To fast-growing technology, media and telecoms companies, London is second only to New York as a world-beating city. That’s great for the UK, but it presents the firms – and landlords – with a problem.
How can the capital accommodate the mind-boggling rates of growth these businesses are experiencing?
More than 100 TMT companies talked to BNP Paribas Real Estate about their ambitions (p6). Most expect their revenues to grow by 25% over the next 12 months, with the average business expecting to increase headcount by a third. Many will grow faster.
As an Estates Gazette/BNP PRE breakfast heard this week (for full coverage see next Saturday’s edition), flexible property arrangements are at the heart of these growth plans. Strong coffee, superfast broadband and an accommodating attitude are what they need from landlords who, quite simply, have to deliver.
Contrast this new media thinking with that of old media, which is seeking to eke value from property it already holds (p70).
The rival bid faced by British Land as it seeks to redevelop the former Daily Mail print works in Canada Water, E16, is just the latest twist in a long tale (p49). With their revenue mix churning (in some cases disappearing), newspaper groups are seeking to capitalise on their property assets wherever they can.
News International has sold Fortress Wapping, Richard Desmond’s Northern & Shell has moved to Luton, and the Financial Times is looking for a new HQ. (Though there was much speculation that this week’s resignation of Marjorie Scardino as chief executive of FT parent Pearson could see the Pink ‘Un move not just its office but its ownership too).
To draw a somewhat crude distinction: while new media wrestles with eye-watering growth rates while maximising value, lease flexibility and an edgy reputation through property usage, old media’s challenge is more old-fashioned: cash in on assets, deplete costs and, ultimately, become a bit more new media in its projection.
“It’s alive, it’s alive,” shrieks a character in the new Tim Burton film Frankenweenie, which opens next week’s London Film Festival. Burton is knowingly aping horror films past with his latest tour de force. Bankers, it seems, are engaged in the very same practice.
That may be a little unfair. Nevertheless, two major CMBS deals emerged this week, including the first European CMBS for five years.
Just as in Frankenweenie – and its better known forerunner – resurrection can have mixed results. Consultation on new guidelines from the Commercial Real Estate Finance Council designed to improve investor confidence and appetite for the securities closed last week. With bank funding so constrained, other CMBS deals are expected to follow. There may be many more if those guidelines provide the levels of comfort intended.
Let’s hope the outcome this time around is less monstrous.
How’s this for the title for the latest European commercial property update from Roger Bootle’s Capital Economics: Just how weak are Greek property markets? Very, in short.
In Q2 2012, at 8.15%, prime all-property yields in Athens were 240bps higher than their pre-recession level and, Lisbon aside, at least 100bps higher than in any other eurozone market. The lack of transactions means the reality could be worse. Foreign investors are turned off and with the Greek government lowering its 2013 GDP forecast from 0% to -4%, lower public spending and protests are inevitable. Eurozone exit looms in Capital Economics’ mind.
“Of course, at some point demand for Greek property will return,” it says. “Unfortunately, as things stand, there is little sign of that.”
And why does this matter, 1,500 miles to the north?
Greece is only at the more extreme end of the malaise gripping European property markets. The symptoms to varying degrees are apparent across the continent.
Damian.Wild@estatesgazette.com
