as Google, the darling of the economy, having throughout all industries on the back Facebook and Apple have committed fuelled post-recession job growth. of a wave of digital transformation. to ever larger tranches of space. It’s Tax breaks for investors in early-stage New sectors such as fintech and legal easy to see the effect of the sector companies along with the sector’s tech have emerged, focusing largely on the physical workspace, with own Tech City UK body have helped on artificial intelligence and digital connectedness and collaboration support the growth in the number of automation. The UK is now home to at the heart of current workspace startups, with high-profile advocates 22 of Europe’s 57 tech unicorns, the design. Significantly, tech employers, championing the capital’s tech talent. clear majority of which are based driven by a need to attract the Of course, that’s not to say that in the capital. Nearly £3 billion was best young talent, have also set the London’s tech sector didn’t exist invested into London’s tech companies benchmark for “cool” space. Whilst prior to 2010 - but it was still very in 2017, which now employ more than slides and hammocks have since much under the radar, due not least 300,000 people in London. virtually disappeared from fit-out to its epicentre being located in an This success has had a clear impact checklists, the reinvention of what a underdeveloped quarter of London on London’s real estate market. corporate workspace can look like has not typically associated with fast- Demand from technology companies acted as the catalyst for a movement growing businesses. shored up the central London office that has spread far beyond the By Elaine Rossall, Just as London’s tech scene did not market in the years following the bounds of the tech industry. Head of UK Offices begin with Tech City, it also did not financial crisis and the sector is now In the following pages we explore Research & Insight end there. Moving on from the cluster a core source of office leasing activity. the major factors in London’s success elaine.rossall of digital business in east London, In the five years to 2017, the tech as a tech hub and the challenges and @cushwake.com London’s tech sector is booming and sector leased over 7.2 million sq ft opportunities that lie ahead.

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COVER STORY

Access to talent

In an industry driven by talent, London has developed a reputation for attracting a high-quality pool of labour from all around the world. London’s global status and top-class universities have created a magnet for foreign creative minds, building on domestic talent and ultimately accelerating the growth of the sector. A shortage of talent was cited as the number one challenge facing London tech according to a recent Tech London Advocates survey (cited by 29% of respondents). Brexit is creating additional uncertainty about the ability of the sector to retain its vital international workforce. The demand for digital skills is proliferating beyond the tech sector. Tech jobs are in high demand across talent. In 2016, just 2% of all A levels all sectors, which, combined with the taken were in Computer Science: 80% of the expansion of large tech companies, The Mayor more needs to be done to make top 25 is exacerbating the skills gap. 80% of of London it appealing to a wider audience. the top 25 in-demand skills reported has also Universities and schools adapting to in-demand in a survey by LinkedIn related to produce the right skills is one possible skills tech or data. recognised route, but the development of skills reported in Concerns around talent are not this though organisations such as Makers a survey by just Brexit-related. The tech sector shortcoming Academy, where you can learn to LinkedIn needs to diversify, with an under- and has code in 12 weeks, and Code First, representation of females and BAME launched a who recently launched a programme related to employees in the London tech scene. to teach 20,000 young women how tech or data Female tech workers comprise only £7 million to code for free by the end of 2020, 10% of tech professionals in the UK programme are essential to bring through the and, in a recent survey, only 13% of to inspire next generation of talent. The Mayor females had a desire to work in the young of London has also recognised sector. For London to continue to Londoners the current shortcomings and has compete globally there needs to launched a £7 million programme be greater integration of education to enter the to inspire young Londoners to enter and industry to nurture home-grown sector the sector.

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COVER STORY

Startup ecosystem

London has developed into Europe’s capital, and one of the leading global cities, in terms of the startup ecosystem it supports. Attracted by the availability of funding, world- class universities, market reach and the ability to collaborate with Access to capital influential organisations, London and funding has become the European city of choice for startups. The numbers London’s position as the leading global London’s Artificial Intelligence of active startups vary depending finance hub provides ample access to (AI) companies also saw elevated upon the definition, but there is no funding, while the large tech companies levels of funding in 2017. Big deals doubt that London has one of the located in the capital are sources of for companies such as Babylon highest concentrations of startups expertise, capital and potentially direct Health (£47.5m), Callsign (£26.9m) in the world. Businesses have now investment. Startup Genome estimates and Starship Technologies (£13.9m) established themselves in clusters all that early stage funding per startup in saw investment in London AI over the city - not just in Shoreditch. London is $451,000 compared with a companies reach over £200m London’s digital tech industries global average of $252,000. The vote (>50% more than 2016). grew one-third faster than the wider to leave the EU has not diminished the It’s not just VC funding where economy “according to Tech Nation capital targeting the UK’s tech firms. London is leading the way. Despite 2016” and only New York and Silicon In 2017 venture capital investment into the challenges around Brexit, London Valley have produced more startups the UK tech sector reached a record is a key destination for US companies worth over £50 million. high. London tech firms were the looking to access the European Global connectivity is a key part of main beneficiary of this investment, market; foreign direct investment the success of London in attracting London’s accounting for 80% (£2.45bn) of all into the technology sector continues startups and encouraging innovation fintech firms UK venture capital tech funding. to expand year on year. Data from in the capital. London is the most accounted London’s fintech firms accounted EY shows that London is Europe’s connected city in Europe and second for over 90% for over 90% of all money raised by leading city, attracting significantly globally behind Silicon Valley, with of all money UK fintech firms last year. 2017 saw more investment projects and jobs entrepreneurs and tech companies major funding rounds for financial than any other European city for having a strong international network raised by UK technology companies such as each year during the last decade - that provides global reach for ideas fintech firms TransferWise (£211m), Funding Circle and the gap between London and and business. last year (£81.9m) and Monzo (£71m). the regions is widening.

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COVER STORY

Regulation and government support

A business-friendly domestic regulatory environment has encouraged the growth of the tech sector in London. Factors such as lower Corporation Tax rates, a range of visas (albeit limited in number) to enable the hiring of skilled non-EU workers, tax breaks for early stage investment and robust data protection standards have supported the UK as an attractive destination. Beyond this, the FCA’s regulatory sandbox allows firms to test innovative products in a live market environment, and the Department for Transport has developed a regulatory framework and testing environment for driverless cars. The government has recently published a sector strategy for AI with a commitment to invest £300 million in AI research and development, which it is hoped will stimulate further private sector investment and activity. Nonetheless, concerns have been raised around issues such as privacy, labour market security and the role of social media in society. The sector is under ever-increasing scrutiny, with Sadiq Khan calling for greater regulation of both technology companies and social media channels in the wake of recent high-profile coverage. A balanced approach to encourage further innovation whilst upholding confidence in the sector is required if London is to maintain a The thriving tech sector. government With Brexit comes a potential has recently divergence from EU laws concerning data protection standards, which published could prove a double-edged sword. a sector The ability to access the EU consumer strategy for base and labour market will be vital AI with a to the growth of the sector. The commitment government is responding with a pledge to double the number of Tier to invest £300 1 Exceptional Talent visas from 1,000 million in AI to 2,000 to support recruitment from research and abroad - but whether this will be development sufficient remains to be seen.

