Lorna's Logic: Not going out

Having spent a busy week out in the sunshine, I got to thinking about staying at home and those for whom this has become a preference, or should I say a mental necessity. Although we typically think of agoraphobia as being a fear of open spaces, it is medically described as a fear of being in situations where you believe you will be exposed, in danger, or cannot escape.

Pre-Covid agoraphobia affected around 1-2% of the population (slightly more women than men). However, the impact of the pandemic on that number appears not to have been accurately recorded as yet. We all know of people who seem to have ‘disappeared’ from public life, and a number of US newspapers are reporting that there has been a “surge in cases of agoraphobia” (Dr Gary Grosel), and the American Psychological Association believes we now have a mental health crisis with repercussions likely for years to come…yet there are no stats available and, worse, no apparent focus on the problem.

I like to make these blogs light-hearted usually, but I wonder if we should all be dragging our stay-at-home colleagues and friends back into the light, and the office, and the pubs and restaurants, before they become utterly house-bound – not literally dragging of course, maybe use biscuits – to help ensure they don’t become part of the ‘missing’ workers.

As someone who is almost the opposite of agoraphobic (is that possible?), I am still very much aware that many of our friends are suffering. Go find them!

Things you need to know about ESG and real estate - No.1

1. Poor buildings may be awful, but they aren’t unlawful.

Fact: despite what some people will tell you, it is not unlawful to lease a property that is substandard in its EPC rating.

A substandard building can be exempt if the cost of improving the EPC rating is disproportionate to the cost of the works. While there may be a stigma attached to some exempt buildings, this is by no means true of all such properties. Any risk to value will be influenced by the nature of the building, the quality of its location and, as ever, demand and supply.

Our view is that timing is everything, and the cost & disruption that will be incurred by investors and owners at some points in a building’s lifecycle will be significantly less than at others.

Remember, there is no obligation to renew an expired EPC until a building is re-marketed and if you obtain a new EPC prematurely, you may lose control over the timing of works.

A tactical approach to EPCs and MEES may prevent waste and help owners do the right thing – at the right time.

Talk to Charles Woollam about your long-term ESG strategies.

Lorna's Logic: Sunglasses at the ready

So, MIPIM has been and gone for another year and, believe it or not, this was my first EVER trip to “the world’s leading real estate market event”.  

In my previous roles, the focus and target audience did not make it a viable event for me to attend and then, over time, it became something almost to be viewed with trepidation: the stories, the gossip, the bad behaviour, the misogyny…why on earth would I go?  

It was therefore with a degree of hesitation, and just a little angst, that I joined the suited and “sunglassed” on the sunny Côte d’Azur last week.  

The men still massively outnumber the women present, and that will take some time yet to change; however, it was very different to my imagining and surprisingly refreshing in its approach.  I can’t knock it, but I could sure do with some boot camp training before the next one!

There is clearly a reliable recipe for a productive business meeting, and it involves a relaxed and balmy atmosphere, a mysterious ability to bend time to your will and, yes, sunglasses. 

Ah, wait, we live in the UK.  I’m not sure the Reservoir Dogs look would have the same impact here, but I’m willing to give it a go.

Lorna's Logic: International Women's Day and the glass ceiling

Continuing the theme of work (well, why wouldn’t I?), there is a message here for those who have been living in a cave: this past week we celebrated International Women’s Day!

What a time for women in the workforce. The cementing of hybrid working has both helped and hampered women. As a working mum myself, there is an inevitable challenge around domestic/offspring responsibilities and the need to work a full day, so the lack of a daily commute buys back precious time. However, not all women are faring so well in the new normal; the requirement to be super-woman and be all things to all people is now less revered and more expected.

Did you know that out of the 30 countries in the Organisation for Economic Co-operation and Development (I hate acronyms), the UK only manages to scrape in at 17th place in the Economist’s “Glass Ceiling Index”, measuring our role and influence across the workforce?

Hey ho, best go and check the washing machine has finished.

Lorna's Logic: Teams. Zoom. Screen fatigue.

After a week of intense screen action, I am pooped.

How different it would have been had all those meetings been face-to-face. Would the nuances of body language have been clearer to read? It is supposedly easier to tell if someone is lying over the telephone than when seeing their face; I guess you can’t tell if they have their fingers crossed throughout a Zoom call.

So, a predominantly home-based week has left me drained, how about you? According to ONS data, around 47% of us feel that working from home improves our well-being. What about the “bigger” half?

The blurring of work-life boundaries is also often overlooked and as we are getting brighter evenings, how much easier will it be to slip into unpaid overtime?

Lorna’s Logic: hybrid working - unlocking talent

A few months ago, the New York Times published a telling article about disabled workers. For once, there was a positive tale to tell about Covid and its surprising outcome for this important talent group. Prior to home-working being accepted as some form of normal, many disabled workers were excluded from key jobs in cities, partly due to the spirit of presenteeism.

