26 commercial property roundtable


SEGRO and The Business Magazine gathered sector experts to discuss current market conditions and matters affecting its future wellbeing. Factors such as technological advances, workstyle change, new regulation, and energy efficiency came under debate but there was one underlying question . . .


Do we need workplaces ... or simply spaces to work?


Participants


Kate Dean: Regional director, SEGRO


Chris Hiatt: Head of the national offices, Jones Lang LaSalle


John Alker: Director of policy & communications, UK Green Building Council


Simon Peacock: Jones Lang LaSalle, current chairman British Council for Offices, South West and Thames Valley region


Lined up to debate: our Roundtable team


John Burbedge reports the roundtable highlights Market overview: Grade A, green thinking and pre-lets


David Murray invited Roundtable comment on only 28% of the 12 million sq ft of available Thames Valley office space being Grade A, with 50m sq ft of leases due in the next five years.


Chris Richmond of PwC: “We have 18 lease expiries coming up within five years so we are active in the market, but we have precise requirements for larger floorplates and it is very clear that such Grade A space is lacking in the Thames Valley. We are also looking for fuel-efficient buildings that will sell our business. We have occupied many of our buildings for 20-25 years, and now we want to send out a statement through our real estate that we are a modern forward-thinking business.


“Because we have lease expiries coming up shortly in Reading, we are having to consider contingencies. I see ourselves having to work with our landlords to extend our occupation in many of the buildings we have got, while keeping our future plans in place to secure buildings that support our business.”


Property agent Jeremy Bates of Savills: “That’s exactly what we are seeing with many global corporates in the Thames Valley. Tenants have stayed in buildings, but increasingly some of those buildings are becoming obsolete. Nowadays, there is increasing acceptance


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that a better workplace produces a better business, which 10-15 years ago was less prevalent as an ideology. Due to more active leasing markets and take-up levels in the late 1980s and 90s informs us that there is a significant opportunity for new development over the next few years as companies with lease events are likely to decide to relocate due to both inappropriate or ageing buildings and the desire to provide a better working environment for their people.”


Chris Hiatt, of Jones Lang LaSalle mentioned another potential change to the office market. “There has always been a ready supply of speculatively built buildings, but that supply has now dried up. There are eight buildings in the western corridor being spec built at the moment – we can’t see another wave of spec building coming through. We may see a move to the world of pre-lets following the American and Australian model of ‘built to suit’.


“Also, watch out what happens to the costs of these buildings because the rents we are seeing on built space at the moment are the product of poor demand, but if you start putting a proper viability on these schemes it will be a totally different rent.


Bates suggested there are currently two active poles of the office leasing market:


Chris Early: Estates manager,Telefonica


Chris Richmond: PwC, sits on BCO Occupiers Group


Jeremy Bates: Executive director, head of National Offices, Savills


Carl Blanchard: Associate director, Jones Lang LaSalle


Yvette Hanson: Principal director, tp bennett, architectural & interior designers


Ian Durbin: Partner, Hoare Lea consulting engineers


David Murray: Managing editor and publisher of The Business Magazine, chaired the discussion


the Grade A market where corporates seek to gain cultural change, consolidation and operating cost savings; and the value market where companies were taking on “existing ‘on the shelf’ buildings and doing something interesting with them inside.”


Murray asked Kate Dean about the type of development planned on SEGRO's major IQ Slough project: “There is not going to be any spec building for the time being. Our ethos is that we are ‘getting ready’, preparing by doing demolition and enabling works but we won’t commit to spec building yet. That’s a comfortable approach for us because it foreshortens the delivery timescale, while giving us flexibility around design when occupiers come to talk to us about pre-lets.”


THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2012


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