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COVER STORY

Several urban campuses have taken shape across London in locations such as Stratford and King’s Cross

The growth of the Smart City

Twelve months age, Sadiq Khan set out his vision for London to become the smartest city in the world, with digital technology and data at the heart of making the capital an even better place to live, work and invest. London already boasts strong smart city foundations. Open data is at the heart of many policy initiatives. London was at the forefront of contactless transport payments, Oyster cards and autonomous trains - all of which are designed to help ease congestion around the capital. Meanwhile, City Corporation recently launched its free high-speed WiFi The role of property network. Despite these successes, parts of London lag in terms of digital Over the past five years, London has Established office locations like connectivity. demonstrated its ability not only to the City and Canary Wharf are An improved digital infrastructure accommodate the capital’s startup increasingly attuned to the needs of is at the heart of ensuring that scene, but also to attract leading tech occupiers in terms of flexibility, London both makes up ground with global tech companies. The range of digital connectivity, and the dedicated other global and UK cities and is also locations and properties available to services that can be provided by 5G ready. City Hall has announced tech companies in London matches incubators and accelerators. The City plans to install half a million brick- the diversity of its tech ecosystem Core saw more large tech company sized miniaturised mobile masts on and provides environments where in-movers than any other submarket lamp-posts and other public buildings talent can thrive both inside and during 2017, and in the latest Tech to make London Europe’s biggest outside the office. Advocates report the City was named “gigabit city”. Other key initiatives Collaboration between startups the London borough that would see include bringing a 4G mobile signal and established sectors like finance, the fastest growth in tech companies to Underground tunnels by the end of creative industries and life sciences in the next five years. 2019 and creating a new high-speed means that the tech scene is now a Looking forward, the demands of fibre optic with the Tube network at London-wide ecosystem. the large tech-cos and startups are its heart. Several urban campuses have starting to converge and coalesce Bigger open data sets and new taken shape across London in - both in terms of sub-sector smart city technology create exciting locations such as Stratford and King’s agglomerations and at the level of possibilities to overhaul systems Cross, providing opportunities for individual buildings, where coworking and new ways of running our capital large-scale workplaces, flagship HQs, facilities increasingly play host to a that will foster talent, accommodate and entire districts that nurture talent, mix of early-stage businesses and population growth and support innovation, and inclusion. corporates who value the benefits the development of sustainable of co-location. prosperity across London.

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THE HOT ISSUE

covenants over the term of an investment. In other words the risk of holding real estate could be rising. The major risk comes at the end of a short lease commitment. Will the tenant stay or go? By looking more closely at that decision point, we can better appreciate the level of risk and look at ways in which new technologies can help to mitigate it. Traditional switching costs for occupiers include the cost of acquiring new space, fitting out the new space, penalties (for instance in operating a break clause), and potential staff disruption. Serviced offices have broken down some of these barriers: a small business moving from one coworking space to another might not seek advice or need to pay fees, as the fit-out costs are typically borne by the landlord. Investors therefore need to find new non-contractual barriers to exit in order to keep tenants “sticky” to assets and thereby reduce their risk. The key to this is to make the office experience personally compelling, and to power up the bespoke benefits associated with the office such that giving them up would be a real wrench. At the heart of this new proposition lies the idea of community. A fundamental mindset change is needed for the typical office investor to view itself not just as a provider of space or a property manager, but also as a service provider, a hotelier and a custodian of spatially defined communities. If an operator is successful in nurturing human bonds, these can in many cases be more powerful than contractual ones. The one stop shop solution to this might be to hire a dedicated community manager – a role that was historically only seen in coworking spaces – to manage social activities and to help link occupiers with each other. Businesses such THE HOT ISSUE as Equiem provide an end-to-end customer service by combining a community manager with an online portal to drive connections within the building. However, a major area of development in PropTech has been on providing platforms which allow landlords Risk, to engage their customers by linking all of the building services to one easily accessible platform without the requirement to have a community manager. In this area, we communities have companies such as Space-Flow and District Tech who provide platform solutions that allow occupiers to chat with each other, connect with local retailers, and view events occurring in the building - allowing for the emergence of and PropTech an organic community that is self-sustaining rather than requiring constant administration. Leveraging technology to drive Much like in the retail sector, office occupiers also want personalised experiences. This means observing security of income and measuring user experience, typically through the installation or retrofitting of sensors and beacons, which has key trend within the office market in recent years has traditionally been very expensive. Smart sensor company Abeen the reduction in the length of lease commitments. Disruptive Technologies provides a cost-effective and This trend has been driven by the phenomenal rise of short- scalable IoT solution to collect data and gain insights on term serviced office formats (constituting 30% of central how occupiers use the space around them. This approach London take-up last year). These new formats tend to becomes even more powerful when paired with tools such outperform in terms of user experience, with operators such as Locale, which provides landlords with incredibly granular as WeWork adding the cool factor to what has previously information on their occupiers, allowing them to personalise been fairly functional space. They are increasingly attracting the user experience through a platform in real time. a mix of smaller businesses and mature corporates to Often seen in the context of reducing friction in spaces formerly reserved for the latter. transactions and creating process efficiencies, PropTech By Rory Young, The combination of these factors poses a challenge is typically viewed through the lens of cost reduction. Futures & Proptech for office investors, who have typically built their business This new wave of technologies offers the potential for Consultant models on letting space on long leases to strong covenants. value preservation in a world where the ties that bind rory.young The result of shorter contractual commitments expresses occupiersare more about community than covenants and @cushwake.com itself in greater churn, more potential voids, and weaker long-term commitments.

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OPINION

OPINION

The future of technology companies in London At the heart of the debate about the future of technology are ideas about its potential to dehumanise our society. Yet the companies leading the creation of tomorrow’s tech innovations are highly people-focused - seeking to acquire a deep-rooted understanding of people’s thinking, actions, and user experiences.

workplace design. This has now moved on, and as the “how to run a great tech business” model matures, companies are recognising that the next step is to consider how they can influence the community and the city itself. Technology companies continue to be more discerning than the average, evaluating locations through a decision-making matrix that includes the building, the landlord, the community, and ultimately their ability to influence the metropolitan area. How does this translate to London’s technology sector? London has proven itself to be a flexible, connected provider of some of the most forward-thinking workspaces across the globe. King’s Cross has become the blueprint for mixed-use development, while other developers are rapidly evolving their offer and learning from those businesses that are leading the demand for a different type of real estate. However, without people, London will no longer be in demand. Luckily, it remains one of the few truly global cities. And, in spite of Brexit and wider his understanding then enables improve productivity. This is about European political uncertainty, it also Tthem to build and refine their more than just flexible space, remains a place of relative stability. products to meet the constantly workplace sensors and activity- This makes it a safe and attractive changing demands of their target based working: it is the adoption place for the best and the brightest in users. Sometimes this works and of user-led design to create the technology to live and work. sometimes it doesn’t – but they are most productive workplaces - with While political uncertainty nevertheless listening to how people the ambition to create the best continues around the world, London experience the product. companies in the world. These remains a relative sanctuary for global By Toby Ogden, This idea of user experience companies believe their employees talent. As one of my clients said Head of London is also applied equally to the are their most important customers. recently: while the U.S. is building Markets company’s staff. If you understand So how does this apply to real a border wall in Mexico, it’s hard to toby.ogden your people, what they want and estate? For the last decade the recruit into the country – but it’s still @cushwake.com how they work, you will intuitively conversation has revolved around easy to recruit into London.

