Office_Lab caught up with Shaun Simons from Colliers International. Together we explored how the office has been changing and what is driving the shift.

What are your thoughts on what's currently driving the London office market in 2021 and who's leading that?

With that in mind, has Covid brought something forward in the agenda rather than changed the direction?

With the topic of co-working or hot desking obviously we’ve seen a mass increase in the last few years with We-Work and forum styled office spaces. Do you feel that the changes coming are going to take us more towards that model of flexibility or do you think its still going to be an office space, rented out by a company?

So in regard to those changes how do you think the City Fringe will become change. Do you see occupiers still wanting to be a part of that zone or do you see it being de-densified and seeing a shift to offices being smaller and located elsewhere? 

If we park that and forget it happened, what was the next 3-5 year projection for the City Fringe?

Do you see that the type of client in that area has changed? Is the city trying to emulate that creative sense or make an office space that feels less corporate. Is that having an impact on the type of client, maybe in the financial sector trying to go to the City Fringe as opposed to the City?

I guess it's also to do with the impact of availability of floorplates. Where you would go into the city for possible larger floor plates but then a more retrofitted or remodelled building you get smaller more characterful spaces. That's always going to limit the big corporations going into these areas.

Grey space will be a key driver of key vacancy spaces. Could you expand on that and how can we as architects adapt to those spaces. Are occupiers looking to be more flexible with who they're sharing the spaces with and what are those environments supposed to be?

What we are hearing is that we are going to go back to the demand trends that we were experiencing pre-covid. There was already a shift in the office market towards more creative spaces, more flexible spaces. With that in mind is there a key area that you find a lot of the offices delivered to the market are failing to identify?

Perhaps a lack of flexibility, or lack of certain functions and facilities that maybe get overlooked?

“So I think you’ve got to really really be careful at the moment because I think looking at market trends and forecasts, I kind of feel any market forecasting or projections at this moment in time are not really worth the paper that they're written as far as I’m concerned. People talkin about “x” percent of rental growth or “x” percent of rental reductions or incentive changing or packages changing. Right now it’s all opinion based, we work in a very simple economic structure. Its supply versus demand and the way we create our views and thoughts are really predicated on data. So you're developing a building in Shoreditch, we can look at the previous twenty buildings we developed in Shoreditch and look at recent builds we’ve done and work out where the current levels are. The problem is since March, the market has done nothing, it’s flatlined and there’s been no data. So all these opinions both from architects, agents, the press, no ones actually got a clue as far as I’m concerned. Until the market reopens and we start to see some momentum in the markets and some data to support advice, I think everything right now is opinion based. For what it’s worth, in my personal opinion is I do think the market has done nothing for nine moments. In that time supply has increased and keeps increasing whilst demand still remains at zero, flatlining. We’re compounding the issue so I do believe there are lots of businesses wanting to do things but until the government gives businesses in general the confidence that it's safe to go back to work. Whether it's in the form of a vaccine or whatever it may be. Then it's going to be pretty stagnant until then. We saw when we came out of the fist lockdown there was a lot of activity so we came back on the first of June, June, July August there was activity. It wasn’t at the levels we were used to but it was a really good level. You had the rule of 6 that took us out by the legs, we then had the restrictions that took us out at the waist and then we had the lockdown that was a full body tackle that took us out completely. I think what that demonstrated is that a lot of demand is starting to swell but unfortunately with constant moving of the goal post and changes in government direction every Bit of momentum that we created in the summer got taken away from us. But what it did demonstrate is that it's there, we just needed the government to give us confidence to come back.” 

“I was a guy that in sort of March/April. You had this kind of movement, the work from home movement. “We’re working from home forever”, “The office is dead”, “No ones ever going back to work” and I kind of bought into it. Is this the end of everything that I’ve understood forever, is this the end? And I started to believe it and it was only when we came out of lockdown and you say this about the political movements as well. Those who shout the loudest aren’t always in the majority and if you look at the most recent UK election you would have thought Jeremy Corbyn and Labour would have won by a landslide because that was the view. But when it got to the vote Boris Johnson was an overwhelming winner. The point I am trying to make is there are a group of people banging this drum about “Oh we’re never going back to the office” but I genuinely believe and there are facts to back it up. People don’t want to work from home. Yes, having slightly more flexibility around your working hours - don’t get me wrong I am in the same boat. I’ve got two young kids. I haven't taken them to school in 8 years however having the freedom in this post lockdown world I’ve taken my kids to school and it's been great and I’ve been able to do a couple of hours of work from home and then go into the office. Having that kind of flexibility is great but the notion or the thought process that the office is dead, city centres are finished, the office space is never going to return is nonsense.”

