London commercial property market outdated at a fast pace

Posted On Thursday, 06 June 2013 17:58 Published by Commercial Property News
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The 2013 British Council of Offices Conference in Madrid sounded a warning to delegates that much of the existing London commercial property market was becoming outmoded at a far greater pace than previously thought. 

Lord Paul MynersEven some properties as young as 20 years were not keeping up with the modern office occupier requirements.

Lord Paul Myners, a former chairman of Land Securities, was addressing the delegates at the first plenary session, ‘A Brave New World’, put forward that growing density requirements and hindrances caused by the antiquated planning obligations of the Town and Country Planning Act, and a need for on-going enhancements to basic office functions such as high speed lifts and green-type air conditioning challenged the sector to keep abreast of customers wants and needs.

It was also emphasised by Lord Myners that the sector would need to adapt to a whole new office specification in order to continue attracting this new customer base since increasing demand from the Far East investors for commercial property in London was rising.

Sir Stuart Hampson called on delegates to continue developing buildings of quality and resist the temptation to prioritise space over specification. He advised that sustainability shouldn’t just be a slogan, neither should energy efficiency; austerity would show up any high energy costs and make buildings seem prohibitively expensive to let if designers did not keep up with the times.

Sir Hampson argued that the public space around workplaces is equally as important as the interior –this would require investment in infrastructure and support from local authorities for public transport links to office developments. Sir Hampson concluded by maintaining that it was necessary to treat tenants as customers, working hard to keep them engaged in order for office owners to become worthy landlords.

Research released in 2012 by the BCO found that building owners are underestimating the extent of obsolescence if existing valuations are used.

Those valuations suggest only 6% of UK offices are obsolete. However further interviews done by BCO with investors suggested that the figures were more likely to be as high as 15%. This suggesting that a greater proportion of office stock will not meet future building requirements.

The BCO has managed to identify an opportunity for developers and investors alike to assist in ensuring offices are suitable for the purpose of their occupiers, thereby reducing the proportion of offices classed as obsolete in future, and has previously called for office investment strategies which give as much importance to asset quality fundamentals and location as possible returns.

Last modified on Thursday, 06 June 2013 18:30

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