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ROUND-UP

ROUND-UP

estate today, but also demonstrates the value of PropTech through its ability to London at cross-sell into other industries. Along with Zoopla, ZPG also owns household energy comparison site uSwitch, another a glance property website PrimeLocation and personal finance comparison site Money. co.uk. Analysts are predicting good Chinese Embassy moves east chances that ZPG will be able to cross- sell products across its platforms. After months of speculation, the Chinese Embassy’s relocation from Portland Place in Marylebone to the site of the former Royal Mint in the City has been confirmed. This is a significant expansion in terms of footprint, with the Embassy electing to move from 30,000 sq ft in their current HQ to a site with planning permission for over 600,000 sq ft of debt finance allows WeWork to move office space across four buildings. their corporate financing structure away The Chinese Ambassador referenced from just equity, improve their corporate the number of historic renovations in reporting ahead of a potential IPO, and their current premises, but highlighted provide cash for further expansion. China’s growing role in world politics Meanwhile, WeWork acquired the and the need to find accommodation Chinese coworking start up Naked Hub that matches their influence. The as part of their expansion into China. vendors, Delancey and the LRC Investor interest in serviced office Group, had worked closely with local providers shows no sign of abating, stakeholders to gain planning consent as a bidding war is brewing for IWG, for the 5.2-acre site, enlisting the the owner of Regus and Spaces. experience of Sheppard Robson and Lone Star, Starwood Capital and TDR Morrow & Lorraine to help transform Capital are believed to have made Creatives move west it into a modern and flexible office approaches to purchase the business, Publicis Media have taken 212,000 sq ft destination. which operates over 3,000 locations over seven floors in 2 Television Centre, The Chinese Embassy’s decision across 115 countries and has plans to the mixed-use development designed to move further east comes at a time open a further 230 locations. Many by Stirling Prize-winning practice AHMM. when both the United States and the believe that a move from the equity This is the largest office transaction Netherlands have opted to relocate market will benefit the FTSE 250 signed to date in central London. to the so-called “Diplomatic Quarter” company, as it will be better able Television Centre is part of the in the emerging Nine Elms district. to invest in expanding market share wider regeneration being carried out Arguably, the former Royal Mint site without concern for the short-term by Stanhope, Mitsui and AIMCO in Labour has better transport connections, with considerations such as like earnings White City. The regeneration is set sealed its best Tower Gateway DLR station nearby per share. to provide over 5,000 new homes, overall result and the City just a short walk away. 2 million sq ft of commercial office in the capital It is anticipated that the new space, 30 acres of public spaces and Embassy will be completed in late Zoopla bought by private 19,000 jobs. The area benefits from since 1971 2020, with a mix of office and retail its proximity to Westfield White City, space. There will also likely be an equity firm which itself brings over 400 stores, a element of residential space to US private equity group Silver Lake cinema and other leisure amenities. accommodate the Ambassador and agreed to buy the company behind Publicis is one of the world’s largest on-site staff. Zoopla (ZPG) in a £2.2bn cash deal, media agencies with over 23,500 almost a third higher than its closing employees worldwide. They plan to price a week before the takeover. consolidate their six different brands Flexible workplaces target new Launched in 2008, Zoopla combines in the building, each on separate hundreds of thousands of property floors, each with their own distinct funding listings with market data, local style and character. Collaboration and Flexible workplaces continue to make information and community tools to efficiencies from sharing services are headlines, but more recently coverage allow consumers to research and in key drivers of the consolidation. This has focused on financing for growth. turn make more informed property landmark letting confirms White City By Graham Harding, WeWork recently sold $702 million decisions. Since its creation, Zoopla has as a major London sub-market and Graduate Surveyor, in bonds at 7.875% in its first ever become one of the UK’s most popular further cements its credentials as a London Capital debt offering. The bond offering was property search websites, attracting creative hub alongside those of West Markets massively oversubscribed, allowing over 40 million visits per month. London. Other occupiers in the area graham.harding WeWork to increase the size of their The deal not only highlights the value include the BBC, ITV Studios, Soho @cushwake.com offering by 40%. This move towards and importance of technology in real House and Imperial College London.

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SPOTLIGHT ON...

SPOTLIGHT ON...

Sadiq Khan is increasingly flexing his muscles through intervention in planning applications

Capital gains: The winners and losers of the local elections When approached to write this article, I at first relished the opportunity. On the evening of 3rd May, London’s press predicted political pyrotechnics across the city, with several flagship Conservative London Boroughs being lost to Labour in a protest vote against an embattled Theresa May.

et despite the best efforts of both the press and members are in London. The group focused its attention Yparties to talk a big game, neither party can be said to on the borough of Haringey in particular, with Momentum- have outperformed expectations. According to the BBC’s backed Joseph Ejiofor taking up the role of leader. Given projected national vote share, the Conservative Party was that the election campaign was often framed in the context only three points down on what it achieved in 2017’s county of opposition to the Haringey Development Vehicle – a council elections. After eight years in government, this result proposed public-private partnership between the council and was better than its performance in any of the local elections Lendlease - it’s not surprising that current regeneration plans held between 2012 and 2016. are officially “on hold”. At the same time, Labour sealed its best overall The second notable change of leadership is the election result in the capital since 1971. A solid, albeit relatively of Rokhsana Fiaz as Mayor of Newham, replacing Sir underwhelming performance given the attention Robin Wales after a mammoth 23 years at the borough’s awarded to the targeted trophy Tory boroughs. Headlines helm. Ms Fiaz has promised to build 1,000 new council were dominated by its failure to secure Conservative- homes, oppose the academisation of schools and hold held Wandsworth, and the rumoured-to-be-lost Tory a referendum on whether the borough’s directly elected strongholds of Westminster and Kensington and Chelsea. mayoral position should continue to exist. These results, alongside Labour losing Barnet, saw Theresa Important, albeit more subtle changes are afoot in May claiming “success” for the Conservatives in the capital. City Hall. Sadiq Khan is increasingly flexing his muscles In reality it was probably more a sigh of relief, on a night through intervention in planning applications, and recently where the Tories benefited more from the collapse of the announced a substantial funding package for council By Ian Anderson, UKIP vote than denting Labour support. housing across the capital – committing to 10,000 council Senior Director, Post-election analysis put the two main parties neck homes by 2022. Alongside a draft London Plan that Planning and and neck in terms of national vote share at around 35 per prioritises affordable housing and workspace, it’s safe to Development cent. A closer look highlights the extent to which Labour assume that future development packages will need to take ian.anderson consolidated their presence in key metropolitan areas, these policies into account, with a broader focus on social @cushwake.com including London. Around 1 in 5 of Momentum’s now 100,000 brokerage and good growth.

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ALTERNATIVES

FEATURES Alternatives

The last decade has seen considerable change in the Alternatives landscape in London resulting from huge inward investment from operators and investors. Trends such as advances in healthcare technology, shifting demographics, increasing pressure on housing and the increasing global demand for higher education have led to a shift in focus and value in some of the less traditional asset classes. As a result, investors have turned their attention to these asset classes, as they seek yield and investments that will increase the diversity of portfolios by exposing them to new growth drivers. 2017 was another strong year for investment into these specialist sectors, accounting for more than £15.7bn (24%) of the total £65.4bn invested in UK real estate. With investment volumes forecast to reach £17.5bn this year, the days of these sectors being classed as ‘alternatives’ feels like it’s coming to an end. In the following feature set, we take a look at trends By James Johnston, Partner, Specialist in some of the Alternative sectors, London’s contribution Sector Investment to the UK picture, and challenges on the horizon as james.johnston @cushwake.com Alternatives evolve.

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ALTERNATIVES

ALTERNATIVES Student accommodation London is the UK’s largest student market and one of the most popular global education destinations - recently ranked 1st by QS in its Best Student Cities ranking for 2018. There are over 294,000 full- time and sandwich students studying at a Higher Education institution in the capital, and many thousands more studying specialist short courses or language programmes, leading to a huge demand pool for accommodation.

ondon remains a destination of choice for international Purpose Built Student Accommodation (PBSA) providers Lstudents. Concerns over falls in international student are now catering to a more discerning student body: interest have been unfounded, as students prioritise operators now provide en suite rooms and superfast long-term value over short-term political risks, while the broadband as standard, with higher-end accommodation government’s recent announcement that EU students providing swimming pools, state-of-the-art cinema rooms applying to begin courses in 2018 will still be able to and sky lounges to their residents. obtain funding for the duration of their course should There are currently some 80,000 PBSA beds in London, By Paddy Allen, bolster student interest. with 57% provided by the private sector. Cushman & Partner, Student Unlimited student recruitment has led to greater Wakefield research shows the current demand pool Accommodation competition between universities, and an improvement in (students in need of accommodation) to bed ratio is paddy.allen the facilities and services provided to students which can some 2.4 students to 1 bed in London, compared to 2 @cushwake.com clearly be seen in the quality of student accommodation. students per 1 bed as a national average - highlighting the

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ALTERNATIVES

undersupply of beds for London students. The London In the recent past, the prohibitive CIL costs and Plan suggests a need for between 20-31,000 additional The London competition from other land uses has made student student beds by 2025. accommodation less attractive in Zones 1 and 2. This Whilst the rationale for more PBSA development in Plan suggests has opened Zones 3 and 4 to significant development, London is compelling, significant barriers to growth a need for resulting in significant clusters such as Stratford, Wembley exist, with historically high land costs and construction between and Acton. These areas allow the delivery of studio bed cost inflation driving up the cost of development. 20-31,000 spaces at just over £200 per week, considerably below the Furthermore, the Community Infrastructure Levy additional average London studio price of £303 per week in 2017/18. (CIL) on new development, the Mayoral Community The onus is now on developers, investors and Infrastructure Levy charge to fund Crossrail, and student beds operators to explore innovation and thereby drive value. more recently significant restrictions to PBSA by 2025 This can be through design evolution (design of rooms, development in the new London Plan are making PBSA communal space and amenities), new construction development more challenging in London. Amongst methods such as modular build, or leveraging technology other requirements of the new London Plan, developers to lower operational costs using smart building systems, need to have an agreement with a university as part customer apps or AI. How the private and public sectors of the planning process, and a further 35% of lettable can work together in London will also determine how accommodation must be priced at “affordable” rates developers and operators negotiate the new landscape equating to a level at or below £155 per week. set out under the London Plan.

