Metamorphic Wok the View from Europe Night Vision

WINTER 2017 ISSUE TWELVE WWW.GERALDEVE.COM

Night Vision Metamorphic Wok The View from Europe

Turning London into the How wagamama is shaping Thoughts from Gerald Eve’s most dynamic 24-hour city its property strategy to meet alliance partners on the in the world consumer demand effects of Brexit CONTENTS ENGAGE LONDON WINTER 2017 ISSUE TWELVE 01

MARKETS EDITOR’S NOTE OUR ANALYSIS OF THE NEWS UPDATE In the property sector, perhaps more than any Catch up with the other, good negotiation skills are a prerequisite LONDON OFFICE MARKET latest news, deals for success. From investment deals to planning and developments permission, via occupational agency and business 04 rates appeals, it is those who are most able to 02 at Gerald Eve KEEPING THE leverage their hand – and understand the EASTERN LIGHTS ON motivations of the counterparty – that invariably PROMISE A look at property’s role come out on top. The very best dealmakers, MILLION in the ongoing energy of course, find outcomes that benefit everyone. market revolution 06 It is to be hoped that those conducting the Brexit SQ FT EG’s David 12 49 227 negotiations, on both sides of the table, are able Hatcher looks submarkets analysed dedicated professionals in our London THE VIEW to find such a solution. The clock is already ticking at Chinese in our London Markets in our London Offices Markets database. FROM EUROPE and a good working deal is surely in everyone’s investment interests. For the real estate sector, a pragmatic report. team. in the UK 08 agreement that recognises the benefits of as Gerald Eve’s frictionless a border as possible for trade and alliance partners capital remains the hoped-for outcome. give their thoughts on how Brexit will Away from the Brexit negotiations, the political AN ASSET impact their local uncertainty created by June’s hung parliament TO THE FIRM markets will surely see some businesses revisit investment 11 decisions. Similarly, a dip in consumer confidence Meet Gerald Eve’s new portfolio and is having its own impact on the UK economy, asset management team perhaps best seen at the moment through the prism of a muted housing market. NIGHT VISION But there remain reasons for optimism. If there is a common theme in this edition, it is that the 14 opportunities exist for those willing to embrace London’s Night Czar talks to ENGAGE changing market conditions. From the energy about her first year in office sector to London’s nightlife scene, dynamism and innovation will continue to be rewarded whatever the prevailing economic conditions.

For Gerald Eve, these remain exciting times. Building on the acquisitions made in 2016, asset management capabilities have this year been 16 expanded, and opportunities for growth are seized as and when they present themselves. That the IN GOOD firm won the National Adviser of the Year title at TIME the recent EG Awards, on top of the Professional Steve Lewis, founder of boutique Agency (business rates) and Investment Teams advisory firm, Square Metre, shares of the Year at the Property Awards perfectly his story with ENGAGE illustrates how Gerald Eve is growing its offer while maintaining its traditional strengths. METAMORPHIC Simon Prichard WOK Senior Partner, Gerald Eve For further information please contact 18 [email protected] The property team from high street Stephen Peers, +44 (0)20 3486 3450 favourite, wagamama, talk us through [email protected] the chain’s continuing evolution

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CEDAR INVEST SECURES APPROVAL AT APPEAL

