Remit Consulting’s Return at Workplace Trends Research Summit #WTRS23

Looking to provide attendees with access to some of the best research into work and the workplace, the recent Workplace Trends Research Summit featured the most up-to-the-minute research and data-driven case studies, including Remit Consulting’s Return Report findings.

As well as presenting the most recent data to a packed audience, Remit Consulting’s Lorna Landells and Darren Yates also highlighted the issues surrounding the impact of the pandemic and the explosion of remote working practices, examined the possible impact on the office sector and how the widespread adoption of hybrid working might impact our urban centres.

The Return Report is produced by Remit Consulting on a monthly basis and follows an initiative established by the firm to monitor how the pandemic had impacted workplace trends, specifically office occupancy levels. The project was established in 2021 and involved close collaboration with the British Property Federation and The Property Advisors Forum. Both groups have been key supporters of the project and use the analysis within their ongoing dialogue with policymakers and the wider industry. The sample covers around 150 offices, 1,500 leases, and over 200,000 workers in ten UK cities. From the outset, data contributors have included major property managers such as British Land, Great Portland Estates, Cushman & Wakefield, Knight Frank, Workman, Mapp and Savills.

To find out how you can contribute to the research and receive monthly reports regarding the office occupancy rates, visit return.remitconsulting.com

Lorna’s Logic: Dash Dot Dot Dot

This is definitely going to sound sexist, but truly it is merely a statement of fact – or at least of “observation”. 

A sizeable part of what we do at Remit Consulting is to help companies with system selection. 

For those not in the know, these are generally the software tools which enable and facilitate all aspects of working with property.  There are many products to choose from and all have their strengths and weaknesses but the one common feature the software companies strive for is a dashboard.  (I can almost sense the audible “oooh” from the menfolk out there).

Just watch, next time you are being shown a demo.  As soon as a dashboard appears on screen, with its dials and speedometers bars, a portion of the audience will sit up straighter, rapt attention on their collective faces, and an excited intake of breath will follow.

All the software developers need to do now is work out how to give their products a walnut trim, and they will be gazillionaires…

Things you need to know about ESG and real estate - No.3

3. Time is on our side (but only for a little while)

With ESG factors increasingly influencing property investment decisions, buildings that have a high EPC rating are more attractive to investors than worse-rated buildings.

Fact: although only 15% of EPCs are currently rated below E, 85% are below B.

Whilst it’s easy to see how investors can discriminate against a relatively small number of substandard buildings now – even if they are exempt – it may be far harder to mark down much larger numbers of exempt buildings in the future.

That said, although the risk to the value of C- to E-rated buildings may be widely over-stated, there is no doubt that scarce A- and B-rated buildings may well command a substantial premium from investors and occupiers working towards net-zero carbon targets.

Talk to Remit Consulting’s Charles Woollam about your long-term ESG strategies.

Lorna's Logic: Just one Cornetto

It probably seems to anyone reading these snippets that I spend my life in the sunshine; oh, if only. However, this short trip away was a true city break and this time to beautiful Venice.

Venice fared pretty well during the pandemic, but then there are apparently only around 5,000 true Venetians living there: the rest are occasional, rich second/third homers.

So three things struck me about the place. Firstly, it is extraordinarily lovely and devoid of all cars and bicycles and so exhaust fumes (smelly canals and sewers notwithstanding) and vehicular danger are pretty much absent.

Secondly, though, it is virtually inaccessible for the disabled (I saw a total of four wheelchair users over five days and around the periphery only). For Venice this is virtually impossible to overcome without radically altering the historic infrastructure and so it will remain out of bounds for the physically disabled, though maybe a haven for those whose disabilities are linked to loud noises or bright, flashing lights.

Lastly, though, it reminded me of how those with money make it impossible for locals to stay so. How a born and bred Venetian could ever afford to own or even rent a property is beyond reality and similar to the situation on our own doorsteps.

Must go, as I am jetting down to my cottage in Salcombe.

Only kidding (I am a local, after all).

Have a happy Easter!

Things you need to know about ESG and real estate - No.2

2. The EPC bar is being raised, but just not yet

The minimum standard for an EPC is currently “E” but it was always intended that, over time, the bar would be raised, and the Government has stated that it would like the minimum standard to reach “B” by 2030. However, it has been slow to legislate.

Fact: The Government consultation on the Energy White Paper closed in June 2021, but the results are still unknown.

This must mean that there is now uncertainty over both the final detail of the proposed changes and the target dates for implementing any change.

While it is wise to have a contingency plan that anticipates the future trajectory, it may be unwise to incur significant expenditure that is designed merely to ensure compliance with future laws.

This does not mean that investors and asset managers should ignore the compelling reasons for improving the energy efficiency of buildings, but it does confirm the need for a tactical approach to ESG and real estate.

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

MIPIM 2023: Tightening belts, monetizing property data, predictive analytics, business focus and Dengue Fever!

MIPIM 2023 was a great success. In addition to gaining insights into the latest trends and developments across the industry, it was excellent to catch up with so many contacts and create new ones, in a relaxed environment that was so conducive to business.