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ALTERNATIVES

ALTERNATIVES

The Cleveland Clinic, for example, are investing circa $1bn alone in 33 Grosvenor Place, in what will be the first major new central London hospital in 30+ years

The central London private healthcare market After several years of growth in the private healthcare market, 2017 witnessed a reversal in income flow. Several factors came together to impact revenues for major central London operators, By David Kerr, including a drop in central London health tourism – with Bupa Partner, Head of Central London Health Insurance policy subscriptions falling from circa 1.2 million Healthcare Markets to around 850,000, an artificially low oil price leading to fewer david.kerr @cushwake.com Middle Eastern patients, and uncertainty over Brexit.

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ALTERNATIVES

Apps such as GP at hand (Babylon Health) are set to revolutionise how we interact with GPs

onetheless, these are expected to be short-term and generate surpluses to offset deficits in their NHS work. Nfactors, and overseas and national operators continue The next decade will see a radical overhaul of the to focus on the longer-term opportunities in the market. central London healthcare real estate offer and portfolio, Economic challenges are being dealt with and though with the major FTs - notably Guy’s, St Thomas’, King’s operating costs continue to rise ahead of inflation, and UCH - being encouraged to make better use of their increased self-pay, an ageing population and expectations prime estates in value and operational terms. At the of a recovery in health tourism are encouraging and same time, the NHS property strategy team is tasked sustaining new and existing operators. Occupational with making the estate more efficient to save money, healthcare demand outstrips supply and in particular, free up resources and provide buildings suitable for new increased demand for representation in the Harley ways of delivering healthcare. Street Medical Area (HSMA) has been evident, with rents These moves (along with private initiatives inside and approaching and in some cases exceeding £90 per sq ft. outside the HSMA) will complement the existing larger- We are also seeing healthcare occupiers showing a scale offerings to the north in the Knowledge Quarter - preference for long leases - mostly in excess of 20 years. centred around the Francis Crick Institute and Wellcome The arrival of major overseas operators into the Foundation - and west towards the Imperial College London market - such as the Cleveland Clinic, Schoen, knowledge hub at White City. the Mayo Clinic and Oxford University - will change both The HSMA is constantly seeking to find ways of advancing the operational landscape and working practices in the in the fields of medical science, research and technology. private healthcare market. These groups, along with other Projects in the pipeline include bringing laboratories into the European and global investors, represent an unprecedented HSMA, the introduction and greater integration of MedTech, surge in operational and tenant investment into London. new consulting and diagnostic houses, and incubator units The Cleveland Clinic, for example, are investing circa $1bn with short flexible leases, as and when required. alone in 33 Grosvenor Place, in what will be the first major From a wider perspective, the sector will need to new central London hospital 30+ years. adapt to and anticipate the impact of digital healthcare The gradual integration of private and public health treatment. Apps such as GP at hand (Babylon Health) systems in the UK is particularly evident in central London, are set to revolutionise how we interact with GPs, while where at least three major Foundation Trusts (FT) healthcare delivery by handheld and wearable technology now have representation for their private divisions and is expected to increase as the population takes practical associated activities. Acting as a gateway to their main and financial control of their own healthcare - by choice hospitals, these FT private clinics can be highly profitable or necessity.

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ALTERNATIVES

ALTERNATIVES Self storage

With residential development driving relentless pressure on land in central London, the case for self-storage is an easy one. At the heart of self storage is a simple premise. If people use high cost residential space to store possessions that don’t need to be stored in high cost space, then there is a value proposition to finding an alternative. That alternative takes the form of an increasingly sophisticated industry, fighting for sites in London’s sought-after outer-ring.

By Oliver Close, Partner, Valuation & Advisory oliver.close @cushwake.com

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ALTERNATIVES

Occupancy on current lettable space is The UK has 76.1% 48% up 3% from of the European self last year storage market

The UK average net rental rate increased to 22.5% £23.08 of customers use self storage as temporary storage while per square foot per annum moving house

Only Divorced or separated people are more than 46% x2 as likely of the public have good to use self storage than awareness of self storage other people

or the past four years we at C&W have worked with represented, as they tend to have the combined factors Fthe UK Self Storage Association to understand industry of having accumulated possessions and downsized their trends, which includes analysing the results of an annual accommodation. However, a significant barrier to use customer survey plus a demand survey of the general is not actually the use case, but more so awareness of public. Testament to the strength of operators within the the industry at all. Only 46% of the public have a good industry, 92% of customers state that they are satisfied with awareness of self-storage and 60% could not name the service that they receive, and almost a third had kept any existing operators. As awareness builds, there their unit for over three years. The latter point underscores is considerable opportunity to expand the existing the fact that this is no longer an industry just for satisfying customer base (currently growing at 8.8% pa) and short term requirements associated for instance with a maintain upward pressure on rents. move or life changing event (such as dealing with a birth, A further active consideration for investors in self storage death, divorce or similar), but part of longer-term space premises in London is that values can often be underwritten management strategies on behalf of customers. A quarter on alternative uses. Typically occupying space in the of customers visit their unit at least once a week, again transition zone of large cities such as London, there are a evidencing the active nature of their engagement with the ready supply of last mile logistics operators, trade counter space, rather than a one-off store / unstore transaction. operators, and potential windfall residential uses that come In spite of the clear savings that the sector can offer into play over the life of an investment. to those occupying space in central London, uptake remains limited (only 1% currently use self-storage). You can download a full copy of our report here: Divorcees and those over 50 are disproportionately www.cushmanwakefield.co.uk/en/sectors/self-storage

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LONDON DNA

LONDON DNA Elephant & Castle: Authentic & dynamic “In the south suburbs, at the Elephant, is best to lodge” – this cheeky piece of product placement by one W. Shakespeare in Twelfth Night shows that even then, this location had a place on London’s map. Shakespeare was almost certainly punting an inn in the neighbourhood to his audience at The Globe. This area, directly east of Victoria, south of St Paul's and comfortably in Zone 1, is arguably one of London’s most interesting, diverse and vibrant places.

Walworth Road Once you have done this, head on to Walworth Road where there are many fascinating shops – not least G Baldwin, an old-school apothecary specialising in natural beauty products and health remedies, from balms to herbs. G Baldwin has been open on the Walworth Road since 1844 and customers have included Sir Michael Caine and Sir Terence Stamp. Next to the apothecary is G Baldwin's health food shop – if you go inside you will see why Time Out included it in their “100 best shops in London” list. Cross back over Walworth Road and go to Sidecar Coffee Bar for a quick boost of energy. This café started life quite literally in a sidecar to a motorbike, travelling around town, but now has its permanent home in Spare Street (named after local Edwardian portrait painter Pullens Yards Austin Osman Spare), along with A great example of the area's Hotel Elephant, a not-for-profit cultural life is the creative enclave work can be found at the Tate, company set up in 2007 to provide at Pullens Yards, where world-class the V&A and MoMA in New York. In space for culture and the arts in artists, artisans and craftspeople 2005 Frank became the first black Southwark. Hotel Elephant runs an have their studios and workshops. British artist to be elected to the after-school art workshop with local Daniel Reynolds is a ceramicist Royal Academy, and an OBE followed. secondary schools and provides By Richard Howard, whose work has been exhibited If you ever want to see a genuinely space to 40 artists, as well as an International worldwide and graces the most thriving creative hub in the heart of exhibition, education and project Partner, Head recent Kit Kemp hotel in New York, London – or on the other hand you space. The phrase “local hero” of Leasing The Whitby. One of Pullens Yards’ want to order a bespoke lute, which totally encapsulates Reuben Powell, richard.howard longest-serving tenants is abstract is also on offer – Pullens Yards is an an artist himself, who created this @cushwake.com artist Frank Bowling RA OBE. His excellent place to visit. dynamic space.

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LONDON DNA

A thriving creative hub

Walk up towards Elephant & Castle station and you will pass the London College of Communication, where you will find some of London’s brightest young creative minds (and the Stanley Kubrick archive). You will notice that many of the restaurants in and immediately around the shopping centre have Latin American names. This is because this area is home to a huge and thriving Latin American community, with people coming from far afield to restaurants like La Bodeguita for a truly authentic taste of home.

