Cushman: Demographic shifts will impact global workplace by 2030

The retirement of Baby Boomers and the debut of Generation Z workers, along with other demographic shifts, has major implications for real estate occupiers, investors and policy-makers around the world, according to a new Cushman & Wakefield global research report.

All stakeholders need to understand the impacts of these trends and how to position themselves to maximise opportunities. Entitled “Demographic Shifts: The World in 2030”, the report analyses the seismic shifts in workforces worldwide as 693 million Baby Boomers reach retirement age and 1.3 billion members of Gen Z enter the labour force over the next 10 years.

The report looks at the different approaches to work and lifestyle taken by Baby Boomers, Millennials and Gen Z around the world, and the impact on the world’s cities over the next decade as one generation exits the workforce and another enters.

Dr. Dominic Brown, report author and Head of Insight & Analysis, Asia Pacific at Cushman & Wakefield, explains:

“These demographic trends will drive the pace of growth in cities around the world. Cities will need to establish themselves as ‘places’ to attract the highest quality workers and in turn create the greatest real estate opportunities for occupiers and investors alike.”

In London, flexible working is now commonplace, and the number of people who work from home or a different location, outside the traditional office, is increasing. People who live outside the City often work from home to avoid a lengthy commute and achieve a better work / life balance, but increasingly they are also seeking to reduce their carbon footprint. This means the volume of office space employers need to provide is falling. However, and this will be particularly true for Gen Z as they enter the workforce, that space needs to be geared towards social interactions and face-to-face meetings with colleagues to be attractive.

Nicola Gillen, Head of Total Workforce EMEA, at Cushman & Wakefield, said:

“Four and increasingly five generations in the workplace is a key driver for our clients, resulting in a need for greater flexibility and variety across real estate portfolios.

“The days of coming into the office to be told what to do and have your work monitored are dead. Corporate occupiers see the benefit of a diverse workforce, with both more experienced and Gen Z workers learning from one another. This is driving a need for higher quality meeting spaces to help facilitate mentoring and training. It is important to acknowledge that as the world of work changes it impacts everyone, from the new entrants into the workplace to experienced professionals. In the UK we will also see an increased number of returners with people retiring later.

“On the investor side, clients need to understand the factors that will drive the demand for various property types, such as the number of new workers and/or recent retirees in the market.”

Cushman’s analysis continues on Monday.

CBRE 2020: Brexit and US elections twin political issues underpinning sentiment

UK politics will again be dominated by Brexit in 2020 with the UK government and European Union moving on to talks concerning their long-term future relationship. Assuming a negotiated withdrawal deal is confirmed soon (CBRE’s base case), attention will turn to US Presidential election.

Miles Gibson, Head of UK Research at CBRE, explains:

“The Trump Presidency has clearly had an impact on the global economy. Tax cuts have stimulated the US economy, while trade policy has led to sustained uncertainty as both the US and China have imposed tariffs on imported goods. The UK economy is dominated by services, which means that it has been less affected by specific trade issues than other European countries (especially Germany), but the effects are definitely present. So, in the run-up to the US election the UK could experience a bout of imported uncertainty on top of that created by Brexit.”

Investment volumes slowed markedly in the UK in 2019 down to around £45 billion, from £65 billion in 2018, according to CBRE data, as investors reflected politicians’ collective standstill, but a rebound is expected in 2020.

The lower interest rate environment across Europe – including negative 10-year Government bond yields in France, Germany and Netherlands and only just above zero in Spain, and only above 0.5% in Italy and the UK – is sustaining real estate’s relative value to fixed income. Against this backdrop, investors will continue to target super core real estate with little more than capital preservation in mind, forecasts CBRE.

Miles Gibson, Head of UK Research at CBRE, added:

“The UK is arguably priced at a significant discount to European markets, in large part because of perceived Brexit risk. If this can be eliminated, or precisely understood and quantified, yields could sharpen considerably.

“Investors have piled into operational real estate in recent years in search of sustained and sustainable income growth. 2020 will increasingly reveal more of the ‘winning’ platforms – those that can manage gross to net income most effectively while delivering a pipeline of additional product – and the underperformers.