MIPIM by the official numbers:

• Around 15% higher attendance than last year

• Four-day conference

• 23,000 registered delegates.

However, there were thousands more real estate professionals and experts choosing to meet in the cafés, bars, hotels, and restaurants along this small stretch of the Mediterranean.

Despite the reported numbers and the crowds inside “the bunker”, from the Remit Consulting perspective, there seemed to be fewer people inside the event than in the pre-pandemic years. This could be attributed to the increased price of attendance, but could equally be due to the more relaxed approach and familiarity with café culture these days. Our Dutch team reported that it was clear there were fewer representatives from the Netherlands than in years gone by. Interestingly, though, there was a noticeable increase in delegates and businesses from beyond Europe, particularly from the Middle East and North America. It also seemed that there were more “decision-makers” in attendance than historically. Even so, MIPIM retained a strong European focus.

There was much talk about consolidation amongst the many asset and fund managers with suggestions that smaller firms, with limited portfolios or those that focus on one asset class, will struggle to deliver acceptable returns. The consensus is that these mandates will be picked up by the larger asset (and property) managers, and there was chatter of investment funds increasingly looking to rationalise and improve on a pan-European basis.

What was the mood of the market?

With the sunshine, the fine wines and the good food, the mood in Cannes was, on the surface, one of optimism.

However, with the ongoing war in Ukraine, the collapse of Silicon Valley Bank and Signature Bank (and the worries about a possible international banking crisis), and the fear of a prolonged downturn, there was an underlying sense that times are tough and likely to get tougher.

The difficult market conditions were reflected by the scarcity of deals and transactions being announced, with the majority of press releases and news stories being issued by the brokers, focusing on specific bright spots and optimism rather than being more expansive.

The low levels of transaction activity inevitably led to cash-rich investors and their advisors circling at MIPIM and making it known they would be happy to hear about any highly leveraged properties and portfolios across Europe that might become available at ‘competitive’ prices.

Click here to watch Andrew and Lorna being interviewed at MIPIM by Costar News editor, Paul Norman.

The prevailing market conditions were also reflected in a sense of seriousness amongst attendees and a sense of determination to make the best use of time at the event. Yes, for many delegates it was their first MIPIM in four or five years, so there were myriad contacts to catch up with, but we had many meaningful meetings and discussions that were no longer than 30 minutes. Short, sharp meetings were definitely the order of the day.

The brevity of meetings might also explain the rumours that some of the big investment funds have chosen not to have yachts as their bases for entertaining and meetings at MIPIM in 2024. Experience teaches us that, physically, getting onto and off some of the boats can be a slow process, which is not conducive to short meetings.

Despite the apparent lack of market activity (or because of it?), there was a positive attitude towards, and increased awareness of, business transformation and the need to adapt to changes in the market and a realisation from many attendees that now is a time to reflect and invest in an improvement to systems and the use of data.

What were the hot topics?

We haven’t created a word cloud based on everything written about MIPIM, but if we did, it is easy to imagine that “ESG” and associated words, would be dominant as it was the topic that seemed to be part of most conversations over the four days, even if it was not always clear what the implications of ESG are for investors and asset/property managers.

This was not surprising for an event which began with a keynote speech by Jeremy Rifkin, the American economic and social theorist, who outlined a vision for a sustainable future for the planet with the real estate industry leading the way. To reflect this, MIPIM even had its own “Road to Zero” zone within the Palais des Festivals. Disappointingly, it was situated on the lower ground floor (which has no windows or natural light), and except for the seminar area, the Zone was almost deserted on the occasions we visited. Perhaps the sunny weather led attendees to prioritise other conference areas.

Data was also a major focus at the conference, with Avison Young and CoStar both emphasising its importance. A demonstration of Loopnet (which was relaunched by Costar in November) revealed how it provides data-driven predictive insights into the property decision-making process of occupiers. Clever stuff.

Elsewhere in the exhibition, MRI was promoting its Springboard offering. While being well known for its work on footfall in the retail sector, the platform is looking to move into the wider built environment and other workplace situations.

A further interesting development was the number of firms at MIPIM who were sharing ideas on monetising property/building data outside the property industry.

There were many new customer/tenant portals appearing on the scene from all over Europe. This raises the question; how many are needed and is the market now saturated? Equiem, one of the most established in the market, has now dropped its on-site resourcing model and is focusing on its robust software, which is popular and widely used in Australia, Europe, and the UK. Talking of technology, along with videos of major developments in the desert, we were drawn to the Saudi Arabian pavilion at MIPIM showcasing a rather creepy female robot called Sarah who reacted to your voice with all the warmth of a cyborg in a dystopian sci-fi film. It was, nonetheless, an interesting addition to the conference and showed that the industry is always looking for new and innovative ways to approach real estate development.

“Sarah” the robot.

Will we be back in 2024? Of course. Where else are you going to run into so many major investors, property developers, asset managers, brokers, property managers and technology providers in such a short period of time?

Oh, yes. And Dengue Fever. One of our team tried to give blood on their return to the UK, but it was refused! Why? Because Cannes is in an area apparently afflicted by this disease.

Who knew?

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.

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