A genuinely thriving creative hub in the heart of London

Mercato Metropolitano

Now head up Newington Causeway, passing the world-famous Ministry of Sound (now also home to an excellent creative workspace and a health club) to arrive at Mercato Metropolitano. This is Borough Market meets Eataly meets Barcelona’s El Nacional in a converted industrial space – it is huge fun and a fabulous place to enjoy a variety of the best quality Italian food and wine on offer. You could spend half an hour or half a day here, even staying to watch a film in the onsite cinema. www.mercatometropolitano.co.uk

Elephant & Castle is arguably one of the most interesting communities in London, combining a refreshingly urban authenticity with some of the most creative and dynamic people working and studying in the capital. 21

LONDON IN FIGURES London in figures Our team of experts delve into the latest market stats and more...

£ RENTS

EUSTON Annual Rental Change & MARYLEBONE ■ More than 0% ARC ■ 0% ARC KING’S CROSS ■ Less than 0% ARC £75.00 per sq ft STRATFORD 0.0% ARC £77.50 per sq ft £42.50 0.0% ARC per sq ft 0.0% ARC

FITZROVIA NORTH OF OXFORD ST £85.00 PADDINGTON £92.50 per sq ft per sq ft 0.0% ARC 0.0% ARC £70.00 BLOOMSBURY per sq ft CLERKENWELL 12.0% ARC £68.50 & SHOREDITCH per sq ft 0.0% ARC £66.00 per sq ft 1.54% ARC KENSINGTON ALDGATE & & CHELSEA SOHO WHITECHAPEL MAYFAIR & ST JAMES’S £60.00 MIDTOWN £57.50 per sq ft £87.50 per sq ft per sq ft 0.0% ARC 4.55% ARC 0.0% ARC £67.50 KNIGHTSBRIDGE per sq ft £110.00 3.85% ARC CITY CORE per sq ft COVENT GARDEN -6.38% ARC HAMMERSMITH £87.50 £67.50 CANARY WHARF per sq ft £85.00 per sq ft £55.00 0.0% ARC per sq ft -1.46% ARC £42.50 per sq ft 0.0% ARC per sq ft 0.0% ARC 0.0% ARC VICTORIA

SOUTH BANK GREATER £77.50 DOCKLANDS per sq ft £66.00 £30.00 -3.13% ARC per sq ft per sq ft 1.54% ARC 0.0% ARC

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LONDON IN FIGURES

London’s tech scene

Digital Tech Investment £2.45bn 2017 Venture Capital Investment in Total Venture Capital Funding into Technology Firms in the London tech sector Major European Cities in 2017

In 2017 venture capital investment into the London tech sector reached an all-time high, totalling £2.45 billion – almost double the funds of 2016 at £1.23 billion. London’s tech sector continues to fuel the growth of the UK’s digital economy, with the Paris Berlin Stockholm Amsterdam capital’s tech firms accounting for 565 456 360.3 212.2 around 80 per cent of all UK venture capital tech funding in 2017.

London tech companies raised London Dublin Madrid Helsinki Copenhagen significantly more venture capital 2,450 117.5 65.4 57 40.2 investment in 2017 than any other European city. Source: Pitchbook, Dec 2017

22,000 85% 318,000 Meetups hosted in London in 2016 Growth rate of the London digital Digital tech jobs in London tech industry in the last five years

London hosted 22,000 Meetups in The turnover of London digital tech The digital sector in London is creating 2016, that’s three times as many as industries reached £64.1 billion in 2017. jobs 2X faster than the non-digital sector. in Berlin, Amsterdam or Paris Total turnover by London digital Total number of employees in the technologies businesses digital technologies across London

70 350,000 60 London 50 300,000

has more 40 250,000

software London Berlin (£bn) 30 200,000 developers 20 than any 150,000 other city 10 in Europe - 0 100,000 two thirds 2011 2011 2013 2017 2012 2015 2016 2013 2017 2012 2014 2015 2010 2016 2014 2010 2008 2009 2008 more than its Amsterdam Paris 2009 nearest rival Source: Tech Map London Employees by reported year Paris. Source: Meetup, 2016 Source: Tech Map London

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LONDON IN FIGURES

London is the top city destination What emerging tech specialism do Which of the following London both for tech talent moving within you think will define the success of boroughs will see the fastest increase Europe, as well as for those entering London over the next five years? of tech companies by 2023? the tech industry from outside the region. 9.17% 9.63%

Top European city Top European city 3.00% destinations (intro-Rank destinations (non- 8.15% 10.09% 4.29% European migrants) European migrants) 30.91% 18.35% 3.86% 1 London London 9.01% 7.34% 2 Paris Paris 3 Madrid Amsterdam 9.63% 0.92% 4 Berlin Berlin 10.30% 0.92% 5 Amsterdam Madrid 18.35% 9.17% 27.47% 6.42% Source: LinkedIn

AI/Robotics Other Tower Hamlets Southwark Fintech Retail Tech Hackney Camden Cybersecurity Creative Tech City of London Islington Health Tech AR/VR Wandsworth Croydon 7,682 Westminster Other Start up births Hammersmith & Fulham Source: Tech London Advocates

#1 Stack overflow users by city Github users by city Preferred location for start-ups Number of users Number of users

London is the #1 most preferred location to start-up by European founders, 7,128 followed by Berlin and Barcelona. 28,509

The economic contribution of the UK digital tech worker is almost twice as 3,298 high as the non-digital worker. 13,111 1,288

Digital tech workers are helping to 917 4,977 509 4,340 boost the wider UK economy through 327 1,910 higher productivity levels per worker. 1,525 The GVA of a digital tech worker is now Paris Dublin 2X higher than a non-digital worker, Lisbon Paris London Dublin Frankfurt Lisbon

(£103,000 compared to £50,000). London Amsterdam Frankfurt Amsterdam Source: ons annual business survey/ons business structures database

Tech take up 2013-2017 Tech companies have accounted for 13% 20% 13% of all take-up over the last five £48,000 6% years, behind Banking & Financial services companies. This compares to just 6% in the previous five years. 8% 12%

Banking & Finance Media 4% Government, public Office as a service 5% 7% £53,000 & associations Other/Unknown 3% Insurance Professional services 11% 11% Legal Retail & leisure Growth in the productivity gap over Manufacturing & energy Tech the last five years. Source: Cushman & Wakefield

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LONDON IN FIGURES

Are we at risk of oversupply?

Despite a predicted scenario of New Grade A supply in terms of years of take-up slower leasing activity and an uptick 3.0 in sublease space in the aftermath

of the vote to leave the EU, central 2.5 London remains firmly in a low- The market is supply environment. Current supply 2.0 not showing levels across central London stand at 13.7 million sq ft, equating to an overall 1.5 signs of vacancy rate of 5.2%. New Grade A

significant space now accounts for less than 50% Number of years 1.0 pressure and of total supply and has seen three is certainly consecutive quarterly decreases as 0.5 nowhere near occupiers focus on upgrading space. Based on rolling three-year Grade A 0.0 the levels take-up, current new Grade A supply seen in the across central London remains limited, 2011 Q1 2011 Q1 2017 Q1 2012 Q1 2015 Q3 2011 Q1 2013 Q1 2018 Q1 2016 Q1 2014 Q1 2010 2012 Q3 2012 Q3 2017 Q3 2013 Q3 2015 Q3 2016 Q3 2014 Q3 2010 2009 Q1 2008 Q2 years after with just under 12 months’ worth of 2009 Q3 take-up on the market. While not quite the global Central London City West End financial back to levels recorded just prior to the EU referendum, the market is not *based on rolling 3-year Grade A take-up crisis showing signs of significant pressure and is certainly nowhere near the levels seen in the years after the global Central London development pipeline financial crisis. 7.0 This is how things stand presently, but there are concerns around the 6.0 volume of cranes across the London

