Two concepts in one at Tayēr + Elementary by Edit! Architects
Tayēr + Elementary brings two connected bars together within a single space, complementing each other without competing.
A consensus is emerging: the global COVID-19 pandemic will cause acute short-term disruption, and medium-term recession, but it is ripe with long-term opportunities for real estate. David Thame reports.
Investors and developers were keen to buy into logistics property long before anyone heard of the coronavirus. But the pandemic has starkly revealed the importance of the supply chain, and the surge of investment into warehousing is likely to grow once normal life resumes, according to analysis by US logistics aproperty giant, Prologis. The big money will head for so-called urban logistics (think parcels depots, only bigger), which usually have only a small office element, but there is still high demand for typically 350-450,000 sq ft regional and 600-800,000 sq ft national distribution centres (RDCs and NDCs).
These enormous buildings contain a larger and increasingly sophisticated office element. Look, for instance, at the 30,000 sq ft of CAT A offices included in Evans of Leeds’ latest 437,000 sq ft warehouse at Fradley Park, Lichfield. Expect a lot more office floorspace, and a lot more of that floorspace to be CAT A, in the post-virus logistics sector.
Nothing delivers a sharper reminder of the value of generously proportioned living areas, and the joy of gardens, than being confined to your home for 12 weeks. Once the Covid-19 pandemic is over, tenants and buyers will look with newly enlightened eyes on the UK’s still nascent coliving sector, and on pokey one-bed and studio apartments. Some, like FT columnist, Janan Ganesh, go a step further and suggest that the idea of networking itself will become less obviously a virtue as the most networked cities on earth, like New York and London, reveal themselves to be the most vulnerable to viral spread.
Could it be that, after 30 years of hectic growth and prolific ‘densification’, the tide will turn as more people see the virtues of open air, relaxed widely spaced suburban life? The idea that living and working in a city isn’t the be-all and end-all of life will come as a shock to Millennials. To the over 50s, who have seen cities come in and out of fashion before, the adjustment will be easier. So, whilst the thirtysomethings head to the ’burbs, priced-out oldies may make a return to the city? Senior living could be one of the surprise winners.
This reporter listened-in to a tech-based business’ team video conference soon after the UK lockdown. ‘We’ve got over a 100 people on this conference, and you’re all working from home, so we’ve realised we really don’t need to rent offices anymore,’ said the Finance Director, who promptly announced the business was terminating every lease in its portfolio – almost all of it in serviced or coworking space. And they don’t plan to hurry back when the pandemic is over. Decisions like this will mean a big hit for serviced office operators.
The emerging coworking sector always looked vulnerable to recession, but the coronavirus pandemic has multiplied their problems. London-based IWG, the world’s largest serviced workspace operator, has asked for a rent-free period on its 62 million sq ft portfolio. Meantime, WeWork’s woes have multiplied – Softbank Group have pulled out of a share buyback deal with the coworking company worth $3 billion, citing closing condition not being met. After agreeing in October 2019 to purchase shares as part of $9.5 billion rescue package, the deal would have seen the Japanese company take an 80% stake.
Expect a rapid correction in the coworking sector: some (perhaps many) operators will not survive. Landlords may take over their space and operate coworking suites directly.
The coronavirus lockdown will be an extinction event for many retailers, particularly if they already had worrying balance sheets. Simultaneously, many more shoppers will learn online habits during the lockdown, habits they will not shake off, which spells problems for those retailers that survive. It all adds up to trouble for traditional shopping centres.
Major landlords, like Intu, were on the brink of collapse before the outbreak, and now their chances look dire. So expect a rapid pivot away from retail by some landlords (of the kind Hammerson is already trying to execute), expect shopping centres to close, and expect their often valuable town centre sites to be rapidly recycled for housing and workspace (there is surprising enthusiasm for office development). Forward-thinking landlords, like New River Retail, are already calculating the value of alternative uses of their shopping centres. Today, they are almost alone in doing these kinds of sums. By this time next year, they will have many, many rivals.
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