Cedar Invest, advised by Gerald Eve, The application was originally rejected by has secured planning permission for a the planning committee, but the decision NEWS Macclesfield retail park following a public was subsequently appealed and the inquiry that has ruled in its favour. inquiry granted outline permission for the scheme in September. The circa 13,000 sq m scheme will be located on a former industrial site to the Harry Spawton, partner at Gerald Eve UPDATE north of Macclesfield town centre, and and expert witness at the inquiry said: will incorporate four retail units, a coffee “The decision is a victory for common pod and flexible food outlet. sense and overturns a committee LIONHEART decision that flew in the face of not just the planning officer’s recommendations, Gerald Eve is now a proud partner of LionHeart, the but expert advice.” charity created to help support RICS professionals and their families at all stages of a surveyor’s career, from APC to retirement, offering personal, flexible support to help overcome any unexpected life challenges. THIS IS NOT JUST ANY The charity offers professional counselling services, RATING INSTRUCTION… bereavement support, legal and debt advice, financial grants and help with mental ill health, stress or anxiety. The retail rating team has successfully LionHeart supports anyone who is or has been a member secured a key rating instruction with one of RICS. of the UK’s largest high street retailers, Marks & Spencer. For further information please visit www.lionheart.org.uk The retailer has appointed Gerald Eve for the duration of the 2017 list in an GERALD EVE NAMED ‘NATIONAL instruction which covers Marks & Spencer’s full national portfolio including ADVISER OF THE YEAR’ England, Wales, Scotland, Northern Ireland and Eire. Gerald Eve has scoped the prestigious ‘National Adviser of the Year’ accolade at the 2017 EG Awards. Richard Stoney, partner, said: “We are extremely proud to have been appointed The award, in recognition of achievements during the by such a significant retailer. Marks & 12 months to April 2017, follows a transformative year WELCOME TO THE NEXT GENERATION Spencer has a fantastic and enviable for Gerald Eve, during which the acquisition of five heritage in the UK and is a brand teams and further growth of existing disciplines saw Gerald Eve welcomed a new intake of graduates and apprentices which has helped shape the high street the firm reach new heights. in September. The new joiners, who will be based in London and landscape, becoming a trusted household the regional offices, began their time at Gerald Eve with a two-day name in the process. We are really looking IWG GROUP COMMITS TO THE HARLEY BUILDING AS Senior partner Simon Prichard said: “This is a fantastic induction at Welbeck Street before commencing their roles. forward to working with the M&S team CO-WORKING REVOLUTION GATHERS MOMENTUM achievement for Gerald Eve, underscoring the and achieving savings for them.” expansion and development of the firm over what has We wish them every success in their careers at Gerald Eve. Gerald Eve has secured one of the West Founded in Amsterdam, IWG acquired been a hugely successful year. We continue to excel End’s flagship office leasing deals at Spaces in spring 2015, with The Harley not only at our traditional strengths, but have built on The Harley Building, a newly refurbished Building forming the brand’s 11th UK existing expertise to develop market-leading, award- building on the corner of New Cavendish operation, in addition to locations across winning offers in areas such as investment agency. Street and Hallam Street, just to the east the globe. Offering a creative working It is testament to the hard work of everyone in the of Portland Place. environment with a unique entrepreneurial Gerald Eve team.” ethos, Spaces is a community-driven IWG Group, owner of workspace brands co-working office provider. Its workspaces The title caps a successful six months for the firm in including Regus has taken the entire offer an inspiring environment designed terms of accolades, during which time it has also been building – totalling 35,775 sq ft – as to integrate lifestyle into work, with named ‘Professional Agency Team of the Year’ (for a new flagship location for its Spaces value-added services such as a full event business rates) and ‘Investment Agency Team of the co-working concept. programme and community managers Year’ at the Property Week Awards. encouraging members to build their The flexible workspace provider has signed networks and connect. a new fixed term 20-year lease for the six-storey building, paying an annual rent of £3m with a fixed rental uplift in year five.

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“A number of power stations are approaching the end of their useful life – indeed, with some needing to be KEEPING THE retired as part of reaching emissions reduction targets – but are also essential to smoothing out the fluctuations in As the sector adapts, demand, kicking in as needed. How we’re increasingly seeing LIGHTS ON these assets are taxed is a hugely complex issue, and one that we spend energy clients that a great deal of time advising clients on.” require help shaping their AS THE UK ATTEMPTS TO ADDRESS Rise of the renewables property portfolios to fit In Scotland, energy is increasingly their needs. THE TWIN CHALLENGES OF A synonymous with onshore and offshore FORTHCOMING ELECTRICITY CRUNCH wind turbines, located to take advantage of the dependable gusts of the country’s AND A SHIFT TOWARDS RENEWABLE east and west coasts. Property advice ENERGY, A COHERENT PROPERTY on these new assets – site acquisition, planning, development and business rates STRATEGY HAS NEVER BEEN SO – is at the vanguard of the UK’s moves IMPORTANT. towards a lower carbon future. But more notable than the cleanliness or readers of a certain age, energy With the traditional one-way relationship of these new turbines, at least in the policy is indelibly linked to the three between consumers and generators medium-term, is the extra generating day week. For two months in early shifting – people are increasingly producing capacity they bring. And it is needed: in F 1974, as a miner’s strike severely their own energy from solar panels and a market that is already very tight, some restricted the UK’s generating capabilities, feeding it back into the grid – so the 38 gigawatts of large thermal plant will firms were limited to just three days of traditional infrastructure needs of the close between now and 2025. To electricity per week. Regular blackouts industry are changing. Nascent domestic compound matters, the rise of electric made candles and paraffin lamps the battery technology, as being developed vehicles is expected to add another must-have domestic appliances of the day. by Tesla, is further changing the market gigawatt of demand at peak times, dynamics. straining the system further. Viewed from 2017 it seems like a very different world, but today’s always-on “As the sector adapts, we’re increasingly Small scale generation – such as domestic society is under genuine threat. Policy seeing energy clients that require help solar panels and onsite facilities at major failures of successive governments mean shaping their property portfolios to fit their factories – is expected to account for 40% 1970s-style blackouts are all too real a needs,” says Ken Thurtell, regional partner of the market within 20 years, and this will possibility, with some experts predicting a and head of Gerald Eve’s Glasgow office. go some way towards bridging the supply 40% shortfall in electricity supply by 2025. “From reducing costs on operational sites gap. In parallel, advances in battery to realising maximum value from retired technology will allow storage on a far The prospect of an energy crunch is but assets, real estate is an ever-more central greater scale, helping to smooth over the one challenge facing the sector. From part of an organisation’s strategy.” mismatches in supply and demand that ageing nuclear capabilities to the shift have traditionally undermined renewable towards renewable energy – via domestic The tax treatment of power infrastructure, energy. But reaching a low-carbon future solar generation and battery technology – notably through the business rates system, with enough electricity generated to meet the UK’s energy market is undergoing is of particular importance. With the UK’s demand will continue to be a considerable something of a revolution. And as ever, energy supply market finely balanced, challenge. it is real estate that is in the front line. the size of a rates bill can be the difference between an older power plant “The industry is walking a tightrope,” says Alternating current remaining online – and therefore able to Thurtell, “and it’s vital for everyone that the Overseeing nearly 8,000 km of high- contribute during periods of heightened sector continues to maintain its balance. voltage overhead cabling, National Grid demand – and being closed down In this situation, real estate cannot be is perhaps best-placed to identify the and redeveloped. just passively held, but must be actively structural shifts that are changing the way managed, fine-tuned and sweated if the the UK powers itself. “Before the Nineties Thurtell continues: “With very little UK as a nation is to successfully keep we had a very clear-cut industry,” said headroom between demand for electricity the lights on.” Richard Smith, head of National Grid’s and our generating capabilities, the networks business, in a recent interview. Government finds itself in a tricky position. For further information please contact “It’s not as simple now.” Ken Thurtell on +44 (0)141 227 2371 or email [email protected]