Much is being spouted about productivity and hybrid vs office-based at the moment (more about this next time), but how about the additional productive body of talent we have unlocked thanks to a more flexible, realistic approach to work?

The figures surrounding disabled workers still make disturbing and disappointing reading: for example, almost twice the number of disabled employees were made redundant during the Covid years as those who are not registered as disabled.

Maybe now, in our hybrid world, there will be a rebalancing?

Everyone is talking about active travel, but what does this mean for the Real Estate industry?

Remit Consulting’s recent active travel forum, hosted at FORE partnership in London, explored the intersection of active travel and real estate. Guest speaker Will Norman, London’s Walking and Cycling Commissioner, identified how and where there is room for positive change and, more importantly, why should we care as property folk. 

It’s a matter of life or death. 

Think about this - air pollution in major cities across the country is endangering public health and threatening the NHS’s survival. Meanwhile, in London, it is estimated that the capital’s congested roads force drivers to spend 150 hours in traffic annually. 

Is it any wonder that there are calls for increased active transportation? 

The problems might be different outside London, but they are no less significant. Despite the inactivity of people putting significant pressure on health services, it appears that there are fewer active travel initiatives being adopted by local authorities and developers, and more importantly embraced by the public. 

Financial incentives can’t be ignored 

Although getting people out of cars and onto bikes or walking is a huge benefit in itself, active travel is more than just about health issues. Studies have shown that improving walking, cycling and public realm provisions on high streets can increase retail sales by 30%, through increases in potential customers ‘popping in’ to local shops. With turnover increasingly playing a role in lease negotiations, surely this is a statistic the real estate industry should be taking note of.  

This is before you consider that rental values can increase by ~7.5% in safer and cleaner areas.  

What is not safe and not clean? How about an overload of van deliveries and no pedestrian walking zones? 

Lifestyle choices are driving the change 

The trend of urban living is moving in favour of people wanting a ‘liveable’ lifestyle, where the commute is easy, kids can have some green space to play and going for a run doesn’t mean waiting at zebra crossings for half the time, and dodging cars the rest.  

The image above is the same road as the previous image, after an initiative to pedestrianise.

Collaboration is key 

The reasons to invest in active travel are endless, and each one is just as valid as the last, however positive change is reliant on partnerships between thought leaders, local authorities and investors. You lose one and it seems you have none. 

But what is the good news? Real estate connects these three pillars of change. Landlords can apply pressure on local authorities to take active travel initiatives seriously. Developers and investors can fund the positive change. The network of learnt experience from what has already been achieved in developments can push thought leadership, both in London and further afield.  

From this first recent active travel forum alone, Will Norman went away to work on creating a central framework for planning regulations, to fight the issue of each borough having its own, different tick boxes to fill out. 

So, the task is not simple but, in the long run, with greater connectivity between the three pillars of change, cities could see themselves becoming a lot cleaner, safer, healthier and more valuable too.  

To find out more about Remit Consulting’s Active Travel initiatives, take a look at the forum page and also ReTour .If you want to talk to us, contact Emily Bates. 

Lorna's Logic: Presenteeism

So why has presenteeism (a word which irks me) become synonymous with success? This sentiment was uttered by someone I cannot recall, but I agree with it wholeheartedly.

Our figures on ReTurn are derived from actual data, taken from access control systems, yet we are occasionally faced with a challenge on our numbers by those asserting “their building” is at 80% capacity. Of course, it might be – our figures are aggregated and so there will be peaks and troughs. However, the important thing here is to ask why is it so competitive.

Why does it matter if an office is not being used to its full capacity if the employees are still churning out the work? You could argue that it is an unnecessary cost and the value of the asset is damaged, yet why? Does a house have to be occupied all the time?

There are studies which show we are less productive than we think whilst working from home, largely due to the excessive number of meetings. If going to the office becomes a joy, then we should be welcoming our return, just not necessarily every day.

What the market should know about new tech and innovations

As the Educational Sponsor of Realcomm’s London CIO Forum 2023, Remit Consulting helped organise the event, which was held recently at Grosvenor’s offices in the West End.

Realcomm is known for its focus on automated business solutions and cutting-edge views on the market and new technologies, and with speakers from Google, Grosvenor, Argent and Invesco, this event brought to light some key market impacts worth noting.

Not another tech solution. The CRE tech market is overly saturated.

The Technology Bubble has reached corporate real estate, as explained by Justin Segal, the president of Boxer Property. In a market where there is already a high volume of solutions, many CRE companies are integrating solutions which they may not need. Is this a case of FOMO or perhaps a desire to be different? Either way, Justin’s key message was that in the current economic environment, it is more crucial than ever to fully identify the problem first, before jumping to solutions. The message is “don’t be sold on a shiny new idea or sales pitch”, highlighting that such an approach is the best way for technology to help keep costs low and, therefore, support business survival.

Short term pain, long term gain. Will the promise of cutting costs convince the industry to be more environmentally conscious?