“Reflecting its recent lack of appeal to investors, by the end of 2020, retail will account for under a third of the MSCI sample by value, having been more than half 15 years ago. If so, it would be the lowest share since 1984.”

‘The Dutch market punches above its weight in Europe’

The Netherlands punches above its weight in the European real estate market

The Netherlands punches above its weight in the European real estate market, delegates heard at Real Asset Media’s Netherlands Investment Briefing, which was held last week at Taylor Wessing’s headquarters in London.

‘It has strengthened its position as the 4th largest investment market in Europe, which is remarkable for such a small country,’ said Raphaël Rietema, Director, EMEA Strategy & Research, CBRE Global Investors. 

Netherlands Keynote: Raphaël Rietema, Director, EMEA Strategy & Research CBRE Global Investors
Filmed at the Netherlands Investment Briefing, London by Real Asset Media.

It now sits behind Germany, the UK and France and just ahead of Spain with an investment volume of €19 bln in the first three quarters of 2019. By Q3 last year the figure was higher, €22 bln, but according to Rietema Q4 will look better, because there is a lot of activity and a lot of liquidity in the market’.

The Dutch market has become much more diversified in recent years, but residential stands out as the star sector, followed by offices, industrial, retail and hotels. The Netherlands have the second-biggest residential market in Europe after Germany, worth €6 bln.

‘The investor base has also become much more diversified’, said Rietema. ‘The market used to be dominated by domestic players with a 60/40 ratio, but now it is the other way around’. 

The office sector, which used to be oversupplied, has been transformed. ‘Vacancy rates have been falling for the past ten years and now they are extremely low, especially in Amsterdam’s CBD’.

Amsterdam has also become the third city in Europe for tech-based employment after Dublin and Berlin and ahead of London. ‘This is the market that has seen the steepest rental growth,’ said Rietema. ‘It is a structural trend that is set to continue and it will result in more rental growth in the future’.

In the increasingly intertwined logistics and retail sectors, demand is such that vacancy rates are low despite a lot of development activity. 

‘Demand drivers for logistics are changing,’ said Rietema. ‘Now it is less about trade and exports and more about the restructuring of supply chains because of e-commerce. In five years’ time internet sales will be 21% of all retail sales compared to 14% now’.

The Netherlands will catch up with the UK and be far ahead of other European countries.

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CBRE 2020: mega trends are structural shifts influencing real estate trends

The investment outlook for 2020 contains elements of longer-term shifts in the structure of property investment activity, according to CBRE.

CBRE says we are seeing a bifurcation of real estate investment comprising two main elements:

• On the one hand, a strong search for capital protection with large flows into core assets in highly liquid markets, often at a very low yield; and

• On the other hand, a search for growth by identifying mega-trends and structural shifts, with the aim of formulating strategies to deploy capital on these themes.

Among the mega trends that already guide real estate investment choices, ecommerce, urbanisation and the ageing population are among the best identified trends. Others include the shift from home ownership to renting or privatisation of social housing or healthcare. ‘Hotelification’ of real estate is a major structural shift in the industry, impacting income streams and investors’ business models.

CBRE cites five drivers supporting these mage trends:

  1. ‘Lower for longer’ scenario now the consensus, but spread over bonds supporting high levels of real estate investment
  2. still some yield compression for the very best assets in Europe
  3. 2020 volumes to be at least around the 2019 level in continental Europe, with a possible rebound in the UK
  4. with growth in leasing activity likely to ease, investors will need to be increasingly selective, picking markets with the strongest rental growth expectations; and
  5. beyond 2020, investors will be increasingly influenced by mega trends and structural shifts such as ‘hotelification’ and technology innovation.

In the years to come, two other secular trends will need to be embraced by investors, even though timing and impact may still be quite uncertain:

• Energy transition and sustainability: now a major societal issue and one where changes imposed by occupiers and their labour force could be imposed on real estate investors earlier than expected; and

• Technological innovation, including the possible impact of artificial intelligence on labour requirements and thus the quantity and location of real estate expected in the medium term.

The effects of these shifts could come to impact pricing, strength of occupier demand for specific assets, value gradients and the emergence of new types of asset, all of which investors will need to consider as part of a balanced portfolio strategy.