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EASTERN PROMISES

David Hatcher THE SALE OF ST MODWEN AND VINCI’S Head of News & Finance NINE ELMS SQUARE DEVELOPMENT Estates Gazette SITE IN SOUTH LONDON WAS ONE OF THE MOST INTRIGUING STORIES I HAVE FOLLOWED IN YEARS OF WRITING ABOUT PROPERTY, SAYS DAVID HATCHER.

he process provided an intriguing The country’s largest commercial property It seemed odd that it would be On closer inspection, what was 2. Deals with Wanda, HNA, Fosun and The fundamental appetite from such insight into the power the Chinese company, Dalian Wanda, had been the undertaking such an obviously conspicuous by its absence was Wanda’s Anbang will come under more scrutiny investors is unlikely to wane as to some government is capable of wielding name on everyone’s lips as the most likely provocative deal, especially given the name from the statement. Suspicions and uncertainty than any others. HNA London still looks a bargain compared to, T far beyond its shores on the buyer. However, it was Macrolink Group, Macrolink veto, but given it was publically heightened, between ourselves and registered the highest bid to buy the say, Hong Kong where in May a car park country’s companies that have been a company that had never invested in announced it appeared Wanda had Bloomberg, the next morning we managed Olympia conference centre but was not development site sold for $3bn, or $6,400 bossing overseas property markets in European real estate before, that decided managed to please the right people in to reveal that Wanda had been pushed into chosen as the preferred buyer for this per sq ft. But much of this could be offset recent years. to take on such a risky punt and had the high places back home, and the fact that selling the deal on to Hong Kong-based reason. And deal size matters too – one if the Chinese government becomes more site under offer early in the year. it was undertaking the deal through a R&F Properties and CC Land. Whether the of China’s largest companies told me probing. In London where around £10bn The disposal of the 10.2 acre former home Hong Kong-based subsidiary seemed to duo paid Wanda the £470m it dished out they were focusing on small lot sizes in of assets have recently flooded the market of New Covent Garden Market, which has Doubters began to whisper when no give it some sort of magic pass. to the sellers is unknown, but given what order to avoid upsetting the regulator. in the hope of taking advantage of the permission for 1,821 predominantly luxury official announcement was forthcoming evidently became a forced seller situation companies desperate to diversify away flats, was put on the market, arguably and it became clear in March why there The next month the theory Wanda had it appears unlikely. St Modwen chief 3. The Chinese government’s belt and from China, a reduced depth of buyers too late in the cycle, in August last year. had not been: the Chinese government such magic powers was demolished by executive Mark Allan later admitted road initiative has given a clear could leave sellers exposed. This could in Despite concern around the London had unceremoniously vetoed it. No ifs, the government’s iron fist. Chinese banks that even he did not know who he was indication of the type of investments it particular be the case for those with residential market, the word was that no buts. The state visit of Xi to the UK were banned from lending to the company actually selling to. It was a bizarre twist wants companies to invest in overseas secondary assets with short-term income there was decent interest but that there in 2015 may have been met with huge and a huge restructuring including the to a year long tale. – infrastructure and large-scale that have yet to see re-letting risk priced in. was one clear theme amongst the fanfare and a wave of deals timed in $9.3bn sale of hotels and theme parks regeneration along old trading routes potential runners – they were all from unison, but rhetoric from China was was imposed. On 18th August overseas These I think are the main lessons: is more likely to be green-lighted than The next great hope for sellers is Japanese China or Hong Kong. The shortlist was beginning to make clear such agreements property was labelled a “restricted” shiny tower projects. capital but it is not yet here in earnest, and a reflection of their desperate desire to are only possible with state blessing. asset class by the Chinese government, 1. St Modwen and Vinci had a lucky there is a risk that German buyers, which diversify away from their home market meaning that investment would be more escape, in that a deal did get done but 4. Transacting with Hong Kong-based are typically active at this stage of the and get cash out before stringent capital Unperturbed, Wanda, which was one of tightly controlled. when considering transactions with companies or subsidiaries can be mildly cycle, have already had their fill. controls by President Xi’s government four giants alongside Fosun, HNA and Chinese firms it is crucial to understand more straightforward but not always. took hold. These were being put in place Anbang that had become the main focus Surely then the Nine Elms deal had to whether the company already has the Clearly R&F and CC Land have a free Those looking to cash in their chips that due to the systemic risk investors of such of government scrutiny, entered back into be canned? In the EG office we prodded cash offshore to deploy or whether it hand compared to Wanda but with receive reasonable and well funded bids magnitude are considered to pose to the discussions to buy the site, and in June it and poked but everyone involved was will be subject to state approval. most Hong Kong firms typically having for assets should grab the deal with both country, and the impact their activity is struck and announced a £470m deal. determined the deal was still on. Even much of their portfolios on the mainland hands and resist getting greedy. having on currency reserves. still, on 21st August when St Modwen they are still within the Chinese announced that a sale had completed government’s influence. we were flabbergasted.