Isn’t it funny how some of the most popular topics are those which are least understood? That is often the case regarding the topic of ESG in the property industry. It is widely understood that ‘going green’ more often than not comes at a cost; retrofitting and new technology traditionally have hefty price tags. The problem persists that only with mass adoption will these prices fall, but no one likes to pay more now to help others pay less later.

This conundrum, discussed by Helena Rivers, director at AECOM, is not one which is easily fixed but increasing peer pressure to go green should start to outcast those who won’t pay for these critical technologies. If cheaper technologies of the future aren’t enough to convince the industry, hopefully reputational damage of the present should get ESG taken seriously.

Lock the doors!  How hacking into buildings’ systems has become a piece of cake.

Ken Munro from Pen Test Partners spoke at Realcomm about his recent work to test buildings’ security against hackers, by hacking into them himself. With a large volume of technology being installed in buildings without proper security, this is a potential threat that building, property and asset managers must be aware of.

Consider the volume of technology in your office; microphones in board rooms, webcams on your second (or third) screen. If your building’s technology has not been made secure, hackers can simply stand outside a building and connect to various devices without any issue, as Ken had discovered during his point-proving hacking mission. The message is clear: everyone should check and secure the technology in their building to avoid being caught out by a hacker with perhaps more damaging intentions than just watching you eat your sandwich at lunch!

Forcing attendance on Fridays. Some companies are stamping down on office attendance to boost productivity.  

Isha Jain, Head of Digital & Technology for CBRE UK & Ireland, explained how the real estate giant is now putting many of their meetings on Fridays to encourage five days per week for employees. This seems like a radical idea, with people questioning whether in-person attendance is how we should measure success. What if people are more productive at home or if Fridays are logistically difficult for people?

While it was only three years ago that this would be the norm, the dust is clearly not yet settling on the in-out-in-out dance of office attendance. It was interesting to see the CBRE office at the evening event following the conference. It is definitely an “all singing, all dancing” property, so we couldn’t blame them for being there the whole time!

A PROPTECH A DAY – how Grosvenor manages to see 500 new proptechs each year.

You thought you just needed an apple a day to keep good health, but Grosvenor’s innovation team takes business health to new ambitions by encouraging frontline teams – AM, PM, FM – to trial innovative ideas and have set aside money for every team to do this. All each team needs to do is fill out a one-page form on how they will trial the idea. This move has been a great success with the innovation teams having seen more than one new start up every day in 2022 – over 500 of them in total!

Lorna's logic

Some thoughts on corporate real estate and the workplace from Lorna Landells

Remit Consulting director, Lorna Landells

Back to the office or back to the kitchen table?

Getting people back to the office is a tired but topical subject of concern: how do we encourage them, do we need to encourage them, and what are our real motives?

In the same week, we learn that Morgan Stanley is aiming for full attendance (with inconsistent success) yet Barclays is more sanguine. We are also entertained by an editorial suggesting that the “molly-coddling” (sic) of our workforce is going too far.

Yet the hybrid model seems here to stay with all its pros and cons.

Is it mainly the older workforce who have finally recognised the shortcomings of presenteeism?

The temptation to remain in your warm and functional study looking out over the Cotswolds is at odds with those at the kitchen table and background babble for many of the other employees…

Digital Transformation: Navigating the changing landscape of real estate

As the world becomes increasingly digital, businesses in all sectors are facing the need to adapt to, and incorporate, digital technology into their operations. The property industry is no exception. From property management to leasing and sales, digital transformation is becoming a crucial component of success in the industry. But what exactly does "digital transformation" mean, and how can real estate businesses navigate this changing landscape?

At Remit Consulting, we have been researching and studying the impact of digitalization on the property sector for the past five years. In 2017, we wrote a report for the RICS titled "The Impact of Emerging Technologies on the Surveying Profession" that outlined how digitalization would transform the property sector.

First and foremost, it's important to understand that digital transformation is not a one-size-fits-all concept. It can be planned (proactive), reactive, or organic in nature. Proactive digital transformations often involve a long-term, strategic approach to incorporating technology in order to ensure long-term growth or even survival. Reactive digital transformations, on the other hand, are more of a knee-jerk reaction to changes in market conditions or technology itself. Organic digital transformations are characterised by small and frequent changes to a business, often driven by the widespread adoption of technology by individuals.

There are different types of digital transformations that can occur within a business. Business model transformations, for example, look at how technology can improve conventional business processes. In the real estate industry, we've seen a shift from traditional office leasing to membership-style contracts, particularly aimed at small businesses and start-ups, often combined with enhancing regional and local facilities. This is a significant business model transformation that continues to evolve.

A culture transformation is a change in an organisation's mindset, allowing it to adapt and change with the times, and a process transformation uses data, analytics, and AI to improve efficiency and reduce costs.

An example of this within the property sector is the rapid growth of home-based and hybrid working that has led to shifts in culture, affecting both employers and providers of property-based services. This shift in culture has led to a demand for unique office spaces and designs from tenants and customers, with architects and designers being challenged to come up with creative solutions.