CBRE expects companies to devote more attention and rigour to ESG policies that integrate organisational, portfolio and asset level objectives. These typically include short and long-term targets around reduction in energy, water and CO2, as well as targeted improvements in health & wellbeing and biodiversity.

Jos Tromp, Head of Research, Continental Europe, explains:

 “Organisation-level policies are typically translated into fund level initiatives to manage ESG compliance through the adaptation of a portfolio level action plan over a period of 3-5 years. Portfolio owners recognise that they are not always in full control of the fulfilment of their targets but depend on the attitudes and behaviours of their occupiers, investors and other stakeholders. To accommodate this disparity, we expect a growing focus on stakeholder engagement and reporting transparency. Benchmarking with peers and disclosure of performance, for instance via GRESB, has seen a steep increase in recent years.

“Asset-level action plans can be very wide-ranging, including upgrades to building installations or envelope, smart meters and monitoring systems to drive operational reductions, targets to improve EPC ratings or Green Building certification scores; or alterations to hard and soft services, such as waste recycling, green cleaning programs or healthy catering concepts.”

CBRE adds that all investors, developers, occupiers and advisors, as well as asset, property, and facility managers all have a role to play in this transition.

Contrarian view: opportunistic investors to bet heavy on UK retail in 2020

Opportunistic investors are predicted to return to the UK retail space in 2020, attracted by price corrections big enough to allow a rebalancing of rents to a level that is acceptable to struggling retailers, predicts Savills.

Such a deal would call the end of the stalemate between vendors and purchasers of retail on pricing.

Mat Oakley, Head of Commercial Research at Savills, explains:

“The prevailing wisdom of the past few years has been that selling retail and buying logistics should be at the core of every investor’s strategy. However, the outlook is not quite so simple, and the returns from tactical buying of retail could exceed those from paying record low yields for hotly competed-for logistics property. While there is nothing wrong with buying good logistics, investors should take note that, not only are yields at record lows, but also that the sector faces its own structural challenges, including staff availability, the rise of autonomous trucks, and competition for land from housebuilders.

“Retail is undoubtedly a cold, hard place to be in at the moment, but 2020 will be the year when we start to see some investors capitalise on the falls in prime yields. Retail is not dead: even in the UK, where we shop online with a fervour that is unmatched in most other countries, more than 80% of everything we buy touches a shop in some way. With capital values on prime retail schemes having fallen by 20% or more in the past two years, the point at which a major investor calls the bottom of the cycle may not be far away.”

Elsewhere, Savills also predicts the return of non-domestic institutional investors who have chosen to stay out of the UK due to Brexit. These funds, predominantly from Europe and Japan, have considerable amounts to invest and an increasing bias towards property due to low base rates in their home countries. Savills expects the bulk of this money to be focused on larger, secure-income assets, centring on London and a handful of prime regional city offices, as well as logistics.

Mat Oakley added:

“The challenge for these investors is that the traditional lifecycle of such assets has become rather broken in recent years. Development activity in the office market is close to record low levels, and future supply of prime long-leased stock will be tight. Unlike previous periods of uncertainty, there has been very limited distressed selling, with many investors choosing to refinance rather than sell assets.

“While yields on these kinds of assets are historically low, they are high relative to other global markets, and this will be enough to convince some investors to increase their weightings to the UK. There is also an argument that parts of the UK market, most notably central London offices, have missed out on the rental growth seen in other European cities. For once, London is following rather than leading the occupational cycle, and this will enable investors to justify paying cyclically low yields for another few years.”

‘Alternatives are becoming mainstream’

The trend is being driven by the new generations that have a different mindset and investors and operators are adapting to the changing landscape.

‘In 2030 we will not be talking about alternative sectors anymore, because they will be standard and mainstream, and renting will be the new normal,’ Samuel Vetrak, CEO, Bonard, told Real Asset Media’s European Alternative Investment Outlook 2020, which took place in Amsterdam recently.

The trend is being driven by the new generations that have a different mindset and investors and operators are adapting to the changing landscape.