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PETER VON PUTTKAMER, REALCIS, SPAIN “Paris is lovely for travelling and tourism, together with Paris could have the ability as a financial centre right now. “We think commercial real estate in the two major sufficient potential employees and available office space, Impressive business hubs and real estate developments Spanish cities may benefit from a possible, but in our but France is not known as a fan of banks nor for its are ongoing. Paris has lots of assets that many companies THE VIEW view limited, exodus of some UK firms to Madrid and competitive tax regime – which may admittedly change could seriously consider.” Barcelona, seeking to improve their links to South with former banker Macron as President. Frankfurt has America and maintain a European passport. everything except the weather.” MORTEN HAHN, DR. LÜBKE & KELBER, GERMANY “We have seen a first ‘run’. More than 10 of the largest FROM EUROPE “Residential would be very different, as a significant INGRID CEUSTERS, GROUP HUGO globally active banks have committed to Frankfurt as number of British residents in Spain may move back CEUSTERS – SCMS, BELGIUM the new EU headquarters including Goldman Sachs, to the UK and try to sell their homes here, which would “Lloyds of London has decided to open an office in Morgan Stanley, Citigroup and diverse Japanese banks WITH NEGOTIATIONS SURROUNDING depress apartment and house prices along the coast Brussels, to be in operation as of the beginning of such as Nomura and Daiwa. We know that different even more. In summary, Brexit will cause a lot of 2019. This is a direct result of Brexit, and will hopefully scenarios have been further developed by companies THE UK’S DEPARTURE FROM THE EU upheaval for what we think are all the wrong reasons.” be followed by many others that are dealing with the that will be affected by Brexit and that these plans will be NOW WELL UNDERWAY – AND THE EU. As well as general advantages – a multi-lingual implemented in a timely manner as the situation becomes “Recent developments in Catalonia have demonstrated workforce, central location, accessibility etc – one of clearer. We assume that at least 8,000 employees will RACE TO ATTRACT FINANCIAL that the rule of law has been re-established and that the reasons for choosing Brussels was that Lloyds could have to relocate to Frankfurt in the next few years.” Catalonia is and will continue to be an important part of be pretty certain that it wouldn’t be leaving the EU! OCCUPIERS BECOMING INCREASINGLY Spain. The December elections should hopefully confirm “Frankfurt is an established European financial and COMPETITIVE – ENGAGE SPOKE WITH the peaceful and complete return to normality as well as “We’re sorry for our London colleagues . . . but obviously banking location which offers many ideal conditions provide investors with the needed security for the future.” very willing to join efforts to help these companies in their such as the best-connected airport in Germany and GERALD EVE’S EUROPEAN ALLIANCE moves to the continent!” the seat of the European Central Bank.” PARTNERS TO SEE HOW THE SYLVAIN PIEDFER, ESTATE CONSULTANT, FRANCE “There are rumours of some banks moving staff to Paris, EMMANUELLE GAUTHIER, MICHAEL CHIDIAC, REALCORP, LUXEMBOURG KEY DESTINATIONS ARE SHAPING UP. and the European Banking Authority (EBA) may choose EUROFLEMING EXPERTISE, FRANCE “We have had M&G, AIG and Blackstone all recently La Défense following Brexit. Yet in my understanding it is “Over the past months and since the change of elect to set up their European hubs in Luxembourg, Frankfurt, with the most balanced offer, that will be the president, more strength is provided to companies although sadly we missed out on Lloyds!” biggest winner in terms of jobs. and work legislation is about to change. CONTINUED >

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JAMES MULHALL, MURPHY MULHALL, IRELAND AND THE VIEW FROM THE UK “The office market, primarily in Dublin, has already STEPHEN PEERS, GERALD EVE, LONDON experienced an increase in demand from international “The relocation of some UK-based staff to other companies such as J.P. Morgan, Barclays, Standard EU cities is inevitable. In a way that is yet to be fully AN ASSET Life and others growing their existing operations understood, Brexit has changed the landscape for in Ireland. As is well known, Ireland attracts such those with financial trading mandates within Europe, companies and will be the only English speaking and with that change comes a natural, proactive country in the EU post Brexit. reaction to shape a business accordingly.