At Remit Consulting, we have helped many real estate organisations with their digital transformations, from small to large, private and public sectors, including charities and housing associations. Follow the link to read more about our views on Digital Transformation.

If you're interested in learning more about our approach and sharing your own experiences of digital transformation, please contact Andrew or Sue.

ReCast - the festive wish list edition

The big S..….Steel, Social value and Storage problems

Andrew Barber and Emily Bates were joined by Remit Consulting Director, Lorna Landells and Andy Martin in a special festive edition of the ReCast, in which they discussed wishes for a better property industry 2023 (as suggested by members of the Remit Consulting team and the firm’s associates).

If you want to listen to the full episode and find other episodes from ReCast, then you can do so by following this link: ReCast

The main topics discussed during the podcast were:

Steel puts the property industry firmly on the naughty list

Unsurprisingly, the wishes begin The discussion began in the world of ESG wishes, noting the property industry is firmly on the naughty list due in part to its reliance on steel, which is a major global pollutant with as 1.5 tons of CO2 being produced for every 1 ton of steel created. Until we can make green steel readily available, this problem is not set to improve.

Listen to part of the discussion here:

2023…the year of the Big S in ESG

For too long, the S in ESG has been the forgotten party in a familiar acronym. 2022 saw some good schemes, for example, social investment leases like those being piloted by the Royal Borough of Kensington and Chelsea. However, huge problems in homelessness, among many others, paint a rather sad picture still for this particular ‘S’. It’s not therefore surprising this was top of the wish list for the ReCast team for 2023.

Hear the team talk about this here:

Technical difficulties

There seems to be a plethora of options on the technology menu, but is there too much choice? The team discussed the likelihood of true collaboration between companies to create a tool which can meet all requirements, meaning property companies won’t have to prioritise their requirements to fit a single solution. While the idea sounds great in the hypothetical, the human reality seems to suggest behaviours won’t change in favour of such collaboration.

It's not all bad news, though. We only have to look at the pandemic (go with me here) to see how human behaviour could change to embrace collaboration as a means of survival. Close to home, REMark is a prime example of the industry coming together to share knowledge and data to understand what is happening in the world. Additionally, the efforts made in other areas of life to bring communities together were a reassuring demonstration of the collaborative possibilities.

Data storage needs a reset

Wouldn’t it be great to have fast broadband in every home? No one can deny the benefits to isolated communities and elderly individuals, but to complete such infrastructural would require huge investment at the government level. The issues don’t stop there. The inefficiency of data storage, a necessary requirement to expand broadband provision, raises a whole host of problems, leaving you thinking that perhaps this wish may create more problems than it solves.

Hear some of the conversation here:

Is renting scary, or is it just English pride?

The rental market is a scary place to be right now, with private landlords unable to shake their greedy reputation in the hearts of many. Is this contributing to the desire to be a homeowner in this country?  While ‘an Englishman’s home is his castle’ may be true, it seems the US takes a different approach with a huge institutional sector in the residential market and the provision of housing. Residential, multi-family development is the biggest investment sector in the US market, with over one hundred major city suburbs being predominantly rentals. If the UK could adopt similar approaches, perhaps housing targets would be more easily met and our nation of homeowners would shift in favour of renting.

Hear some of the discussion on this topic here:

Thank you again to Lorna Landells and Andy Martin for joining Paddy and Emily for this episode, which you can listen to in full, by visiting our ReCast page or listening on Spotify or via Apple Podcasts.

Stay up to date with Recast on Instagram @recast.pod, or you can always get in touch via the Remit Consulting LinkedIn page or by emailing us.

Expo Real 2022: the return of normality – or a step to the future?

Key takeaways from Expo Real in Munich:

• Tech dominates innovation, and you can see those who are using data effectively

• New business models for funds and REITs are shaking up the market

• Despite market and economic uncertainty, most real estate businesses are planning for growth

Expo Real revealed the growing gap between those who “get” technology and those who would prefer to refine their traditional approach. There is a risk that established property players will lose their market to those using technology to change the game.

Expo Real 2022

The beginning of October saw the full return of Expo Real in Munich, following two years that made it necessary for the annual event to become ‘virtual’ in 2020 and ‘hybrid’ in 2021.

Maybe the return of the globally famous Oktoberfest helped boost the confidence of people to return, but reports suggest that the 2022 event was as big as it ever was before the pandemic, with seven of the vast halls of the Messe München conference centre, totalling 72,250 sq m (777,700 sq ft), full of stands occupied by 1,887 exhibitors from the real estate sector, from across Europe and beyond. The official news release from the organisers says that there were almost 40,000 attendees at the event. Anyway, the traditional client event at the Oktoberfeste in the Marstall tent hosted by Remit Consulting on the last evening of these festivities was a great success, with clients attending in ‘Trachten’ from both the UK and the Netherlands.

It certainly felt that things were back to normal.

Then again, at the same time, it didn’t.

