When designing a London office building, it used to be clear what sort of business you were targeting. Whether it be financial services in the City or insurance brokers in EC3, developers could provide institutional space to suit.
But as London’s occupiers become more footloose, searching for new locations and working environments to attract talent, developers are having to adapt.
“In the past three years, the number of occupiers moving from their existing London submarket out to another has tripled,” says Knight Frank leasing partner Dan Gaunt. “Decision makers are now more open-minded and are driven by the demands of their staff.”
Occupiers in the tech and creative sectors have been pioneers in location choices and types of office space. Now others are keen to follow suit.
James Goldsmith, leasing director at Real Estate Management, the asset manager behind the Shard, SE1, and Park House, W1, says: “The definition of an institutional building is evolving rapidly.”
Assets that traditionally met that definition – uniform building design, core locations and income underwritten by long-term leases – remain highly sought-after by some investors. Yet, in the quest to follow occupier demand, developers are broadening their scope, both in location and design.
Rather than targeting specific sectors in specific submarkets, many are considering how to create space that meets the needs of a multitude of users.
The Shard, for instance, incorporates a 26-storey office complex that is designed to attract a range of occupiers. The iconic development has so far attracted tenants from sectors including investment banking, media, law, energy, fashion and health.
Goldsmith says: “To do that, you need to choose a location with great connectivity and social infrastructure and provide a building with key attributes, such as open-plan floors, good floor-to-ceiling heights and plenty of natural daylight. You’re offering a palette for the occupier to express their own identity.”
Nigel Webb, head of developments at British Land, adds: “It is possible to appeal to a range of occupiers if you provide flexible space with the right fundamentals. We are spending a lot more time not only talking to decision-makers, but the people they employ. They want a social experience, a dynamic environment surrounded by great amenities.”
British Land has enjoyed the benefits of occupational boundaries being blurred. At its Broadgate campus, it has welcomed a range of occupiers beyond the traditional financial firms, the most notable being Amazon. At 10 Brook Street, Regents Place, W1, the tenant mix ranges from Facebook to Santander, Debenhams to Manchester City FC.
Webb says: “If we can multilet to a range of occupiers, it helps us manage the assets and drive better returns.”
To present a building that can appeal successfully to a range of users, developers are going back to the drawing board to create space that incorporates the must-have features on almost every occupier’s wish list. Together with more obvious elements, such as efficient floorplates, good floor-to-ceiling heights, natural light, temperature and acoustics, occupiers demand a greater mix of spaces in which to work and interact.
Some of the most successful London offices are those that recognise the need to support staff collaboration with breakout areas, vertical integration with staircases, or receptions with coffee shops.
“It’s also about the softer considerations, such as access to green space and local amenities,” says Oliver Knight, London leasing director at Land Securities.
LandSec has one of the biggest speculative development pipelines in London, totalling more than 1.5m sq ft. Development is focused mainly on Victoria which, like other parts of the city, has seen its occupier base broaden significantly.
After being regarded as a government-orientated location with few amenities, new retailers and leisure operators have moved in as part of a much wider mixed-use environment. Now Victoria’s tenant mix includes the likes of Channel 4, Google, EDF Energy and 3i.
LandSec’s new Victoria office development, the 190,000 sq ft Zig Zag Building, SW1, is due to complete in July. It has been branded the “thoughtful office building” to reflect the focus on providing an environment to engender staff happiness and wellbeing (see box).
Features include 22,000 sq ft floorplates, private terraces and a concierge service. It has also put aside a generous chunk of basement space for bicycle provision, which has shot up the list of London occupiers’ priorities.
“The research we’ve done indicates that a happier workforce is a more productive one,” says Knight. “The design of buildings has to focus on the needs of occupiers, rather than just maximising square footage.”
Connections with the outside world are also a priority within the office building itself, with occupiers now favouring balconies, terraces and roof space, such as the three-floor Sky Garden at LandSec’s 20 Fenchurch Street, EC3.
This new philosophy is even permeating London’s most traditionally conservative submarkets, where the tenant profile has been far more predictable.
Anna Farnes, development manager at Grosvenor, says: “The days are gone when you could provide a generic offer. Our occupier base is now far more diverse and although value for money is still important, the quality of space is moving up occupiers’ agenda. They want space that reflects their culture and brand identity.”
Even Mayfair is beginning to broaden its appeal, says Farnes. “A range of sectors, from marketing and IT to professional services, is being attracted to the area. KPMG has prelet 40,000 sq ft at 20 Grosvenor Street, W1, and if you’d told us at the beginning that that was going to happen, none of us would have believed it.”
Prelets allow occupiers much more input into the design of office space, but even where that is not possible, Farnes says Grosvenor is having to consider far more carefully the type of space it offers the market.
From new-build to refurbishment, Grosvenor’s 11 projects cover a variety of offers, including a new town house office concept at 69 Grosvenor Street, W1.
“Here we’ve created more of a residential-type office product that retains all the building’s original features,” says Farnes. “We could have covered it all up with ceiling tiles, but that is not what occupiers want. As developers, we are having to be more creative and take inspiration from different areas.”
Flexing up to be adaptable
Designing a building that both excites potential occupiers and remains flexible enough to meet different requirements is the challenge facing London’s office developers.
“Developers can no longer be sure where occupiers will end up, which means their buildings need to be as flexible as possible,” says John McRae, director of Orms, the London architect behind a host of high-profile office developments, including Great Portland Estates’ City Tower, EC2, and Derwent London’s 1-2 Stephen Street, W1.
“Adaptability is key, not only to attract a range of potential occupiers today, but for five years’ time when there may be a different tenant wanting the building to function within a completely different set of rules,” says McRae.
Considerations include how much power is required, and how to adapt occupational density and design services to meet the needs of different users.
For instance, at its Zig Zag Building, Land Securities has opted for a category A fit-out but with a concrete rather than steel frame, so occupiers can adapt the space more easily.
It integrates three-point access onto floors, enhancements to accommodate high-density occupation and the flexibility to subdivide.
Similarly, designs for British Land’s proposed 500,000 sq ft 100 Liverpool Street, EC2, development at Broadgate will include adaptable floors that are easy to split, interconnecting stairs and the flexibility to allow for exposed soffit and plant.
When providing a truly flexible building, it may seem that shell and core is the obvious solution.
Yet most agents and developers say occupiers find the concept difficult to grasp; they need the space to ignite their imagination and be ready to occupy within tighter timescales.