“The current office supply in the pipeline should “For some, this will be an opportunity to widen their TO THE FIRM accommodate any post Brexit relocations. In terms centre of excellence beyond the pivot of London, of the investment market, the uncertainty caused by whether it is eventually necessary or not. For others, Brexit has led to a slowdown of UK funds and private if passporting is to alter and the movement of employees ENGAGE CATCHES UP investors considering Ireland. Conversely, it has seen is to be restricted, then they simply have no choice. a renewed focus from European and other international And, understandably, our European colleagues are WITH GERALD EVE’S funds looking at prime assets in Dublin in particular. keen to capitalise on this opportunity. NEW PROPERTY AND “The bigger issue for Ireland is that Brexit and “That said, one year on from the initial shock, the feeling ASSET MANAGEMENT the weakening of sterling will mean challenges for ‘on the ground’ is that the impact of these shifts may Irish businesses trading with our most important and be somewhat less than originally feared. Anecdotally, TEAM TO LEARN closest economic partner. Ultimately this will affect the majority of mooted relocations appear to be reserved ABOUT THE LATEST economic growth.” for key European personnel, on a case-by-case basis. Conversely, over the past year we have some other, STRING TO BE ADDED much diversified industries – particularly those in the tech and creative sectors – committing to London in a big TO THE FIRM’S BOW. way; all of which compete with our financial markets for the very best talent. A combination of continuing traditional occupier demand, a less dramatic reaction from the FSI sector than first feared and some major new entrants suggests to me that the prospects for this great City remain both positive and strong.”

vonne Smith is outlining how Duru adds: “Gerald Eve also understood Gerald Eve’s new property and the quality of the service we undertake. asset management recruits fit We’re very particular and discerning Yinto the wider firm. Yvonne was about what we do, and we couldn’t recruited alongside Angela Duru and work somewhere we would need We describe ourselves Jennifer Cottle in spring 2017 to bridge to compromise. These same values as being at the centre of the noticeable investor side property and can be seen throughout the firm, a wheel, with access to asset management gap in Gerald Eve’s in all departments and at all levels.” capabilities. The three of them previously the full range of services. worked together at a specialist advisor, Transparency At any given time, we’ll but the opportunity to create a new team For the property and asset management within a larger firm was an irresistible one. sector as a whole, these are interesting be engaged with every times. The need for a good strategy for department in the firm, “Gerald Eve had existing asset each asset and portfolio has never been but crucially remain the management capabilities,” says Cottle, higher, but at the same time previous “but didn’t have the capacity to take approaches have been found lacking. The single point of contact for advantage of all the opportunities presented practice of using property management the client. It’s a structure by its great client list. Now we’re here, as a loss leader – in the hope of picking that works for both us the firm is being retained by clients who up lucrative agency fees – has shown would previously have looked elsewhere itself to be unfit for purpose as landlords and the client. for their management requirements.” tire of the hidden charges. Continued >

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Typical clients “We work with clients of all sizes,” says CASE STUDY: Smith, “but the majority of our work falls MERCURY PLACE within what some would call the middle ground – not the largest REITs and We’re seeing a lot of high institutions, which have global mandates with the biggest firms, but the assets and net worth clients who portfolios we advise on are still sizeable have bought trophy and significant.” buildings, but would be Cottle adds: “A typical client might be seen as small fry by the an endowment or pension fund, or a larger firms. As a result, high net worth individual. We’re seeing a lot of clients who have bought trophy they come to us knowing buildings, but would be seen as small they’ll get the attention fry by the larger firms. As a result, they and advice they need come to us knowing they’ll get the attention and advice they need.” Mercury Place is a dual-use building “Owners understand that they get what Duru continues: “In monetary terms, in Leicester, offering 59,000 sq ft of they pay for,” says Cottle, “and there’s the portfolios we manage would usually office space over five floors and an growing discontent with management be between £100m and £500m in adjoining 24,000 sq ft of warehouse contracts that look cheap but end up value. Again, it’s the middle ground that space. Situated on a 2.4-acre site expensive as charges are hidden away is under-served by other firms, and close to the city centre, it includes in ancillary services. Frankly, we’d rather offers excellent opportunities as a result.” undercover car parking spaces and be transparent with our clients when it was previously owned and occupied comes to fees and make sure they get Cottle adds: “When we were first by the Leicester Mercury newspaper. the strategy and services that benefit speaking with Gerald Eve, we heard them, not our bottom line.” Simon Prichard describe the firm as The team was appointed by the new ‘small enough to care, large enough owners to devise and implement a Smith continues: “We’re different to to deliver’ and that really struck a chord comprehensive asset management larger firms, who tend to offer high- with us.” For clients and colleagues strategy that would maximise the volume, low-quality services but struggle of the three new arrivals, their passion value of the property. With the majority with issues such as staff turnover as and enthusiasm has really struck a of the property already stripped a result. We’re providing a bespoke, chord too. back to shell-and-core, and the high-quality service with partners 30 year old services suffering after working on each and every instruction. Duru concludes: “Now, with the new years of under-investment and We’re innovative and nimble in our capability in place we are able to offer mismanagement, a full refurbishment approach, which the larger firms can’t asset, property, portfolio and facilities of the building was in order. be. Similarly, there’s a growing feeling management alongside Gerald Eve’s that cheaper, higher-volume asset existing suite of services.” The team oversaw the refurbishment managers have relatively little impact works to Cat A standard, reduced on values and returns.” For further information please contact energy consumption by 24%, and the team on +44(0)800 140 4978 improved both cashflow and the average length of unexpired leases. The strategy saw an increase in value of 66%.