Dirk Bakker, Head of EMEA Hotels, Colliers International, Asli Kutlucan, Chief Development Officer, Cycas Hospitality BV, Ron van Bloois, Partner, HEVO, Samuel Vetrak, CEO, BONARD and Crispijn Stulp, Country Head the Netherlands, AXA Investment Management discuss the opportunities for investment in Hotels, Student Housing, Healthcare and similar sectors.
Filmed at the Alternatives Investment Briefing, Amsterdam, November 2019 by Real Asset Media.

‘The young don’t want to own anything,’ said Asli Kutlucan, Chief Development Officer, Cycas Hospitality. ‘They will be in student accommodation to begin with, then move to micro or co-living or extended stay places as they progress in their careers. They will rent apartments and will end their lives in senior housing. That’s the lifecycle of the next generation’.

No wonder investors are piling into all the new forms of residential. Operators are already blurring the boundaries between student housing, co-living, micro-living and hospitality and it is a trend that is just beginning. 

‘We like merging a few concepts together under the same roof and becoming a hub,’ said Kutlucan. ‘We can provide different services to different people that go well together, for example have a lifestyle hotel for young professionals alongside student housing for mature students.’

Student housing has been on the most notable upward trajectory and has attracted institutional investors because it is liquid, transparent and counter-cyclical. There are now over 700 companies active in the sector and there will be consolidation ahead.

‘Finding capital is not a problem now, what is difficult is finding the right partner and the right assets in good locations,’ Vetrak said. There are investors with billions of euros looking at the Italian market, for example, but the problem is lack of opportunities.

‘It is a recession-proof asset class and that is why so many institutional investors are transferring capital from office and retail into student housing,’ he said. Most European Universities are aggressively marketing abroad, so the number of international students is set to grow even faster.

The PBSA market in the UK and Continental Europe is set to double to €6 bln.

Developers and investors are increasing their involvement but operators are in short supply. ‘A problem with student housing is the lack of operators,’ Vetrak said. ‘If there were more independent ones the sector would progress even faster’.

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CBRE 2020: offices, beds and sheds to outperform broader UK market

Offices, alternatives – including student accommodation, healthcare and hotels – and logistics are predicted to outperform across the UK and generate new opportunities for investors and occupiers, according to CBRE.

After exceeding expectations in 2019, office occupier markets are likely to continue to perform well across the UK next year, with corporate occupiers increasingly using real estate as part of their recruitment and retention strategy. Office-based employment, which has grown rapidly over the past two years, is set to continue to expand in 2020, albeit at a more moderate rate.

The war for talent will drive the occupational markets, with increasing demand for new, high-quality space. Given the supply of such space remains low, further rental growth is predicted in 2020.

The industrials and logistics sector is set to remain resilient, on the back of steady demand for logistics space and the sustained growth of e-commerce. Industrials and logistics rents are expected to continue to outperform other sectors.

Next year could also see the first multifamily assets trade hands in the UK, rather than the high volume of forward-funding transactions seen in the market up until now. With developments set to spread throughout the UK, CBRE predicts investment in multifamily will increase by 30% in 2020.

In the retail sector, CBRE expects a continuation of the current challenging environment from a combination of structural (changing consumer spending preferences and the growth of e-commerce) and cyclical (wage growth above inflation and EU workforce shortages) factors.

However, CBRE expects retailers who redevelop and reposition excess retail space for alternative uses to survive and thrive in 2020. Health and beauty will continue to benefit from increasing consumer interest in wellbeing, while the food and grocery sector will perform well as convenience remains the top driver for consumers.

Operational real estate, including student accommodation, healthcare, leisure, hotels and petroleum and automotive, is set to be a major growth area in 2020, with an increasing volume of deals in the sector and the emergence of specialist and core funds, with a greater allocation of institutional capital into operational real estate. Drivers include the continued slowing of the traditional real estate sectors, the shift in focus to non-core markets as balancing real estate capital in core markets remains challenging, and the decline in lease lengths and capital growth through rent reviews.

CBRE expects the trend of the ‘hotelification’ of real estate to continue in 2020, as property investors align with best-in-class operating partners to drive volume and pricing.