skyline and how that will impact on 5.0 the future vacancy. The underlying

uncertainty over Brexit and the 4.0 structural changes in how we work – an analysis of IPD data for the same 3.0 buildings over 5 years showed a sq ft (millions) downward trend in workplace density 2.0 from 12.5 sq m to 9.6 sq m – could potentially impact on the demand for 1.0 space at a time when it feels like more space is breaking ground. 0.0 It's worth putting today's 2011 2013 2021 2017 2012 2015 2016 2018 2019 2014 2010 2022 2020 2008 development market into perspective. 2009 The first thing to note is that the Completed-spec Under construction & available Pipeline probable 10-year spec average number of new office buildings delivered in central London is 23% below the numbers delivered during the total development completions are new starts fail to match development financial crisis in 2008. Only 103 office expected to be above average over the completions. This is also happening buildings (over 20,000 sq ft) were next couple of years, on the plus side against a background of an expansion completed during 2016/2017 totalling pre-committed space accounts for 46% central London geography. just over 12.0 million sq ft, down from of all space under construction, which Looking forward, Cushman 133 (14.5 million sq ft) in 2008/2009. is a high point when looking over the & Wakefield estimate there is Declining developer optimism, last five years. This figure is anticipated 6.1 million sq ft of planned office increased risk aversion and falling to rise with several rumoured pre-let developments that could potentially financial lending to property developers deals at 22 Bishopsgate, among others, complete over the next five years. has led to a reduction of speculative which will also mitigate the impact of Given that annual average Grade A development starts. The amount lent by this dominant scheme on future supply. take-up levels across London stand By Hayley banks to property developers has fallen Speculative space under at 6.8 million sq ft, the development Armstrong, Senior 56% over the last five years, from £34 construction across central London pipeline looks tight and, despite a more Insight Analyst, UK billion outstanding in December 2013 totalled 6.2 million sq ft at the end challenging economic and political Research to just £14.8 billion in December 2017, of March 2018. This has been falling outlook, Cushman & Wakefield forecasts hayley.armstrong according to the Bank of England. steadily since a peak of more than do not anticipate any significant upturn @cushwake.com There is no disguising the fact that 10 million sq ft back in mid-2016 as in vacancy over the next five years.

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IN CONVERSATION

In conversation with Theo Blackwell, London’s Chief Digital Officer

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IN CONVERSATION

IN CONVERSATION

In Autumn 2017; Theo Blackwell was appointed by Mayor Sadiq Khan as London’s first ever Chief Digital Officer. Our Insight Associate Kat Hanna headed over to City Hall to catch up with Theo as he took a break from preparations for London Tech Week and the publication of his first Smart London Plan. In conversation below they discuss collaboration, data, and innovation.

By Kat Hanna, Insight Associate kat.hanna @cushwake.com

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IN CONVERSATION

and even make predictions about our but this doesn’t necessarily mean interactions with the city. accepting every application for trials However, we need to get the My role here and licenses that arrives at City foundations right first. We may have in London is Hall. I very much welcome every the data in vast amounts, but it's about leading opportunity for collaboration, but this not always of the standard it needs has to be based on an articulation of to be. As anyone who’s ever been collaboration our needs and values as a city. involved in a digitalisation project will across the know, getting that data up to scratch city, to make KH — Given recent concerns about how means collaboration between all sure that data is collected and held, what is City those collecting it, as well as time and the capital’s Hall doing to ensure Londoners know investment to ensure that it's clean what information is collected about and consistent. That’s step one in various them and what it may be used for? becoming a smart city. strengths in TB — Ensuring Londoners knowing innovation how and why their data is collected Kat Hanna — First thing's first – what KH — The term ‘smart cities’ isn’t are greater is a priority for me. This means exactly does the City Chief Digital exactly new, and can feel a little than the sum highlighting use cases of data in a Officer for London do – and what’s dated. How would you best define it? way that is meaningful to citizens top of your agenda right now? TB — There’s no doubt ‘smart cities’ has of its parts – for example, CityMapper, but also Theo Blackwell — No two Chief evolved as a term. Ten years ago, the setting out the different types of Digital Officers are the same. My big focus was on systems – the creation data and how they can be used. I’m role here in London is about leading of large technology platforms where working with colleagues in City Hall collaboration across the city – both data could be viewed in one place. to launch the London Office of Data public and private sector – to make We’re talking big IT solutions, often Analytics, which will help us show sure that the capital’s various delivered by major global companies. how data from different sources strengths in innovation are greater Things have moved on since this comes together, and the types of than the sum of its parts. model. In addition to collecting data on use cases that emerge. Over the next Right now I’m focusing on the utilities, or labour markets, or school few months I’ll also be developing launch of the new Smarter London places, we are on the verge of a more a cybersecurity strategy that will Together Roadmap - which is dynamic understanding of how people support my ambitions for London. effectively a roadmap for what we move around the city. hope to achieve, setting out the tools There’s a tendency for people to KH — One of the most exciting parts that we will be using to get there. think smart cities are all about hardware of your job is visiting and hosting What lies at the heart of this is data. - driverless cars or IoT connected Chief Digital Officers from a range of I’m looking at how we can ensure that street furniture. These technologies global cities. What city do you look to we are able to get the most out of the may be exciting, but opportunities for for inspiration or best practice? vast amount of data produced across innovation, for truly smart cities, are as TB — I spent more or less the first the capital, and use it tackle the likely to come from new approaches to 100 days of my job getting out and priorities that matter to Londoners. service design or data analysis as they about and trying to understand what are from gadgets and gizmos. was already being done in London, as KH — Let’s talk a bit more about data. well as looking to international cities. Why is it so important, and why are KH — Is there a limit to how ‘smart’ Part of my job is about convening we hearing so much about it now? cities should be? organisations and individuals. This TB — Cities have always been a TB — I think there’s two ways of isn’t always straightforward, especially rich source of data. London, is after thinking about this. First – what is when you’re trying to work with all, a massive agglomeration of acceptable to citizens in the uses of 33 boroughs and a fast-moving data from both public and private their data? Second, how do we express technology sector. That said, it's sources, records of transaction, citizens needs in a way that the tech valuable to see how different boroughs of administration, production and sector can better understand? We are taking different approaches to how consumption. Add to that the mass need better ways to engage the sector, they collect and use data. This allows adoption of the smartphone, and and many cities are experimenting us understand to what works and what then it's not just institutions that are with innovation prizes. That’s where doesn’t, rather than rushing in and producing data, but individuals. This city government comes in, helping reinventing the wheel. means we need to start thinking about to broker a relationship, to promote I’ve been lucky to be able to visit London not just as the boroughs, or better understanding of the use of a number of US cities such as Austin City Hall, but an entire ecosystem. data for public benefit but also to set and San Francisco, and I’m building Nonetheless, the sheer amount of terms for tech sector engagement. relationships with my counterparts in data we now produce as city means That’s where democracy and civic European cities. I’ve learnt that not all that if we are going to get the most responsibility comes in – in the ability cities have the same starting points out of it – and really understand how to articulate what matters to citizens, and priorities. For example, a lot of people use the city – we need to look and to convey to citizens the civic the conversation in US right now is beyond the capability of conventional benefits of data. focused on the future of mobility data analysis. That’s why I’m really It’s also about getting the right – whether on-demand buses or excited about the potential of machine balance between innovation and driverless cars – in part because many learning and artificial intelligence (AI) regulation. Of course, we want cities lack the type of mass transit we to help us extract trends, patterns, London to be open to innovation, have here in London.