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n November 2016, London Mayor, With these ambitious targets being set, Sadiq Khan, appointed the capital’s Engage caught up with Amy Lamé to first ever night czar in a bid to hear her views on how the city can I protect the city’s established venues balance the need for new homes, and enhance the night time economy. workplaces and infrastructure alongside Speaking upon the appointment of a thriving night-time economy and a NIGHT Amy Lamé to the role, Khan said: “My diverse cultural backdrop. night czar will be working with other businesses, local authorities and Speaking of the challenges involved, she Londoners to maximise the economic said: “My first priority is to stem the tide and social impact of a growing night of closures. And then my ultimate goal is time economy“. to turn London into the most dynamic VISION 24-hour city in the world. The job of night czar may sound enviable on paper, but the reality is far more “But this is a nuanced job that requires HOW LONDON’S NEW NIGHT CZAR challenging. Despite – or maybe because conversation. Of course I will fight hard of – London’s status as a world city, its for venues and operators, but I also IS TRYING TO BALANCE THE once famed night-life is now in rapid understand that co-operation with NEED FOR A VIBRANT NIGHT-TIME decline. Since 2007, London has lost developers is absolutely vital. Having 40% of its live music venues and half good relationships with all stakeholders ECONOMY WITH CONTINUED of its nightclubs. – the developers, the councils, the police, planning and licensing – is the only way DEMAND FOR NEW HOMES AND This presents the city’s authorities with we can ever reach any consensus and WORKPLACES. a thorny dilemma. The influx of new work towards achieving this goal.“ residents and workers into London all come for social and cultural reasons as The appointment of a night czar is the much as employment reasons. They first step towards addressing one of the also need somewhere to live, yet no-one major problems to have affected the wants to live next door to a nightclub. city’s nightlife in recent years. To date, those with most influence over licensing In a bid to address this dilemma, decisions are local councillors and London’s Night Time Commission, led by police officers – neither of which has Khan, along with Lamé and Philip Colvin any incentive to promote a night time QC, has launched a vision for London as economy. Police officers want to reduce a 24-hour city. Speaking at its launch, crime and anti-social behaviour and We ignore this at our peril. We are “It doesn’t take a genius to work out My ultimate goal is to Khan said: “I want London to be a global councillors are at the mercy of local facing an uncertain future with Brexit that you can make more money by leader in the way we plan for life at night. residents who generally oppose any and we have an opportunity to turning a pub into flats than you can by turn London into the most But we face tough competition, with increase in nocturnal activities. really craft and create a dynamic, pulling pints,“ she says. dynamic 24-hour city in Paris, New York, Berlin, Tokyo and San well-balanced 24-hour London. “ the world... Francisco all looking to grow their night The Night Time Commission will bring Although she admits there is no quick Amy Lamé time offers. local authorities, businesses, police, Figures from Gerald Eve also estimate fix, Lamé is clearly looking towards the London Night Czar residents and workers together to shape that London’s night time economy property industry for solutions. “The ...The development “London’s greatest asset is its diversity. its plans and will seek the views of a contributes some £400m per annum in development community has a crucial community has a crucial I want to make sure London at night is wide range of Londoners. They will business rates revenue – sums that are role to play in making London a 24-hour welcoming and accessible for all. This recommend policies and new initiatives not easily replaced if venue closures city and in future-proofing the night-time role to play in making isn’t just about pubs and clubs. It’s about to the Mayor to make London at night continue at their present rate. economy. A key part of this role is London a 24-hour city a whole range of activities and services, a vibrant place for everyone. ensuring that good acoustic design and in future-proofing from museums and theatres opening While the Night Time Commission is is embedded into their plans and that later, to being able to do your weekly Preserving and enhancing the capital’s making some inroads and encouraging their buildings are well soundproofed. the night-time economy shop after an evening shift, through to the nightlife is not purely a hedonistic a more joined up approach among key That way, new developments can safety of those working and travelling at exercise. As Lamé explains: “London’s stakeholders, surely the biggest threat thrive alongside night-clubs, bars and night. We need positive planning for our night-time economy is worth an to London’s nightlife is high property grassroots music venues without night time economy – to attract the right estimated £26bn and accounts for costs. Lamé readily admits property is compromising residents’ need for a balance of businesses and activities one in eight of the capital’s jobs. a big problem. good night’s sleep.” at the right times.”

