The dust has settled on Cannes as architecture and property’s biggest event, MIPIM 2016, has ended with it’s record 24,000 attendees back at their desks pockets stuffed with business cards and new ideas. In our latest Creative Business briefing, Made Journal’s Sandra Tinari takes a look at the key themes emanating from the French Riviera, such as the creative workspace trend, to discover the burning issues for architecture and real estate.
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Workspaces for start-ups
Trends towards occupier flexibility and heightened convenience are increasing as businesses expect more tailored working spaces and developers respond to those demands.
While at present the trend particularly benefits smaller and more dynamic companies, who favour adjusting their space as their operations and staffing levels change, commercial property owners are making the new paradigm work for them too – tenants are often willing to pay a yield premium in exchange for terms under which they can be more certain of maximising the utilisation of their work spaces.
The situation is particularly acute in London, where start-ups are disrupting the office market. A recent 2,700-strong PwC and ULI Europe survey on emerging real estate trends found that 66% of occupiers wanted shorter leases and 53% said they would pay more for a more flexible lease. Intreating data for a city geared toward large corporate businesses with its office towers comprised of extremely large floor plates.
Jackie Newstead, global head of real estate at Hogan Lovells, agreed that flexibility was one of the most important factors for London’s fast growing start-up community. She argues that landlords and investors can respond to the need by creating hubs or incubator units with further space available for people to expand into. “That means shorter leases, break clauses and also clustering into buildings where there are opportunities to grow,” she said.
The shift is helping large creative cities such as London and New York, retain previously priced out talent and entrepreneurial business. The question for other global cities, including Dubai, Paris, Hong Kong and Singapore is if they can learn from London’s emerging trend. Innovative, early adopters are sure to benefit in the race for global talent. The same could be said for the UK’s regions.
What’s more, how can these locations continue to attract talent if more flexible – and cheaper – creative workspace sees innovative start-ups increasingly remain in London and New York. And, what risk does this paradigm shift pose to property owners and their lenders with its tendency toward larger numbers of shorter leases in buildings.
Words & Photography, Sandra Tinari, Made Journal