Realcast: ESG dominates office thinking, UK retail closures on the up, post-covid office use up

In the spotlight this week:

As 2023 gets underway and the return to work gathers pace, offices are under scrutiny and ESG is to the fore.

Invesco announced its first carbon neutral redevelopment at 20 Manchester Sqaure in London,  a prime office building in the West End that will be upgraded to be a state-of-the-art ESG compliant asset when completed next year.

In France, Primonial has acquired the Bloom office building in the centre of Paris from Axa IM Alts, a 15,000 sq m office let to four tenants. The building has already been upgraded to improve its green credentials. Both buildings demonstrate how the new focus on ESG will maximise the experience of the tenants while also maximising the performance for investors.

In Milan, developer Coima has announced that work has started on the 2026 Winter Olympics Village after the grant of the building permit by the city authorities.

In the UK, the news is less positive. Nearly 50 shops per day closed down in 2022 – a total of over 17,000 which was 50% up on 2021 and the highest number for five years. Over 11,000 were independent shops. This trend is likely to continue in 2023 as the cost of living crisis bites, although there may be better news in the second half.

Meanwhile, while Amazon announced plans to cut 18 000 jobs there is growing interest in retail real estate from investors. DIC sold a 26,900 sq m department store in Chemnitz, Germany, to retail focused Krieger Group, for instance.

The European Council of Shopping Places has called for the EU to work with the retail property industry to develop a pan-European approach to delivering energy renovation roadmaps to help the process of decarbonising shopping centres, which the council points out are complex real estate.

As the seasonal return to work continues, lift manufacturer Kone says it can provide an unusual perspective on the post-Pandemic return to the office – and urban hotel – using data collected on the use of escalators and elevators.

Knight Frank has also been looking at the post-covid return to work in London’s flexible office market. Occupancy now exceeds pre-pandemic figures says the the firm, which surveyed 30 of the largest operators of flexible office space in London. Financial services companies have been the key driver of demand followed by technology firms.

While UK flexible office figures are now better than pre-pandemic levels, Blackstone highlighted that in the US office occupancy is still below 70% on most days, with Friday being the worst.

Several people moves have kicked off 2023, including that of student housing specialist Rainer Nonnengäiser who has joined Amro Partners. Europa Capital has also announced the appointment of Graham Porter as head of research.

Click on the video to see the full discussion or listen to the podcast below.