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IN CONVERSATION

KH — New technologies and KH — One of the most common KH — What does success look like for opportunities for investment means issues that comes up with landlords you, and what do you think are the we are seeing new types of urban and occupiers is the quality of biggest challenges in achieving it? management and development connectivity. What progress has TB — One of the biggest challenges emerge. What are the opportunities been made and how can we ensure is making sure we focus on getting for collaboration between City Hall buildings have the capacity to adapt the foundations correct. That means and London’s real estate sector? to future infrastructure needs? cleaning up our data, identifying TB — The real estate sector has a TB — It’s clear London needs a new partners for collaboration, and setting fundamental role to play in both strategic approach to connectivity, and the terms of engagement for public- shaping and delivering a vision for a out new Connected London work will private sector partnerships. The Smart London. The sector has been do this finally. We also know that top use of data and AI in improving city incredibly forthcoming in discussing quality digital connectivity matters not management is a huge opportunity, the Smart London Plan. I think that’s just to traditional tech occupiers, but but there are also risks if we don’t based on the realisation that when pretty much any business these days. get the fundamentals right. It may used well, data can be incredibly That’s why companies like WiredScore not be as attention grabbing, but it’s powerful not just in making buildings have an important role to play in so important that we take the time and places more efficient, but making improving transparency around levels to work out what our needs are, and them better at serving those who of connectivity. how we can best partner with others work in them. The use of There is a role for both public to address them. Technology is fast The question for me is how to take data and AI and private sector here. Looking moving, and you can’t plan for every this live debate that is taking place in improving back, I think there were missed possible new innovation or use case within the real estate sector and look city opportunities for collaboration - I’m – but getting the right framework at the extent to which lessons from management keen that we learn from that. I’ll be in place, we can make sure we can how landlords are managing private working on is a set of standards building the right smart foundations spaces can be applied to the public is a huge for Internet of Things sensors, so for the future. or semi-public realm. The advances opportunity, that developers and landlords know in our capability to collect and but there what’s expected in terms of quality, analyse data mean that conversations are also security, and interoperability. This between the real estate sector and risks if we type of regulation is more about City Hall need to move beyond setting a minimum benchmark for planning permission, and look at the don’t get the quality – and something I hope the types of spaces we need and how fundamentals sector will be keen to collaborate productive they can be. right. with City Hall on developing.

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IN CONVERSATION

The real estate sector has a fundamental role to play in both shaping and delivering a vision for a Smart London. The sector has been incredibly forthcoming in discussing the Smart London Plan.

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#TRENDING

# TRENDING Down the garden path

It’s a beautiful sunny day at the Chelsea Flower Show, and I’m standing here with what feels like most of middle England. The sell, sell, sell of everything you can conceivably need for your garden – and plenty that you don’t – is ringing all around me. Retail, it seems, is not dead: it’s alive and kicking, and looks like a new pair of personalised Wellingtons.

By Hannah McNamara, Partner, Retail hannah.mcnamara @cushwake.com

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#TRENDING

Their technology harnesses the power of the footstep and uses it to create power, data and engagement

s someone who spends her time people walk through the garden Apositioning and repositioning and step on their special tiles, they shopping centres, I wondered generate off-grid electricity that can whether I might find a solution to be used to power experiences – whilst the challenges of modern retail also learning more about you. But among the ferns. Perhaps what I was gardens are the tip of the iceberg seeing was the “Petersham effect” for Pavegen – the most significant (a luscious new retail and restaurant application of their technology is in empire in Covent Garden). Should we retail environments. be filling our retail destinations with In today’s omni-channel retailing flowers and Monty Don?? environment, the maintenance of a In an industry where experience is discrete P&L ledger for each store is everything, this felt like a good start, a bit of a challenge. A sale may well Their technology allows them to but then I stumbled across a very happen online after browsing in-store, track footfall patterns and numbers different piece of the puzzle… or get lost in a much bigger store anonymously, whilst also collecting Nestling in between the lupins network. It therefore becomes more permission-based data in what and the salvia – very on-trend in complex to assess the value of the they describe as “a fair exchange of the gardening world – I found a store in creating the sale. If the role of value”. By integrating the Pavegen company that is trying to match the store is to create customers and interface into a brand’s own app, delight and personalisation with a increase our willingness to buy – rather they can offer rewards for walking clever new business model based on than just being there to effect a sale over their tiled floor or interacting data insights and guided footfall. The – then surely footfall and customer with their installation. This gives black and white floor tiles designed engagement are key in measuring its retailers and shopping centre owners by Pavegen for the Kate Gould and contribution. These factors are both at the information they need to create New West End Company’s garden the heart of Pavegen’s proposition. a more personalised shopping are much more than they seem. Their More than just creating electricity, experience and drive consumer technology harnesses the power of Pavegen wants to create more behaviours. An example of this is the footstep and uses it to create meaningful connections with brands where Pavegen collaborated with power, data and engagement. As by generating data and rewards. the team at The Mercury, an Ellandi-

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#TRENDING

owned mall in Romford. Walking keep digital planes in the air. across a walkway in the main entrance It’s this type of data that will help in the centre results in rewards for brands and retail locations get to subscribing customers which can be know their shoppers better so that swapped to make small purchases they can personalise the service they or in-store discounts. The customer’s offer. It might also offer a way to choice of reward also provides ascribe value to physical stores and valuable data to the retailer in itself. help measure their contribution to the The technology also reinforces final purchase; similar systems could the link between the brand, the be at the centre of how we monetise digital world and the physical place. shops in the future. A project with Adidas Boost saw So what are the next steps messages from loved ones pop up on for Pavegen? They want to build a screen as marathon runners passed their market share and help create over their walkways. Pavegen have sustainable cities, using their product also worked with Google to promote as a key piece of infrastructure to Pixel 2, creating a footfall-powered enable brands and retail locations to “selfie tunnel” which gave pedestrian get to know their customers better. users a selfie at the end in return With major Pavegen installations being for all-important data. And if you’re delivered over the coming months in taking a flight from Abu Dhabi Airport Hong Kong, New Zealand, Thailand, any time soon, you might experience UK and the US, it seems their grand a Pavegen walkway that gamifies the plans are become a reality. usually tedious experience of walking Meanwhile, it’s back to the peonies between two terminals by generating for me – armed with a new set of Laurence Kemball-Cook electricity from footfall and using it to branded gardening gloves. Pavegen Founder and CEO

It’s this type of data that will help brands and retail locations get to know their shoppers better so that they can personalise the service they offer

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#TRENDING

With major Pavegen installations being delivered over the coming months in Hong Kong, New Zealand, Thailand, UK and the US, it seems their grand plans are become a reality

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PAST, PRESENT, FUTURE

PAST, PRESENT, FUTURE Shoreditch Shoreditch is now as much a part of central London as the City or Mayfair, but it hasn’t always been this way. Originally known as “Soersditch”, interpreted as “Sewer’s” Ditch’ after the boggy river Walbrook running near to what is now Curtain Road, Shoreditch has By Christopher variously been a religious, salacious and artistic enclave Dunn, Senior Insight Analyst, outside the City – but one that has shown a remarkable UK Research capacity for reinvention. Chris Dunn charts its progress christopher.dunn @cushwake.com and asks: what’s next? 35

PAST, PRESENT, FUTURE

In the 17th century, Shoreditch became home to increasing numbers of Huguenot weavers who had fled religious persecution from King Louis XIV of France. These migrants brought highly sought-after weaving skills to London.

he area of Shoreditch first rose to prominence when Tthe Augustinian Priory was established in 1158, soon becoming an sprawling 8-acre religious site on the west side of Shoreditch towards Hoxton. The nunnery was affectionately known as the Holywell Priory, and was once the richest nunnery in the country - before its closure during the Dissolution of the Monasteries in 1539. The next phase of Shoreditch’s development came not long after the closure of the Priory. In 1576, James Burbage began construction of The Theatre, the first of its kind in London. Within the same year, the building was completed and the theatre hosted dramatists and performers who had long been prohibited from performing within the City’s walls. A second theatre was constructed the following year just 200 yards from Burbage’s first site, and was named the Curtain Theatre due to its proximity to the City walls. With the landlord refusing to renew the lease for The Theatre in 1596, The Curtain Theatre became the primary venue for Elizabethan performances - including premieres of Shakespeare’s Henry V and Romeo and Juliet. Burbage dismantled the foundations and timbers of the original theatre, transporting them through the City and across the frozen Thames, where they were assembled to become The Globe in Southwark. In the 17th century, Shoreditch became home to increasing numbers of Huguenot weavers who had fled religious persecution from King Louis XIV of France. These migrants brought highly sought-after weaving An example of the workspace used by these companies skills to London, and were keen to set up in Shoreditch, can be seen at Curtain Road Studios, previously owned Spitalfields and Bethnal Green to avoid the levies In 1576, by furniture company C. & R. Light and now used as a imposed within the City walls. It is thought that there James high-end studio for brands such as Harrods and Vogue. were up 20,000 looms operating in Huguenot homes, Other factories left behind industrial facades that now rather than dedicated factories. This meant that the Burbage form part of many of the converted workspaces that weavers left a relatively limited architectural footprint: began characterise the area, as well as providing the UK’s first but the boost to Shoreditch’s economy cannot be construction loft-style apartments. underestimated. of The Originally called the Shoreditch Technical Institute Girl’s Alongside the weaving and fabric industry was Theatre, School, the London College of Fashion was launched in a burgeoning furniture trade, with many successful 1974 and built on the area’s history in textiles and design to businesses operating in Shoreditch. In the late 19th the first of establish itself as one of the leading education institutions century, the area had become the epicentre of the its kind in of its kind - and training famous designers such as William furniture industry, for both manufacturing and trade. London Tempest and Jimmy Choo. 36