Things have changed since the 2019 event. There was a more relaxed attitude at the conference; those wearing ties were in the minority, and an increase in technology exhibitors and visitors meant that business casual clothes and trainers were much in evidence, which is a welcome change for such a huge event. Our team’s step count ranged from 10,500 per day up to 30,000 steps in one case. It would seem that Germany is no longer as formal in its attire as it used to be.

Whilst the famous Savills “cubes” were once again used for informal meetings and open-air chats in the site’s courtyard, the equally well-used deck chairs in the landscaped sun-trap between halls were this year sponsored by shed specialist Panattoni. A sign, perhaps, of the importance that suppliers place on Expo Real.

As a business, we certainly found it to be valuable in terms of new business opportunities along with keeping up to date with market trends, innovation, and the changes that are transforming the market. Remit’s Dutch team focused on interviews concerning several projects, with Hans and Antoine each managing between eight and ten meetings a day.

The UK team found time to find new contacts around the halls and quiz established contacts about their updated services and technology. Unusually, it was reasonably easy to get meetings at short notice with key individuals – there appeared to be fewer booked meetings and a more freestyle approach.

Crisis what crisis?

Despite the obvious dark clouds on the horizon of the energy crisis and the strong possibility of a global recession, the famed optimism of the real estate industry meant that few in attendance were being anything other than positive. Whilst there was a quiet acceptance that tough times may lie ahead, many at the conference were looking at how to adjust to the reality that Europe is facing. For many, spiralling costs and the uncertainty caused by the war in Ukraine seemed to have been factored in as part of the normality of the situation.

Certainly, the domestic political situation in the UK seemed to be of no interest to those focused on the wider European market. One major developer summed up the attitude of the European property investment market to the relevance of current British political news, saying “I think we have enough to worry about without having to dwell on who your prime minister might be!”

The focus of Expo Real was not so much on the politics but on how to rise to the challenges faced by the industry and society as a whole, particularly on energy and ways to save it, and it was good to see several ESG-focused service providers, who have expanded quickly across Europe, collecting and analysing large amounts of useful information to feedback into energy savings.

Seminars and discussions

The focus on the energy crisis and spiralling costs, particularly associated with the residential sector, were certainly a major talking point in a panel session regarding the Polish Residential Market, and its appeal to international investors, which was moderated by Paddy and attended by over 100 delegates. From zoning and planning to the market’s reaction to the influx of displaced Ukrainian families, it was the EU Taxonomy Regulations and ESG disclosure requirements and the spiralling costs of construction which were the topics of most concern. As one investor highlighted “While the fundamentals of the market are attractive, we just can’t predict what the market will do over the next few months, so will just sit on our money and wait for now.”

The tantalisingly titled “Lessons learned from hundreds of Taxonomy Assessments and link to ESG with Blue Auditor” was just one of the many tech talks, though, which hinted that ESG in another guise has been around for some time and we should look to existing measures before reinventing the wheel.

“The Fate of International Investment Amid the Turmoil of Today” was a lively and thought-provoking panel session with senior representatives of M&G Real Estate, Savills IM, Allianz Real Estate, and MSCI debating the ‘denominator’ effect and the pros of looking further afield for the choice investment opportunities. A key prediction from the panel was that affordable housing was to be the new hot potato, or kartoffel, should we say.

Residential is a sector which is gaining more attention, partly due to the upheaval in retail and offices and the associated capital that needs to be reinvested. Many of the PropTech firms in Tech Alley had solutions aimed at the residential sector and believe that their immediate successes will be in that particular market.

Data and tech

In terms of technology on show at the conference, there was very little that was truly new. Many of the technologies on display were already being discussed in 2000. However, there are strong hints that the big investment money is focused on harvesting and analysing data to a far greater extent than in the past. Blackstone’s investment in tech companies was mentioned at almost every turn, and the big fund managers and REITs in the US seem to have stolen a march on the European funds in identifying the data they want to capture. What is certain is that as soon as the data content is secured, the costs to access that data will soar – and those controlling the data are likely to be from outside the industry.

The UK team spent some time attending a tour of Tech Alley which consisted of a series of two-minute intro presentations from PropTech companies, including:

• Bots4you – a company who has an initial focus is on automating chat bots to support the letting of properties and thereby freeing up time and speeding the process

• Joyce – provides a digital alternative to analogue processes for selling and renting apartments

• Vilisto – Smart thermostatic radiator valves that detect room usage and controls heat based on demand saving up to 32% of heating energy and CO2 emissions

• Priva – creating digital twins of a building’s energy systems to use weather and demand forecasts to predict energy use so that the optimum mix of energy input can be used to heat buildings more efficiently

• BeeBoard – a project management tool (yes, really!)

• Syte – An AI powered tool that researches and evaluates potential building sites reducing the time from weeks to seconds. It also analyses building sites and delivers their development potential in real-time by reference to real case studies and local regulations and policies

A key theme across the new technologies was the use of AI in many aspects of managing real estate, including faster site selection, energy use optimisation and customer service automation.

