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What happened to jobs? Over the past decade, office job growth has become more concentrated in a handful of locations, to an extent that has not been particularly appreciated by business or policymakers, let alone the general public. Over the 10 years leading up to the financial crisis – 1998 to 2008 – 50% of new jobs were created in some 48 Local Authority areas and 75% in 121. In contrast, over the 10 years leading up to the end for 2022, half of additional jobs were created in just 23 Local Authority areas, and the figure only rises to 77 at the 75% level.

Rewind to 1998-2008, and the picture is somewhat different. The top 20 features out-of-town locations such as West Northamptonshire, South Gloucestershire, Milton Keynes, Swindon and North Yorkshire.

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The single biggest quantifiable threat to many offices is their poor environmental performance. Part of this is driven directly by legislation.

Under Minimum Energy Efficiency Standards (MEES) legislation, The UK Government has already made it unlawful to let or sell buildings with an Environmental Performance Certificate (EPC) rating of F or G. It is consulting on making B the minimum permissible rating by 2030, with a possible intermediate step of C in 2027. Given some of the issues around EPCs – namely, their lack of reliability and questions around their relationship with actual building performance – the Government has also previously considered introducing an alternative measurement system. This would likely be along similar lines to the Australian NABERS certification, which involves measuring actual operational carbon emissions and energy efficiency. This would be unlikely to make the problem less significant.

At the same time, businesses’ own requirements are becoming more stringent. Many have their own plans to reduce carbon emissions based around either net zero or science-based targets, which mean it will be hard for them to own, stay or move to poorly performing buildings. Even if the rate of change slows or government goalposts are shifted, the direction of travel is apparent – which means that the poorer the environmental rating of an asset, the less attractive it is as an investment. Furthermore, occupiers know that younger employees are increasingly environmentally aware and prefer to work (and stay) at companies that demonstrate their sustainability credentials – and what is more public and obvious than their premises? This is part of a wider trend in which offices and workplace design support corporate branding as well as recruitment and retention. Investors, who must take a longer-term view, are also critically aware of these factors and increasingly see poor environmental performance as a major risk, whatever the regulatory system.

Until more reliable measurement systems are in place, EPCs remain both the only real comprehensive source of data, and as they are legally binding, they are of great importance to the office market. There is a huge geographic variation, which is partly a result of the underlying distribution of offices (which are highly concentrated in London and a few other centres) but also the longer history of where these buildings have been constructed and how.

It is also difficult to generalise about how much it will cost to retrofit office buildings, as it varies significantly. However, there are tools emerging such as our own ME:EStimate, which provide rapid, reasonable indicative estimates of retrofit costs. Such estimates can help inform early-stage thinking on refurbishment versus change of use.

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The purpose-built office has only been a major feature of our cities for less than two centuries. It has become central to our working lives, to pension fund portfolios, and to city centre economies. But the sector is being challenged as never before in its relatively short history. Long-term structural shifts are fundamentally changing the patterns of occupation, investment and development within the sector. There are huge consequences which reach beyond the property industry to the wider business and local communities and both local and central government. The office will remain a major feature of our cities. But, the overall stock is likely to be smaller and more concentrated in a handful of locations.

With the mandatory 10% biodiversity net gain (BNG) recently turning six months old, we thought it might be helpful to collate a few FAQs and share them with our clients and followers.  

Thanks go to our collaborators, Dr Martin Brammah at Sweco and Matthew Stimson at Bevan Brittan, for their input on the technical ecology and legal bits.

Any questions, please don’t hesitate to reach out to Oli Pye, Mathilde Francois-Downey or Jon Bradburn. Hope it helps!

Click below to view 👇

Our 2024 Retail Market Update is here…

The Retail sector is prospering, with improving sales figures and annual volume growth, driven by increased consumer spending and falling inflation. These positive trends are expected to intensify through 2024.  The bumper profits announced by M&S announced this week, hot on the heels of the recent positive results from Currys, provides evidence of how quickly the market is already improving.

Read our annual Retail outlook to discover the key trends shaping the future of retail and what they mean for the industry 👇

Contact one of our dedicated Retail & Leisure team for more information.

*This research has been prepared for general information purposes only. It does not constitute any investment, financial or other specialised advice or recommendations, and you should not, therefore, rely on its contents for such purposes. You should seek separate professional advice if required.

Town centres face both challenges and opportunities that will shape their future in 2023 and beyond.  Our shopping and working habits continue to change with a commensurate impact on our urban places. The governments continued Levelling Up agenda is set to impact many town centres, with funding and partnerships being used to drive regeneration and development. Additionally, the upcoming Business Rates revaluation should, in the main, help the high street.

The Montagu Evans Town Centres sector team delve into the key trends and challenges for the sector in 2023 in their full report below.

 

With London’s population increasing so rapidly, it’s clear that providing enough new homes at an affordable level is going to be one of the key planning and development issues over the next few years.

Below is our final research report concluding our ‘London as a 10 Million City’ series. It also ends our yearlong City of Tomorrow campaign. Thank you to everyone who got involved. Please keep your eyes peeled for our next campaign launching in the new year.

Please find the web version below and the full-resolution version HERE.

*This research has been prepared for general information purposes only. It does not constitute any investment, financial or other specialised advice or recommendations, and you should not, therefore, rely on its contents for such purposes. You should seek separate professional advice if required.

The role of the town centre or high street has evolved to become less about shops, and more about place. Successful towns embraced their individuality to create a stable community, one that has ownership of its vision, understands its requirements for housing delivery, employment growth, connectivity and the confidence to embrace its purpose. Our places will always need to provide compelling offers and a diversity of use to thrive, now more so than ever before.

Solutions are complex by their nature, and this is where we excel. Having knowledge of the full development cycle and our experience in linking public and private imperatives to unlock value can help towns not only be resilient to change, but adapt and thrive. Montagu Evans’ Recovery and Restructuring team applies our combined knowledge of overcoming common challenges in the sphere of property lending, with asset class and market specific experience. We harness individual expertise into one integrated team dedicated to delivering creative solutions for lenders and Insolvency Practitioners on the challenges they face.

*This research has been prepared for general information purposes only. It does not constitute any investment, financial or other specialised advice or recommendations, and you should not, therefore, rely on its contents for such purposes. You should seek separate professional advice if required.

HERACLITUS ONCE SAID, THE ONLY CONSTANT IS CHANGE, AND THAT IS CERTAINLY TRUE.

Real estate stands out as an example of an industry that has managed to survive a long uninterrupted period of little change in terms of required services and means of delivering those services. But like most industries, it is now meeting disruption head on in the Fourth Industrial Revolution (IR4). We identify that the application of emerging and existing technologies will have a major impact on real estate development, from the selection and acquisition of sites, to design, planning, construction and sale of a completed scheme.

Please see below our research that launched in November 2019. Although, a lot has changed since then, many findings still stand today.

*This research has been prepared for general information purposes only. It does not constitute any investment, financial or other specialised advice or recommendations, and you should not, therefore, rely on its contents for such purposes. You should seek separate professional advice if required.