PAST, PRESENT, FUTURE

1576 Construction starts on James Burbage’s ‘The Theatre’

1158 1685 Augustinian Huguenots started Priory founded to settle in the - Shoreditch Shoreditch area first comes to prominence

One of the most important factors in the success of offered larger corporates such as Amazon and Adobe Shoreditch as an emerged location is its human capital. the ability to access creative and technological talent and For many From the 1990s onwards, the area played home to an use the neighbourhood's cultural and social amenities individuals, increasing number of young graduates – a population to attract a young and highly skilled workforce. which continued to grow as transport connections It was this confluence of talent and amenities that the charm of improved and network effects developed. For many led to the infamous tweet in 2008 from Matt Biddulph Shoreditch individuals, the charm of Shoreditch was quite simply of Dopplr: “’Silicon Roundabout’: the ever-growing was quite the opportunity to find relatively inexpensive office community of fun startups in London’s Old Street area.” simply the or studio space near affordable residential rents. The Although this was a very tongue-in-cheek comment at opportunity density of these locations – combined with “third spaces” the time, the area surrounding the Old Street roundabout including galleries, bars, andclubs – not only attracted has evolved into an established hub of creativity and to find young graduates, but also promoted the creation, innovation. Interestingly, Biddulph mapped the startups relatively distribution, and development of ideas, technologies in the area back in 2008, which showed a grand total of inexpensive and businesses. 16 tech companies. Reports estimate that there are now office or This concentration and collaboration of skilled over 1,350 tech businesses in Shoreditch, demonstrating studio space individuals is critical not only to the area’s success as a huge explosion of growth in the area. a cluster of tech and digital content start-ups, but its These young companies swarmed towards Shoreditch, desirability as a location for major occupiers. Shoreditch and could find relatively inexpensive office space in 37

PAST, PRESENT, FUTURE

1974 2017 London College of Fashion TfL and Islington Council launched, building on the invite designs for creativity already present redevelopment of Old in Shoreditch Street Roundabout

2008 First mention of “Silicon Roundabout”

Courtesy of Cove Burgess Architects, London

many of the ex-industrial buildings that are scattered One potential downside to this continued redevelopment throughout the area. As well as being inexpensive, many is the impact on prime office rents. Since 2008, prime of Shoreditch’s spaces have the advantage of being Grade A rents have more than doubled in Shoreditch, Since 2008, flexible and adapting to a range of uses. Early start-ups which could see historically native creative tenants prime Grade took advantage of short-term leases, even in buildings priced out of the area. This is compounded by a relatively slated for development at a later date - such as the constrained development pipeline, with future supply A rents have Transworld Office at 100 City Road, which housed Silicon likely to add further upward pressure on rents. more than Roundabout royalty including Moo Studios and Dopplr. These fears were echoed in a recent report by Hackney doubled in The site is now home to the White Collar Factory. Council, where respondents were concerned with the Shoreditch The White Collar Factory is not the only new “increased rate and scale of commercial development office development in Shoreditch, as a total of nearly seen in the area”. Some argued that the number of 1.3 million sq ft of newly built or refurbished stock was corporate occupiers arriving in Shoreditch has diluted the delivered since 2015. Interestingly, over 1 million sq ft of unique character for longer-term residents. In the same this space was pre-let before completion. Key schemes report, Hackney Council explores what Shoreditch might include Brookfield’s Principal Place, which was pre- be like in 2033, and promotes the idea of a collective let by Amazon; and Helical Bar’s refurbishment at The vision rather than piecemeal development. Respondents Warehouse, 211 Old Street, that was pre-let to tenants to the survey iterated that increased development of arts/ such as Stripe Payments, Pivotal and Farfetch. culture facilities, community projects and housing were

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PAST, PRESENT, FUTURE

The White Collar Factory is not the only new office development in Shoreditch, as a total of nearly 1.3 million sq ft of newly built or refurbished stock was delivered since 2015

the priorities for the next 15 years, whilst 65% wanted environments for both work and leisure. to see less office development. Improvements to open With the borders between Shoreditch and the City spaces and the road network were also high on the blurring in recent years, there are concerns that this agenda of local residents and workers. could dilute or even sanitise the unique characteristics of It is perhaps no surprise then, that the Old Street Shoreditch. Whilst the inevitable expansion of the City roundabout is set to be redeveloped by both TfL and core could well see changes take place in Shoreditch, it Islington Council. Over 100 entries were submitted, of is too soon to say whether these will be negative. In fact, which 39 were longlisted – with just four making the final there are potential positives on the horizon, with better shortlist. These designs include features such as street footfall for retail, better transport and more investment art, bee-friendly planting, an automated cycle parking into the public realm. structure, a forest of lights, and a reflective “lens” which So, whilst there are questions concerning the ongoing forms a focal point for performances, play and relaxation. changes in the fabric of Shoreditch, the future looks The common theme here is that once the roundabout is very positive, and the unique characteristics and history removed, the area will be redesigned and “given back to of the area are set to be protected and potentially the people”, with a focus on open space and pleasant even improved.

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VILLAGE LIFE

VILLAGE LIFE

Each edition we take you Clerkenwell into one of Once home to The Monastic Order of the Knights Hospitallers London’s of St John of Jerusalem – and more recently the infamous villages. Turnmills nightclub – Clerkenwell has some of London’s most This time beautiful period buildings and is a hotspot for food, drink and our mystery design that caters to Londoners and visitors alike. man- about-town showcases COFFEE SADLER’S WELLS THEATRE THE POSTAL MUSEUM the best of AND RAIL MUSEUM Clerkenwell

Apparently “Coffee Culture” is now An iconic venue since 1683 for those Not just for stamp collectors, the something that people are actually who like music, dancing and prancing. Postal Museum also provides access to “into”, rather than just a means of This year you can attend the Flamenco Mail Rail, a set of clandestine tunnels ingesting caffeine. If this is your thing, Festival London to get back to your originally opened for the transportation Clerkenwell is the place to be: you can gypsy roots, or watch Akram Khan of condiments from the marmite mines choose from Workshop Coffee Co, Company’s production XENOS, of Hammersmith to Whitehall during J&A Café, Dose, Caravan, Black Opium, described as “a triumph of energy, the war. The conspiracy theory is that Timberyard, Fix and the legendary empathy and intelligence”. A bit like the tunnels were used to ferry post Prufrock. There is also a Starbucks and my Monday mornings at work, then. around London, but that would be a Caffé Nero for the less adventurous. plainly absurd.

ZETTER TOWNHOUSE EXMOUTH MARKET LOOK MUM NO HANDS

For a city break or debauched A path less trodden than the heaving Probably London’s coolest cycling weekend there are few better places Borough and Broadway markets, shop, café and workshop. This is the than this 13-bedroom Georgian Exmouth Market is home to some place to check out the latest bling mansion that’s been turned into a great cafés and restaurants. Get your fixies and road bikes, or get some cracking boutique hotel. Make sure hair and beard trimmed at the Barber needed repairs. Enjoy an espresso in you try one of their powerful cocktails Streisand hair salon, and hit the world- the morning or a bottle of Vedett in the (Bee Pollen Rum Old Fashioned?... so famous Family Tattoo Business to get a evening; rub up against like-minded hipster it hurts!) and you might find permanent mark that will let everyone Mamils and watch reruns of famous yourself talking to a stuffed fox until know you love your mum / dog / pet cycling tours on the big screen. the early hours of the morning. rabbit (delete as appropriate).

CUSHMAN & WAKEFIELD KAYAK ATTACK

On June 15th, our London team will be kayaking 13 miles from Tottenham to Paddington Basin, through 11 locks and over eight hours of paddling to raise over £100,000 for two incredible charities we support.

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