Unexpectedly, the software supplier MRI was not present at the show. Their place was filled by their rival Yardi, of course, and new pretenders in the PropTech space. There was more focus on asset and fund management tools than ever, answering clients’ questions on scenario planning and alike.

There is still a lack of real coherence to the systems market as the property investment market expands to new sectors and to gathering data from the “entire stack” from fund management to facilities and building management. No one system supplier seems to be able to tackle the whole property picture, leaving room for new data specialists like NTrust to make a good living gathering, cleaning, and inputting the additional data.

Looking forward to 2023

The two-year break from Expo Real seems to have rejuvenated the event. This might be because of the turmoil in the markets, or it might just be because of the appetite of delegates to meet in person again. Whatever the reason, it remains a key industry event and 4-6 October 2023 is already in the corporate diary.

Gallery

Remit Consulting sees an increase in rent collection rates seven days after the June Quarter due date

• Rent collection stands at 75.5% on 7 days past the June due date, up from 68.8% on the due date

• Offices record the highest rent collection at 7 days of all the sectors, at 80.6%

• Retail rent collection is up from 69.7% at the due date to 79.6% at 7 days

• Overall collection rates remain about 15% below pre-pandemic levels

The collection rate of rent for commercial property, seven days after the June quarter day due date, reached a national average of 75.5%, an increase of 6.7% over the seven-day period and the highest comparable collection rate witnessed so far during the pandemic, according to the latest research from Remit Consulting.

The collection rates were 1% below those at the same point of the March Quarter (2022).

By comparison, seven days after the June Quarter Day due date in June 2020, the collection of rent for commercial property was just 50.7%. In 2021, the figure stood at 66.5%.

“Overall, collection figures are still around 15% lower than was typically experienced at this stage of the quarterly collection periods before the pandemic,” said Laura Andrews of Remit Consulting.

“Over the duration of the March quarter of this year, there was a shortfall in rents collected of 4.4%. While this was by far the best quarterly period of the pandemic, this figure represents a significant deficit in the income of many landlords including pension funds and other financial institutions.”

“The uplift of collection figures is certainly welcome news for the landlords and investors who have seen a substantial shortfall in income during the pandemic. However, with the cost-of-living crisis, a reduction in consumer spending is a real possibility, which could translate into reduced rent collection, particularly with businesses that are reliant on disposable incomes in the leisure and retail sectors,” she added.

The latest REMark Report from Remit Consulting shows that, after seven days of the June Quarter, the overall collection of retail rent rose from 69.7% on the June Quarter due date, to 79.6% after seven days. At 80.6%, offices saw the highest rent collection of all the sectors after seven days.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since March 2020, working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Property Advisors Forum, and other members of the Property Industry Alliance (PIA). The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.

Commercial Property rent collection comparison

Remit Consulting reports a further shortfall in the collection of commercial property rents

• Collection rates remain around 12% below pre-pandemic levels

• 87.2% of rents were collected, 35-days after the due date

Thirty-five days after the March Quarter Day, the collection of rent on commercial properties remains around 12% below those experienced pre-pandemic, according to the latest research from Remit Consulting.

The management consultancy reports that 35-days after the due date, an average of 87.2% of the rent from occupiers of commercial property in the UK had been paid to their landlords.

While the current quarter continues to see the highest rent collection rates for commercial properties so far in the pandemic, they remain around 12% lower than those recorded at the same stage in the March Quarter of 2019, and only 3.9% above the figure recorded after 35-days of the previous quarter.

“While rent payments are the highest that we have recorded after 35-days, we remain on a similar trajectory to previous quarters during the pandemic and, at just over 87%, the collection rates remain significantly below that witnessed pre-Covid,” said Steph Yates of Remit Consulting.

“The end of the government's moratorium on the eviction of tenants for non-payment of rent due to Covid-19 coincided with the start of the current quarter, and many landlords were optimistic that this would see a substantial uplift in rent collection levels. However, with arbitration now an option for tenants, it appears that the market is still some way from returning to pre-pandemic levels.

“The trajectory suggests that investors can expect a further shortfall in their incomes at the end of the 90-day period,” she added.

After 35-days of the current financial quarter, rent collection rates for retail properties stood at 88.4%, an increase of almost 5% compared to the same stage of the previous quarter (83.2%). Overall rent collection for leisure properties (hotels, pubs, restaurants, etc,) reached 87.6% after 35-days, compared to 79.5% three months previously. Offices remained the best performing commercial property sector, with a collection rate of 92.3%.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since March 2020, working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Property Advisors Forum, and other members of the Property Industry Alliance (PIA). The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.

“ESG is how tech will get inserted into real estate

CREtech London, 27th-28th April 2022 

CREtech, back in it’s usual spring slot after a catch up session last autumn, is unusual for UK property conferences; it is full of technologist, venture capitalists and a real focus on building level data. This makes it a refreshing and different look at the property market for most UK property investors. 

