Professionals working across the office market discussed the health of the sector, including the challenges and opportunities the industry is currently facing.
Flexible office spaces, refurbishing old buildings, and changing occupier expectations were some of the issues discussed over two panels at the Place North West conference, sponsored by Philip J Davies Holdings, HBD and 5plus Architects, and hosted by Dan Whelan, senior reporter at Place North West.
Scroll down to see photos and presentation slides from the event.
Presentation – Avison Young
Chris Cheap, managing director with Avison Young, gave an update on the Manchester office market, and explained why the war for talent is shifting demand.
He began with his observations on how the industry is recovering as workers start to return to the office.
“There’s a lot of activity in the office market”, Cheap said, “but there’s little depth to it at the moment, largely driven by a slow return to the office.
“It’s a work-from-anywhere office environment we’re walking into now, but only part of our sector is returning to the office at the moment.”
The process is still in the early stages, and this is having a knock-on effect on the market, he added. But 712,000 sq ft of deals took place in Central Manchester in the first three quarters of this year, Cheap said, which is “pretty significant” – and the final quarter of this year “looks strong”.
Cheap went on to talk about occupiers’ changing expectations.
“We’re seeing people take less, but better, space because people are weaponising the workspace in the war for talent,” he said.
“Office occupiers have never been more discerning in their search for workspace. People are central to every property decision that’s being taken at the moment.”
Cheap said people are now looking for more service than what can be found in conventional leasing. Part of this, he added, revolves around carbon reduction, and it won’t be long before big investors only invest in a certain product.
“The occupier world isn’t truly understanding what we need to achieve around carbon reduction, and isn’t ready yet to pay a premium for an office building that delivers carbon reduction,” he said.
Rising demand for sustainability and flexible working, alongside inflation, means the industry will have to evolve how it presents buildings to the market, Cheap said.
“We’re going to have to look at a whole different suite of things to present to occupiers. Progressive, forward-thinking developers will start to think about how an offer is presented.”
Panel one – The state of the market
- Mark Davies, owner, PJD Holdings
- Chris Cheap, managing director, Avison Young
- Sarah Syson, design manager, Claremont
- Martin O’Rourke, commercial director, Patrizia
The panel discussed the importance of office culture and returning to the office, flex space, and diversity and inclusion.
Martin O’Rouke has noticed, after reopening amenities on site, that most of those returning to the office are younger.
“This is probably because they need to learn,” he said. “We all learn by osmosis, listening to people who are more experienced. You don’t get that when you’re not in the office – that’s the challenge we’re all facing.”
Chris Cheap said: “There’s a need for people to come together in a shared workspace for part of the week. It’s about culture and business development. I worry about whether we’re functioning really well remotely, it’s almost impossible to develop talent remotely.”
The panel also discussed designing office space for occupiers, and Sarah Syson said landlords shouldn’t fully finish fit-outs.
“Every industry and employer is reacting in a slightly different way now, so it’s more important than ever that offices are tailored to them individually,” Syson said. “The office needs to become a destination for that individual company.”
Mark Davies disagreed.
“I think it depends on the area and the sector,” he said. “But it’s clear that if you do forward fit, that actually the voids are shorter. The rent-free periods are shorter.
“I think there’s a lot of businesses, especially in Manchester where we have a large tech and creative sector, that don’t want the hassle of fitting out their office,” Davies continued. “They just want to go in. But what they want is they want to go into a building that has the right environment for them.”
Cheap said developers must also stop focusing purely on driving down costs.
“A number of occupiers have signed up to their own carbon reduction targets, so the next move they make helps them deliver on this. Therefore, occupiers will be thinking about global costs.”
The panel also discussed flexible office space.
“Flex has gone through an interesting evolution during the pandemic. Larger occupiers are building flex into their occupation footprint,” Cheap said.
And technology in the office is more important than ever before, said Syson, especially with the rise of Gen Z in the workplace.
“We’re also more in tune now with equality and equity, and diversity and inclusion within the workplace,” she said. “These personal aspects becoming more prevalent and we’re getting more involved with human psychology in the workplace.”
Presentation – 5plus Architects
Paul Norbury, director of 5plus Architects, spoke about the process of upgrading office space in the context of 5plus’ current refurbishment project, 100 Barbirolli in Manchester.
The building attracted larger financial and legal occupiers, who took out long leases before it went on the market and was purchased by 5plus’s client.
“The DNA of the building suited refurbishment,” he said.
It was decided that the ground floor space would be turned from a car park into office space, with an extended atrium and reduced parking space. The entrance was also extended.
“We reconfigured the atrium space based on daylight analysis,” Norbury said.
Some of the main considerations across the project included reducing energy, access to daylight and sunlight, and outside space.
“Material selection is becoming more and more important,” Norbury said. “We’re seeing a lot of studies on getting down to the nitty-gritty of how the product is made, which can make a big difference on the impact of the building.”
The project further reemphasised how “a good well-designed building lifts spirits”. The major themes of the project focused on people, sustainability and health and wellbeing, according to Norbury.
“The quality of the product is increasing throughout,” he said. “Occupiers are becoming more discerning, and in response, we’re moving away from designing spaces for business to designing in spaces for communities and people.”
Panel – Creating offices for investors and occupiers
- Lee Treanor, director, HBD
- Paul Norbury, director, 5plus Architects
- Frances Hampson, senior planner, Deloitte
- James Kington, strategic head of estates & asset management, Stockport Council
The design of new offices, and scrutiny around sustainability were among the topics discussed in this panel.
The panel talked about the importance of amenity – and agreed that considering public spaces can be effective in cases where, according to Lee Treanor, “the ground floor isn’t producing rent but it’s producing an environment that means it let quicker”.
“Outdoor space can be expensive to produce. Communal space isn’t income-producing but it may add value for the owner-occupier, so it’s about breaking that mindset away from ‘every sq ft has to produce something’ and looking at where you can add value,” Treanor said.
The panel also discussed the challenges that come with regenerating older buildings.
“The barrier for demolition is higher than it’s ever been; you’ve got to justify the demolition of a building,” said James Kington.
Treanor added: “You’ll find that the next generation of new build properties will be at a different level in terms of sustainability because you have the ability to incorporate a huge ramp-up of the ESG (environmental, social and corporate governance) goals.”
Paul Norbury emphasised the importance of “thinking about the future flexibly”.
“Hopefully we’re not building offices that are going to be knocked down in 20 years. If we make the right key decisions now, a building structure can be reused in the future,” Norbury said.
Treanor added that using existing buildings is a “no-brainer,” and where a developer can’t, it’s important to retain elements of it.
For buildings to meet energy requirements, the occupier must “come on a journey with you, otherwise, the developers’ efforts to reduce carbon are in vain”, Treanor said.
“The occupier is in control of over 80% of the energy consumed within the building. If they’re not occupying the space in the way it’s designed, targets won’t be met. There’s a responsibility on developers, landlords and advisors to bring landlords on that journey.”
Frances Hampson said unregulated energy, used by tenants, also needs to be talked about.
“There are some interesting ways to change people’s mindset. One project I’m working on is already discussing the requirements of future tenants, and how to influence them, such as carbon offsetting payments, which is a useful way to control people’s habits,” she said.
The presentation slides can be accessed below:
The next Place North West event is tomorrow: Future of Retail + Leisure. Tickets are currently on sale for the in-person conference. Digital livestream tickets are also available.
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Article by Jessica Brown for Place North West