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Thankfully Goldman Sachs understood STEVEN LEWIS, CEO OF and were aligned to the rationale”, SQUARE METRE ASSET says Lewis. MANAGEMENT, TALKS “By combining a market-facing The key word for us is TO ENGAGE ABOUT asset management-led strategy to the acquisition and disposal of assets, relationship... We want to THE ORIGINS OF HIS alongside the reporting rigours of an act as trusted advisor and FIRM AND HOW THE investment bank, we really have been co-investor on carefully able to identify and add disproportionate BEST OPPORTUNITIES value.” selected assets – and only Steven Lewis CEO of Square Metre ARE ALWAYS A Having successfully managed some when the market timing Asset Management PRODUCT OF TIMING. £675m of assets, Square Metre has is right. cemented its pedigree and is poised for further growth. With a demonstrable track uring a recent interview with The following three years were record, Lewis is eager to offer Square Steven Lewis, we didn’t take the characterised by uncertainty and lack of Metre’s rigorous asset selection and opportunity to examine his choice opportunity due to the effects of the global business plan execution capabilities to Dof watch. However, for a man who financial crisis. During this period, Lewis new investors. has built his entire career on a judicious quickly came to understand the rigorous sense of timing, we can safely assume that analytical approach required by the bank ”The key word for us is relationship”, adds his timepiece is precision engineered. and seized the opportunity to apply this to Lewis. ”Our rationale isn’t just about the real estate marketplace. getting hold of money and then deploying. In a career spanning three decades, Lewis We want to act as trusted advisor and has ridden many peaks and troughs and ”The level of analysis and due diligence in co-investor on carefully selected assets emerged with a reputation for shrewd the initial underwriting stage of a deal was – and only when the market timing is right. investment decisions. A commitment unlike anything I’d ever encountered to robust analysis and a willingness to previously– despite having cut my teeth An unwavering commitment to this challenge market consensus are the in major propco’s such as Ladbrokes approach has underpinned the success cornerstones of his boutique advisory and Burford.” of our continuing relationship with firm, Square Metre Asset Management. Goldman Sachs. The bank has recognised As he began to better understand the the value we add and we look forward to Since its inception in 2013, Square Metre bank’s method of working and investment offering the same to other investors at the has kept a discrete profile, working as rationale, Lewis saw the opportunity to appropriate moment.” asset manager to Goldman Sachs on a bring appropriate deals to Goldman Sachs’ series of portfolio investments. Lewis and attention. At the end of 2012, perceiving Lewis is justifiably proud of Square Metre’s his team have successfully implemented value where the market had not yet done track record in a short time, but sounds many and varied business plan strategies so, a case was made for a multi-sector a note of caution for future investment across all UK commercial real estate portfolio strategy to be executed by decisions. sectors, with the ability to call markets Goldman Sachs in partnership with Lewis. and realise value being at the core of It was at this moment that Square Metre ”We have now entered a phase in which the business. was born. Overlaying Lewis’ extensive we cannot rely on yield compression to market knowledge to Goldman Sachs’ add value. A wider understanding of Talking of his relationship with Goldman intensive analysis, both parties were ever-changing macro and micro market Sachs, Lewis says ”I was first introduced confident of an imminent improvement in conditions together with careful asset to Goldman Sachs via Andrew Rosenfeld, the UK property market following historic selection and detailed asset management former Chairman and CEO of Minerva Plc, lows between 2008 and 2012. will be vital to ensure value enhancement who approached me at the tail end of in the current environment. Whilst I’m very 2007 to work alongside him to identify ”The global financial crisis caused a market proud of the assets we have bought, I’m investment opportunities that may have shift the likes of which we had never seen prouder still of the ones we didn’t buy”. been of interest to Goldman Sachs before. The resulting opportunity was managed real estate funds.” simply too good to ignore.

Illustration: Neil Webb WWW.GERALDEVE.COM ENGAGE FEATURE FEATURE ENGAGE 18 ISSUE TWELVE WINTER 2017 WINTER 2017 ISSUE TWELVE 19

AS THE CASUAL DINING MARKET CHANGES, ONE OF ITS MOST POPULAR OPERATORS IS ADAPTING WITH THE TIMES. ENGAGE SAT DOWN WITH JAMES DORAN AND TOM TRENCHARD FROM WAGAMAMA’S PROPERTY TEAM TO LEARN MORE ABOUT THE OPPORTUNITIES AND CHALLENGES IT FACES.