The quote above was one of the many given during the keynotes which were from Toby Courtauld CEO of GPE on Wednesday and Dean Hopkins COO of Oxford Properties on the Thursday. GPE has made big strides in adapting its business to the requirements of customers and of sustainability. For example, it has implemented “green” clauses in its finance agreements and is thinking of doing the same in its leases. During construction, it has started to re-use materials from its buildings which are being demolished, notably steel being reused in a new Piccadilly building. 

Disappointingly, there was limited patience amongst the speakers for existing human resources. Most people talked about fresh ideas from outside the property industry rather than retraining and re-skilling – Melissa’s question to Toby Courtauld on this subject elicited a rather vague response about the culture of a business. 

There were enough stands in the exhibition to make it interesting – most were names we hadn’t heard of but none took innovation much further and many didn’t have a UK base yet. Networking was mainly limited to catching up with technology suppliers – there were a few investor end-users and these had very full meeting schedules. 

This is a good antidote to traditional property conferences but it still carries an air of being quite niche – as an industry we really need to embrace the conversations here more enthusiastically. 

Collection of rent on commercial properties climbs again, but a significant shortfall remains

· Remit Consulting reveals that 84.9% of rents were collected, 21 days after payments were due

· Overall collection rates remain around 12% below pre-pandemic levels

The latest research from Remit Consulting has revealed that, 21 days after the March quarter day due date, an average of 84.9% of the rent for commercial property had been paid by business occupiers to their landlords in the UK.

While the current quarter is seeing the highest rent collection rates for commercial properties witnessed so far during the pandemic, they are still around 12% lower than those recorded in March 2019, twelve months before the first Covid-19 lockdown.

“The start of the current quarter coincided with the lifting of the government's moratorium on the eviction of tenants for non-payment of rent and it was hoped that this would see a substantial uplift in the collection of rent,” said Steph Yates of Remit Consulting

“However, it seems that while there has been an improvement, we are on a similar trajectory to the previous quarters of the pandemic and still significantly below the collection rates recorded pre-Covid,” she added.

The management consultancy’s REMark Report reveals that, at 84.9%, the average collection rate of rent on commercial properties is five percentage points higher than at the same stage in December and four percentage points higher than after 21 days of the September quarter.

After 21 days of the current financial quarter, rent collection rates for retail properties stood at 85.6%, an increase of 8.6% compared to the same stage of the previous quarter.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since March 2020, working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Property Advisors Forum, and other members of the Property Industry Alliance (PIA). The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.

Commercial Property rent collection comparison

BCO – Market Cycles II

On Tuesday 8th March, Remit helped launch the BCO Research Seminar: Market Cycles II - The Impact of Cycling on Office Buildings. The event celebrated the launch of BCO’s report, for which Remit undertook research on the impact of active transport on office specification. This is following five years of increased policy and public investment in this area since the earlier report written by Remit for BCO in 2017.  

Where Can I Read it?

At the event, the report was heralded for its depth of analysis, and should you wish to read it in full you can find it on the BCO website, free for members. However, the event itself highlighted some key takeaways which prompted thought and discussion.  

“It is a really comprehensive report

Active transport is becoming increasing popular

In the five years since the 2017 report on cycling’s impact for offices, there has been a growing focus on quality, rather than quantity of active travel facilities within office buildings. Offices in 2022 are competing with home. Therefore, increasingly, employees are looking for offices to be not just functional places to work, but pleasant places to visit. This has encouraged landlords to design enjoyable environments for its tenants.  

In a time when active transport options are becoming increasingly popular, these pull factors to bring people into offices are needing to consider active travel requirements more and more. It is not enough to just provide copious numbers of bike racks, when employees have nowhere to adequately change, or even store their bike under cover. It is this shift away from quantity and towards quality of end-of-journey facilities which has characterised developers’ considerations for office specifications over the last five years.  

 “The presentation was excellent”

Not just buildings but education

The discussion during the event also addressed an important and far too often forgotten point. Active travel, while it has come far to be not exclusive, it is not yet fully inclusive. This distinction between inclusive and not exclusive opened the discussion to alternative forms of active travel, including micro-mobility (any small, lightweight devices used for short distances). During the Q&A there were several questions which touched on this aspect of the report’s findings. Being “actively inclusive”, as Kat Hanna from Lendlease described, is a continuous and rigorous consideration process, requiring developers to always look for the views least likely to be heard. The report includes detail on diverse forms of transport and how these are considered by landlords when assessing the quality of end-of-journey facilities, with many promising case studies.  

However, the drive for active travel is not as simple as ‘build it and they will come’, as was brought up through questions of educating cyclists on safety. Neil Webster challenged these by suggesting education should be for ‘people’ as opposed to cyclists or drivers. If the aim is for active transport to become more popularly used in UK cities, then all those who use the space should be included in the considerations and education on safety. Furthermore, the development of active transport facilities and routes can only occur in parallel with their increased use. More users of these facilities can provide more data which will improve forecasting and future planning of end-of-journey facilities.  

