Helical predicts ‘hotelification’ of office market post-Covid

Aaron Morby 3 years ago

London developer Helical has set out its upbeat vision for the future of offices post-Covid but warns the Government must lift final Covid restrictions on 21 June for the market to rebound strongly.

Gerald Kaye, chief executive of Helical (above), said the office sector was on the cusp of considerable change.

Helical has identified four key drivers that will shape the use of offices going forward.

He said property investors like BlackRock had already remarked on a tectonic shift in the reallocation of investment to sustainable assets which Kaye said would drive future new building and refurbishment activity.

Kaye said: “Tenants will want to occupy the most sustainable and environmentally favourable buildings to achieve both their own net zero carbon targets and those of their stakeholders.

“For the same reasons, investors will actively seek to acquire these buildings. We believe there will be a “green” rental and yield premium for the most sustainable assets.”

“The second trend is wellness,” said Kaye. “In a post-Covid environment, tenants will require the most efficient and up to date air conditioning systems to minimise the risk from airborne viruses. Sensors showing air quality in a building will be essential and office density per worker will decrease so employees will benefit from a more comfortable environment. 

“Third, buildings will see greater use of technology to optimise their environment and the workplace experience. Sensors that record occupation levels will improve energy efficiency and the management of buildings.

“The fourth and final trend is enhanced amenity. There will be greater demand for secure bike parking and high-quality “club style” changing facilities.

“Buildings should provide an attractive working environment with food and beverage facilities close at hand. As part of this enhanced amenity, we will see an increasing “hotelification” of office buildings, with five-star management a necessity.

“Assets are moving from passive, low risk, long lease investments to intensively managed shorter leased buildings where maximising tenant retention, rental growth and building performance will be the priorities.”

Kaye predicted there would be a bifurcation in the office sector as the “real” Grade A buildings, which incorporate these facilities and amenities, diverge from the rest in both capital value and rental growth.

He said: “I would expect this pattern to accelerate as tenants seek working environments that match the expectations of their employees.”

Kaye said Helical’s main focus now was to use the considerable firepower at its disposal to identify and acquire new projects.

He said there would be a mix of repositioning, refurbishment or redevelopment opportunities, delivering best-in-class office space commensurate with a more sustainable post-Covid world.

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