5 min read 16 Oct 23
A recalibration of corporate space requirements has resulted in some businesses taking less space, and some relocating to more fitting offices. Equally, businesses are more likely to prioritise high quality space which supports new ways of working and draws employees to the office.
This has accelerated a flight to quality by occupiers in recent years, expanding the divide between prime and secondary – and increasingly, ultra-prime offices. Tightening energy performance regulations are further driving a divergence in investment values for assets that require improvement.
With sustainability and wellbeing credentials now a prerequisite for both occupiers and investors, proof points are beginning to emerge that indicate ‘green premiums’ for buildings that are synonymous with best-in-class assets. For these offices, rents are increasing in Central London.
With occupiers’ needs from the workplace evolving, office space has to tick more boxes. Location is no longer a singular driving factor; specification and sustainability rank alongside.
Accordingly, best-in-class offices are raising the bar. The aim is to create sustainable buildings that meet occupiers’ needs in the modern working world; help to attract and retain talent; and operate efficiently, in turn helping companies to meet their own carbon targets.
Ryden’s move to M&G’s Capitol building in Aberdeen – the city’s former Art Deco theatre and music venue – met the company’s needs on several levels. “We are delighted to be moving into the centre of Aberdeen where our staff can benefit from all the amenities available on Union Street and the surrounding area,” said Arron Finnie, Regional Managing Partner in Aberdeen for the Scottish real estate consultancy. “The move also allows us to follow our aspirations to be a sustainable business and move towards net zero carbon usage.”
The Capitol building has been extensively refurbished to create sustainability-led office space; awarded a BREEAM ‘Very Good’ rating thanks to the addition of an automated building management system for energy efficiency control. “We will be seeking to benefit from the building’s many sustainable features as well as placing greater emphasis on encouraging staff to use public transport to travel to and from the workplace or to use electric vehicle charging facilities on site,” continued Finnie.
Creating buildings that set the standard for future offices requires a holistic approach to ESG – from development or refurbishment through to ongoing use. Minimising or neutralising the carbon associated with construction works – known as embodied carbon – is the first step. Innovative methods of construction are becoming increasingly viable, helping developers to advance in this area. At M&G’s Fitztrovia office development in London, a pre-fabricated structure will reduce embodied carbon by 8% versus a steel frame. Repurposing existing materials can also be an effective way to minimise the carbon emissions associated with manufacturing and transporting materials.
Embracing social and ecological impact at the outset is fundamental. This requires considered design – preserving historic structures, for example; which can enhance and contribute to the regeneration of surrounding areas. M&G’s Fürst & Friedrich building in central Düsseldorf retains the original stone facia of the former common bank of the provinces in the Rhine region. The local community is also able to benefit from the building’s electric vehicle charging points, which are available for public use.
Equally, ensuring natural habitats are protected and nurtured is essential. This may involve planting ‘brown’ roofs to provide native plants and encourage biodiversity, or installing bat boxes or bee hives, for example.
Smart design extends to buildings’ operational efficiency. For example, M&G’s Brooklands office development in Cambridge incorporates a saw tooth roof design in order to accommodate large photovoltaic solar panels on the building’s south face. Building design that creates shading can also reduce air cooling requirements.
Technology solutions are key to optimising buildings’ energy use, from LED lighting and automated building management systems, to heating systems which heat incoming air through exchange with outgoing air, as opposed to the creation of heat through a fuel burning boiler system.
M&G’s Heritage Lanes building in Brisbane embraces leading technology, sustainability and design to create a net zero in operation office development. This is supported by the reuse of rainwater for cooling and irrigation, alongside 129kW of solar energy generation. Its six-star NABERS certification, a new world-leading sustainability benchmark from the Green Building Council of Australia, reflects a proactive approach to operational efficiency, requiring ongoing monitoring of the building’s performance.
Meeting the requirements of tenants in the new working landscape often means thinking outside the box. This could mean providing flexible space to accommodate changing space requirements – from adaptable floor plates, to flexible office space that allows tenants to grow or shrink their take-up as needed. Cultivating an environment that inspires workers is increasingly pivotal. At M&G’s 742,000 sq ft Surbana Jurong Campus in Singapore, biophilic design helps to connect workers with the natural environment by optimising natural light and breeze and incorporating native planting, helping to promote wellbeing and productivity.
Crucially, best-in-class buildings need to offer lifestyle benefits for users. No longer ‘desk factories’, modern offices need to appeal to younger generations and create a thriving environment. M&G’s 40 Leadenhall development will create a unique new destination in London’s financial district, designed in a way that recognises the significance of the office as a place that people spend part of their life. The building incorporates 80,000 sq ft of high quality and varied amenity space including a central square with a large, contemporary library; a screening room, auditorium and rooftop clubhouse; access to multiple terraces, two restaurants, a fee-free private gym with a hotel-standard changing and treatment area, 1,000 bike spaces and a Changing Places facility.
Indicating the growing market share of best-in-class buildings, 40 Leadenhall is currently over 70% pre-let, to tenants including global insurance broker, Acrisure. Jason Howard, President of Acrisure International and Chairman of Acrisure Re, explained: “Acrisure is well known for its collaborative culture and having us all under one roof will optimise this even further. The building’s open and innovative vibe also aligns perfectly with our wellbeing and growth strategies.”
In a new reality for offices, well located buildings that raise the bar and offer a competitive advantage for companies are bucking the market trend, attracting rising demand from occupiers and investors. Buildings that are conscious of people and the environment represent the future of offices, helping to transform the built environment, future-proof portfolios and boost potential returns. Creating these next-level offices requires a holistic approach to wellbeing and sustainability, to create destinations with character, that thrive and evolve.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.