Increasing options for commuters

In all, the event incited wonderful discussions which did not shy away from the intricacies involved in including active travel considerations in the specification of office buildings. There is much still to do to improve the inclusivity of active travel as an option for the commuter, but there is also much to be commended which is reflected in increased policy, investment, and of course engagement from the active traveller. 

Paddy’s postcard from Cannes

Mipim 2022 in Cannes was billed as a return to normality for the global real estate market, with announcements from the organisers that over 20,000 people were registered for the event.

In truth, it really didn't feel that busy to me. The numbers seemed more like a pre-pandemic Mapic, which was usually attended by around 10-15,000.

Maybe it was the slightly unseasonal weather (it didn't snow this year!) that was responsible for keeping the crowds indoors, but certainly Café Roma, other bars and restaurants were not as busy as in years gone by. The London stand was also noticeably quieter than previously. Which, as it was about half the size of years gone by, was not a bad thing. Sadly, the giant 3D maps of the capital and The City did not feature this year, and there were fewer London businesses displaying their products or services.

The reduced numbers did however make it easier to meet people, and random, accidental meetings seemed more frequent. It was fabulous to be able to meet existing contacts, some I hadn’t seen for three years, and to make some new ones. For me, this is the real benefit of attending the event.

One thing that hadn’t changed from previous years was the high proportion of delegates that could be described as “pale, stale males”. As a pale, stale male myself, I’m just grateful I didn’t feature on the “Mipim Lads” Twitter feed (twitter.com/MipimLads), which highlights the industry’s diversity problems.

As might be expected, the war in Ukraine was on everyone’s minds and was marked by a poignant collection of images of buildings and landmarks in Ukraine, taken before the invasion, displayed inside the Palais des Festivals. There were many conversations about how this appalling human tragedy may impact the markets and how real estate businesses were dealing with the situation, particularly the question of Russian investment.

Beyond the war, talk at Mipim was about the issues that the wider market is facing up to. “Driving Urban Change” was the conference's slogan for 2022, and how we transform our towns and cities, particularly with the response to Covid-19, was always going to be a key focus for delegates. As you would imagine, ESG was also a major topic and seemed to feature in most conversations. Other hot topics were Real Estate Debt along with logistics, international supply chains and nearshoring.

In the numerous pavilions (and stands) promoting the UK and various cities, Levelling Up was the topic of the day. I sat through a few presentations on the subject (and housing in general) and concluded that everyone has a different view on what “Levelling Up” means. What is also unclear to me is why so many public bodies felt it necessary to travel to Cannes from the UK to talk about it in an echo chamber. My prediction for Mipim 2023 is that there will be fewer regional and local authorities in attendance.

Remit Consulting’s research reveals that rent collection from tenants of UK commercial properties is still below pre-pandemic levels despite lifting of moratorium on evictions

• Verified figures reveal that, overall, 63.0% of rents were collected on the March Quarter Day due date

• Rent collection for retail properties improved compared to the previous quarter

• 94.0% of all commercial property rents were collected by the end of the December Quarter

Remit Consulting’s latest research into the volume of rent collected by property managers and landlords of commercial properties in the UK reveals that collection rates for the March Quarter Day were broadly similar compared to those experienced by investors three months previously but still substantially below those experienced prior to the pandemic.

The management consultancy’s REMark Report reveals that, overall, 63.0% of commercial property rents were paid by tenants on the March Quarter Day due date, compared to 62.7% in December. In March 2019, twelve months before the pandemic, collection rates stood at 79% on the due date, rising to 90% within seven days.

Remit Consulting also reports that 94.0% of all commercial rent due was collected by investors and property managers by the end of the December Quarter. While this is the highest end of the quarter figure so far in the pandemic, it represents an increase of just one percentage point compared to the end of the September Quarter. Remit Consulting calculates that this represents a shortfall in the rent collected by investors, which include many pension funds and other institutions, of over £400 million for the three-month period. According to Remit Consulting’s research, since the start of the pandemic, property owners have seen a total shortfall in the rent they have received from commercial occupiers of £7.86 billion.

Steph Yates of Remit Consulting said: "The end of the moratorium on evictions appears to have had little impact on the willingness of some tenants to pay their rent on time. While the due date collection rate is the highest witnessed during the pandemic, it is only a fraction of a percentage point higher than seen at the start of the previous Quarter on Christmas Day. Many observers had expected that the threat of arbitration for Covid related debt and the return of legal remedies such as forfeiture and CRAR (Commercial Rent Arrears Recovery) would have encouraged a higher level of rent to have been paid by tenants who have previously chosen not to pay.

“Rent collection rates for retail properties reached 64.5% on the March Quarter Day due date, compared to 62.3% three months earlier. There was also a similar increase in the level of rent collected for leisure properties, which include pubs, bars, and restaurants, from 52.4% in December to 55.3% in March,” she added.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since March 2020, working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Property Advisors Forum, and other members of the Property Industry Alliance (PIA). The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.