“I think definitely the latter, I think there is this overriding idea of change and i'm not scared of change. Even if it impacts what I do I embrace change and it's why I've had the success of the various things I’ve done throughout my career because we have accepted change and embraced it. I do believe that there is going to be a shift in the mindset of businesses moving forward. I don’t think it's a one size fits all, I don’t think it's safe to assume that 20% of every business is going to do 2 days at home and 3 days in the office. I don’t think that's realistic. Different businesses and the different levels of requirements within those businesses will have different needs. I think it's very dangerous to get into a position where you’re focusing on percentages. I think if you look at it on a broad scale level, covid has changed the way businesses may look at how their staff behave moving forward. The answer to that is 100% yes. Will that change the way office spaces are designed almost certainly yes. Will there still be a need for the office 100% yes. So yes there are changes, there were changes before Covid, co-working, hot desking they were all coming anyways so this was just another one of those changes.”

“I don’t think this is Covid relevant to be honest with you, I think what we’ve been seeing for the last three years regardless of Covid is completely irrelevant to this answer. I’ve been an agent for 21 years and for half my career you’ve had the service office market on one side and the conventional office on the other and a massive thick concrete wall between the two. Occupiers would go to one or the other. When we-work arrived on the scene they disrupted the model, what they did was create cool service offices. So rather than walking into dare i say old fashioned regis where there were blue carpets, suspended ceiling, the floormat was regis, the toilet paper was regis and any time you touched it there was regis on there. We’ve moved much more to a creative environment which mixed up the market. Those two worlds were colliding and actually in the early part of this year there was very little to differentiate between we-work product and a conventional product because the conventional product wised up and started to create spaces that were more turn key with furniture and fitout, there appetite for doing shorter leases became more consistent whereas instead of holding out for 5-10 year leases they were prepared to do a lot more flexible leases. So in answer to your question, that kind colliding of two worlds was happening anyway and was gathering massive pace pre-covid. Covid might speed it up again slightly but i think we were seeing those changes and we would have seen those changes regardless of what's happening.”

“My caveat here is that everything I have to say is opinion based and not based on fact. I believe that when a vaccine is sorted and when there is confidence back in the market in terms of business getting on the tube and traveling to work. I do believe the world will return back to normal. That said, there will be a percentage of businesses and who knows what that percentage will be. Who will choose to want to work outside of central london. There staff may not want to get on the tube and there will be people who will be deeply impacted by the outcome of Covid. Even if there is a vaccine and everything returns to normal as we know it. People will still feel the pain of it and want to react to that. So one of the trends that we’ve seen since the first of June is that we predominantly specialise in the City fringes, Clerkenwell, Farringdon, Old Street, Shoreditch, Aldgate, Whitechapel. That's the centre of what we do but what we also do quite a lot on the outskirts of that location. Our busiest construction since June has been a building in Holloway Road, The Billiards Factory, A building Caledonian Road called the Cally Yard, the Arts Building in Finsbury Park and Metropolitan Wharf in Wapping. Now all of those four buildings either sit right on the edge of Zone 1 or just on the start of Zone 2. What we found is, I would say those four products have had the most amount of viewings, most amount of interest and most amount of deals done comparatively with those in a more central location. So going back to one of your other questions, of course there are going to be businesses and individuals who own those businesses who will never be comfortable again with getting on the tube. Of course that's one of the factors however I think the percentages will be quite low so I do believe that the city centres as we know them and in particular the City Fringe, the spiritual home of creative and digital businesses of London. I think it will live to fight another day and some. But I do think there will be a percentage of people who won't come back and therefore that ring around the city fringe will benefit quite greatly.”

”It was going mental. We operate within the most simple economic platforms. It's just supply and demand and without going back right into history. All districts in central London, in particular places like the West End, Kings Cross and the City Fringe. Were massively under supplied in terms of real estate and there were a number of reasons for that. One there was the explosion of growth inside sectors like the technology sector. I would even go as far as saying that when they did permitted development around the financial crisis. That impact of that loss of office converted to residential haven't actually been felt. It took ten years to catch up with the impact which permitted development hadand then i think the other factor is that i would say when we had the whole brexit chaos. A lot of developers got a bit nervous and turned the tap off. So it's a combination of factors, one growth business just hoovering up space, two permitted developments back in 2010 finally having an impact and three developers getting nervous around brexit. Those three factors compounded the resulting factor in the lack of supply which we are seeing and when you couple that with reasonably good demand. I felt that if Covid didn't happen we would have continued growing rather than reclining.”