Climate change will continue to rise up the agenda for real estate investors and developers. As a result of increasing social, political and regulatory pressures, CBRE predicts that carbon neutrality will become an explicit goal for real estate decision-makers in 2020.

The real estate industry will move towards a more holistic approach to tackling climate change, with the environmental impact of every stage of a building’s life cycle considered – ranging from the sourcing of raw materials to redevelopment. With increasing activism amongst shareholders and clients, CBRE expects most real estate investment strategies to incorporate carbon neutrality during the next year.

The contrarian view: uncertainty will underpin positive investment returns

Greater political and economic certainty will underpin positive investment returns across the different property asset classes over the next five years, predicts Savills.

The scale of those returns will reflect where the current property cycle stage as well as some of the structural changes facing specific sectors. Within the residential sector, properties in the Midlands and the North offer both higher income returns and prospects for capital appreciation at this stage in the cycle.

However, for the private investor, the regulatory and tax environment means buy-to-let is not a venture for the fainthearted. Institutional investment will play an increasing role, with those championing build to rent learning lessons from a more established purpose-built student housing sector, says Savills.

Commercially, Savills says structural change in the way we use the high street will continue to influence where the weight of investment falls. But, as we set out elsewhere, those who adopt a simple logistics good/retail bad mentality risk throwing the baby out with the bath water.

Meanwhile, whatever the travails of WeWork, the underlying shortage of good-quality office space, especially in London, is set to underpin the rental growth prospects in that sector. From a structural perspective, agriculture faces a great deal of regulatory change over the coming five years, though indications are that policy evolution will be gradual rather than sudden. Continuity in the support and trading business environment, and scarcity of supply, in the medium term at least, is likely to underpin land values.

Mat Oakley, Head of Commercial Research at Savills, explains:

“A quick scan through the main commercial property market indicators for the period since 2016 suggests that uncertainty has not been particularly bad for business. Office leasing has been driven by pre-letting and the technology, media and telecoms (TMT) and serviced office sectors, logistics by omnichannel retailing, and overall investment by comparative risk and yields on a global stage.”

Savills top sector picks


  • City of London offices
  • Hybrid retail parks


  • Prime Central London
  • Retirement housing


  • Strategic land
  • The offsetting market

‘Operational models will become prevalent’

Operational models will become prevalent in Europe as more investors follow the megatrends and put their capital in alternative sectors, experts told Real Asset Media’s European Alternative Investment Outlook, which took place in Amsterdam recently.

Operational models will become prevalent in Europe as more investors follow the megatrends and put their capital in alternative sectors, experts told Real Asset Media’s European Alternative Investment Outlook, which took place in Amsterdam recently. 

‘Residential is the biggest asset class to invest in at the moment in Europe,’ said Dirk BakkerHead of EMEA Hotels, Colliers International.‘Real estate is becoming more expensive, so more branding, more design and more lifestyle are used to drive value from buildings and new investment forms are coming in’. 

Dirk Bakker, Head of EMEA Hotels, Colliers International, Asli Kutlucan, Chief Development Officer, Cycas Hospitality BV, Ron van Bloois, Partner, HEVO, Samuel Vetrak, CEO, BONARD and Crispijn Stulp, Country Head the Netherlands, AXA Investment Management discuss the opportunities for investment in Hotels, Student Housing, Healthcare and similar sectors.
Filmed at the Alternatives Investment Briefing, Amsterdam, November 2019 by Real Asset Media.

The resi sector is in a state of flux. Now it’s tenants and customers that are driving change while investors and developers adapt. In future companies will no longer develop products and then find tenants, he said, but it will be tenants who demand a certain product which will then be purpose-built.

‘Brands really matter because we are witnessing the operationalisation of real estate, to coin a word,’ said Crispijn Stulp, Country Head the Netherlands, Real Assets, AXA Real Estate Investment Managers. ‘There’s a combination of factors all pushing investors into alternative sectors’.

As tenants or customers demand flexibility, companies have to become flexible themselves.