n the 25 years since the first wagamama opened its doors on a Bloomsbury back street, the pan-Asian restaurant group has become a firm high street I favourite. Those in need of their fix of gyoza or For wagamama, the teppanyaki now have 128 restaurants across the country to choose from, as well as five US eateries and a further current market is creating 47 franchises worldwide. opportunities. Its portfolio With much of this expansion taking place over the past size makes it relatively decade – in 2005 the group had only 37 UK restaurants, small when compared to and has more than doubled in size since 2011 – the some of its competitors, growth of wagamama has mirrored the wider boom in casual dining during the same period. But is this set to and opportunities for continue, and how will wider economic pressures affect “If consumers want pan-Asian food – or landlords, for that expansion are presenting wagamama and the food and beverage (F&B) trade? matter – it’s wagamama that they come to. We offer fresh themselves... food, great service, enjoyable new fit-outs and a cool “F&B has been increasingly important to landlords for brand. Landlords like us.” some time,” said James Doran, head of estates at The growth of the brand can wagamama, “and that appetite is still there. Schemes “Increasing costs and pressure on consumer spending that were predominantly retail are changing focus slightly are exposing those chains that perhaps expanded too be seen in the new types of and looking to further compliment the retail with F&B. aggressively in the past,” added Doran. “We may not have building we’re occupying and If it’s a good mix, and the number of operators isn’t too grown at their rate during the boom times, but it means excessive, then it can work for all, but beyond a certain we’re better placed now.” also the quality of the fit out. point the supply simply outweighs demand.” “The wagamama brand, our like-for-like growth and It is certainly a sector that has seen remarkable growth, covenant are all attractive to scheme owners,” continued but the outlook for some isn’t entirely rosy. For every Trenchard, “but we still choose where we go very carefully. occupying and also the quality of the fit out. Our wagamama – whose expansion has been more organic Growth of new sites is still important to us but quality investment in kaizen (“good change”) fit-out on sites such and sustainable than others – there are groups that over quantity.” as Covent Garden and Soho reflects the changing nature arguably over-extended themselves as the sector of the wagamama offer.” A look at a newly-refurbished boomed and are now starting to pay the price. A look at New formats, new markets restaurant, incorporating a range of new features – the nation’s high streets would suggest certain categories Like any successful operator, as wagamama has including separate ‘booths’ alongside the traditional are potentially over-served in a number of locations. expanded its brand and offer have evolved. Where initially communal bench seating – reveals an evolving interior its restaurants were located in basements or on first floors, ethos, designed to be more appealing to families and For wagamama, the current market is creating it is now seeking more prime space, and is testing its small groups. opportunities. Its portfolio size makes it relatively format in non-traditional locations. small when compared to some of its competitors, and So what, in broad terms, do they seek in a new site? opportunities for expansion are presenting themselves Doran explained. “As the group has evolved ground floor “We ideally need three-and-a-half to four thousand square as larger groups rein in their growth or even retrench space makes most sense for us – and landlords also want feet of ground floor space,” continued Trenchard, “and it following past over-commitments. us there – and this brings both the advantage of greater needs to be accessible and visible. We need a population footfall but the challenge of higher rents and rates bills.” whose demographics fit our profile, and high footfall “The advantage wagamama has is that we’re in is important.” a category of one,” said Tom Trenchard, head of Trenchard picked up on the theme: “The growth of the acquisitions. brand can be seen in the new types of building we’re Continued > METAMORPHIC WOK METAMORPHIC

WWW.GERALDEVE.COM ENGAGE FEATURE 20 ISSUE TWELVE WINTER 2017

LANDAID DAY 2017

THE PROPERTY INDUSTRY’S BIGGEST DAY OF FUNDRAISING WAS HELD ON THURSDAY 12TH OCTOBER WITH THE RETURN OF LANDAID DAY.

This year’s theme, ‘Record Breakers’, saw a day of activity and events taking place across the firm, with everybody invited to take on a wacky world record or set a personal best and raise money in the process.

A special mention goes to Kirstie Murray for winning the largest and most outrageously decorated cake competition, Samantha Hall for managing to eat 40 Smarties in one minute using chopsticks and Freddie John who won the golf putting challenge after a fiercely fought competition. The group has also tested itself in non-traditional locations more than 20%, and will see it pay an extra £2.5m such as airports, with two restaurants at Gatwick Airport a year by 2021/22. The problem is particularly acute in Gerald Eve is a foundation partner of LandAid, the property and a further one at Heathrow Terminal 5. “Putting sites London, where rents have continued their upward spiral industry charity working to end youth homelessness. into airports is not for the faint-hearted,” said Doran, and the group’s best prime sites have seen their rates “but the feedback from the airports has been great. It’s liabilities quadruple. Gerald Eve advises the group on on a turnover rent basis, which fosters a good working mitigating its rates bills. relationship with the landlord, and the three locations have proven to be very successful.” Doran commented on the challenges: “There’s this enormous upward pressure on property outlays, while at But perhaps the most significant shift in the wagamama the same time significant challenges such as increased property portfolio is being shaped by the rise of take-out staffing costs are squeezing the business elsewhere. The and Deliveroo. With the home delivery service now impact of these rises – especially business rates which to available from 93 of the group’s UK restaurants, it’s a certain extent are beyond our control – will be felt at the increasingly a factor in the location, fit out and pitch margins. Potential new restaurants will become unviable of each restaurant. and the investment won’t be made.”

“On a very basic level, each restaurant needs more Trenchard added: “F&B is an incredibly competitive and kitchen space to meet the increased demand,” said dynamic sector, with new operators and formats entering Doran. “So existing restaurants need redesigning and the market all the time. Therefore we need to be very new locations have a larger footprint. Then you need to discerning in our choice of future locations. The consider how food pick-ups are handled – you don’t wagamama brand is strong – and its fun persona is part want delivery drivers wandering through the restaurant, of its success – but to continue to thrive we need to so do you have a separate entrance / counter? Deliveroo continually reinvent ourselves. We all know that evolution wasn’t a factor five years ago, but it is now part of the is vital if we are to remain relevant.” acquisition and fit-out thought process.” Landlords seeking an operator such as wagamama Property challenges – with the nimbleness and innovation that have been the There are, of course, a number of real estate challenges hallmarks of the brand’s success – should take heed. that the group is facing too. April’s business rates revaluation has increased wagamama’s total bill by For further information please contact Richard Stoney on +44 (0)20 7333 6313 or email [email protected] Visit www.landaid.org for more details.

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