“The City has had to evolve. It had to become more versatile in its approach otherwise relying on a financial sector or insurance, it's too narrow. I think in answer to your question yes, a bit like the lines between conventional service were blurring and the lines between districts of London are changing as well. I think most agents in the markets will tell you that over the last 5-6 years occupiers have become a lot more flexible in terms of where they would want to eventually reside and what we’ve found is that when we would show people around buildings we’d find that they’d spend the morning starting in Hammersmith, moving across to the West End then going to Kings Cross and back to the City Fringe. They were looking at options across all of the different districts. I think there is always going to be a percentage of occupiers who will be (in audible) but I do think that the majority of the tenants base that we rely on i.e Technology, media and creative industries. I genuinely believe that the City Fringe is their spiritual home. The analogy I give is, one of the property industries in the 1960s. All the big property agents and companies were all around Hanover Square. That's where they were, they would be boozing in Davey Street wine bar on a Thursday and a Friday and that was where everyone congregated. It is the same for the city fringe, we’ve got a nucleus of technology based businesses who want to be around each other. It's part of the community, so yesI think there are always a percentage of occupiers who are a bit more loose in terms of where they want to be but our core market I don't see disappearing any time soon.”

”Yes but what we found over the years is that we have had a steady amount of big developments present themselves to the market with buildings like the White Collar Factory at 275,000 square feet and you’ve still got buildings being developed like Bloom in Clerkenwell which is at 130,000 square feet. There are big buildings but it’s a strength not a weakness. Whereas in the city you get a million square feet in one building and then two streets down you get another building of half a million square feet being built. The reason that our location has seen the growth it has seen over the last decade is because the supply is incredibly limited. The builds are, as you say smaller and the developers are smaller and are far fewer and far between. We have fortunately been able to develop enough buildings in the City fringe to deal with the demand that’s been there. So I don't think we’ve lost out on anything, more positively I think the supply is low so the supply demand dynamic pre-covid was at a very healthy level.”

“Again, opinion based. There is a lot of grey space on the market at the moment. It's overwhelming as far as I am concerned. I am not convinced that a lot of these spaces will have deals done on them. A lot is where occupiers are thinking “well we’re in lockdown we don’t really need the office. If we can get rid of it we can”. But i think the reality is that it will be quite difficult for them to do. A lot of the spaces are quite dated now, they're quite old, they need to be refurbished and are necessarily at cheap rents and occupiers have got a lot of choice out there so why would they take something that's quite compromised. The grey space is the concern because I believe it's reaching levels which are quite worrying in terms of quantum. Whether it all gets let or not is a question I just don't know yet. But it is a concerning factor for the market because we’ve got more conventional supply on the market anyways because of lack of demand and businesses going bust. The grey space is an unwanted distraction. 

“As I said, a lot of these trends were happening pre-covid anyway. For me covid hasn't been the impact I think the impact that's changed the stance or the position of the conventional market which we currently all dial into was brought on by we-work.

What we-work did to the market is that they changed the game, they changed the way in which businesses occupied space and it wasn't just we-work there was lots of growth in the service office sector. And I think as I said pre-covid, yes leases were becoming more flexible landlords were needing to provide fit and space rather than open plan Grade A spaces in the traditional form. But I also think landlords have upped their game in terms of the way buildings behave. So for example, I think the days of walking into a building, checking into reception and disappearing up a stairs and the lift and going to your floor. I doubt that, I think people want to have more of an experience on the ground floor. Whether it be to have a coffee or food offerings at ground floor. Spaces for informal meetings or co-working. I think buildings have got to be much more about the experience rather than just the necessity of going to work. So what you’ll find, what we are trying to encourage in lots of huge developments such as Bloom in Clerkenwell which is a very good example. We’re looking at creating a 170 seater auditorium, we’ve got a gym in the basement which is solely dedicated to classes for people in the building like pilates on Tuesday and yoga on a Thursday, spinning on a Friday and wellness on a Wednesday. It’s all that kind of stuff so I just think the best example I can give you is that I feel the office market is moving much more in the direction of hospitality. So if you're thinking about staying in a hotel, if you’re going on a romantic break with your partner. It's unlikely you will go to a hotel without any services. You're going to want a spa, swimming pool, gym, stuff to do. Whereas I think the office is kind of the same thing, what we are seeing amongst occupiers through requirements we’re getting they don't just want a floor in a building. They want to be a part of something bigger where there are more people. I often use the word campus, campus is often used in an incorrect way. We sit in Mordens, which is an 80,000 square foot office campus in Old Street and you’ve got a real mix of occupiers here. Occupiers who occupy 40-45,000 square feet and occupiers of three man businesses. So it's all being a part of something that’s bigger, you bump into people in the coffee shop, there is a courtyard and in the summer everyone kind of congreates in the courtyard and I think that's the way more successful buildings are gonna be in the future.”