‘We operate 28 hotels and 14 brands, 50% of our portfolio is leases but we keep inventing different structures, creative and hybrid, we are very flexible on that front,’ said Asli Kutlucan, Chief Development Officer, Cycas Hospitality. ‘We like the open-mindedness of different capital structures. It is yet another sign that the boundaries are falling’.

One example of a successful innovation is the ‘double-decker’ hotel concept, which combines a trendy hotel, like Moxy, with an extended-stay such as the Marriott Residence Inn. As the lines between business and leisure travel become increasingly blurred, dual-branded hotels make sense.

In general ‘the outlook for hotels in Europe is very healthy, as more tourists come, especially from Asia, and more cities become interesting destinations’, Bakker said. ‘In fact the growth of tourism is our biggest problem in the Netherlands, as supply cannot keep up with demand. Keep in mind that only 2% of the Chinese population has a passport today’. 

Healthcare is another alternative sector that, supported by demographic factors, is attracting more interest. 

‘We see investors in the Netherlands, the UK and Germany paying more attention to nursing homes and medical office buildings,’ said Ron van Bloois, Partner, HEVO. ‘I believe the senior housing sector will explode. ESG is also driving demand for asset classes that have an impact like education and healthcare.’

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Schroders: what to expect in European real estate and private debt in 2020

Interest in private assets will continue to grow over the next year. Schroders’ experts across commercial real estate, private debt and private equity, highlight what to expect.

Duncan Owen, Global Head of Real Estate, commented:

“One of the striking features of European commercial real estate at present is that values in different sectors are not just moving at different speeds, but in opposite directions. Investors must follow not one real estate market, but instead several. The biggest divergence is between retail and warehousing (industrial). Indeed, market fragmentation – a key theme of 2019 – is something we expect to persist next year.

“In Europe, we continue to like office space in ’winning’ cities; those with diverse economies such as Amsterdam, Berlin, Copenhagen, Paris, Munich, Manchester, London and Stockholm. Vacancy rates in many of these cities are at their lowest in 15 years and although development is increasing, it is unlikely to halt the growth in office rents. London faces some uncertainty due to Brexit, but there our strategy is to focus on areas which have a bias towards tech, media and life science occupiers – such as Bloomsbury and Shoreditch.

“The retail sector is difficult. The real opportunity is to convert redundant retail space into other uses including hotels, offices and residential. That should be viable in locations where there is demand from competing uses. We see good potential to re-develop old stores in city centres and retail parks in affluent parts of southern England. It will be much more difficult to re-purpose secondary shopping centres in towns and cities with weak economies.

“In the US, we believe a key market theme will be the move from ’big to small’. Property markets outside of the “Big 6” (Boston, New York, Washington DC, Chicago, San Francisco, and Los Angeles) should provide a primary source of stable income growth and protection from overvaluation concerns. Performance differences will be driven, in large part, by migration and demographic trends and corporate economic development, combined with existing positive commercial real estate fundamentals.”

Ji-Eun Kim, Head of Private Asset Manager Solutions, commented:

“Private debt has been one of the fastest growing asset classes in private assets. Sovereign wealth funds and large state pensions were amongst the earliest adopters, but increasingly the rest of the institutional investor world has followed suit. Private debt’s self-liquidating characteristics and enhanced cash yield are especially attractive in a low-return environment. In addition, the withdrawal of banks from loan activity after the financial crisis, along with more mature relationships between companies and direct lenders, has led to a wider array of opportunities. However, the growth has attracted new lenders, increasing competition and a build-up of dry power. Caution around less favourable pricing and credit terms has risen.

“Though 2019 saw easing of senior loan issuance globally, the market remained borrower-friendly and expected to be so in 2020 given the competition among lenders. With pressure to deploy capital increasing amid signs of slowing economic growth, we believe investors need to prioritise manager quality and maintaining diversified private debt exposures across regions and industries. Investors should also seek lenders with differentiated origination approaches – the type and source of the loans – and scrutinise their credit expertise and underwriting practices to gauge a portfolio’s resilience in a downturn. 

“As a relatively young asset class, many private debt managers did not exist prior to the financial crisis. Lenders with a track record of working through market stress, with the organisational infrastructure and scale to shift resources for troubled investments, are more likely to deliver during the next down cycle.”