MIPIM 2016: Start-ups are disrupting the London office market and part of the industry is “asleep at the wheel”. That was the view of PwC UK real estate leader Craig Hughes, speaking at the Estates Gazette MIPIM debate: Start-up London, a safe investment or too tricky to touch?
Results of a 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.
“Business is going to get disrupted more often and it is important to adapt to that,” said Hughes. “Some businesses are looking at flexibility; some people are a little bit asleep at the wheel. If we aren’t going to constantly try to disrupt ourselves, we’re going to be disrupted.”
Jackie Newstead, global head of real estate at Hogan Lovells, agreed that flexibility was one of the most important factors for attracting start-ups, which landlords and investors can respond to 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.
While cheaper workspace can easily be found outside London, start-ups are remaining in the capital to benefit from its workforce.
Richard Howard, senior director of emerging London at Cushman & Wakefield, cited Vodafone trying to move its headquarters to Newbury, Berkshire, as an example. “They couldn’t hire anyone they wanted so they came back to London,” he said. “Most young people want London on their CV.”
YourWelcome co-founder Henry Bennett, who rents desks at Shoreditch, E1, co-working space Second Home, said: “Talent is so hard to get. We are in one of the best places for start-up offices. They offer yoga and free coffee.”
He said new recruits wanted to work in an office with other companies, not just the co-founders, but added that it could get expensive when paying per desk.
YourWelcome enables Airbnb hosts to offer professional hospitality by means of subscription to a tablet computer pre-loaded with relevant apps.
City of London policy and resources chairman Mark Boleat said financial occupiers were struggling and start-ups represented a “massive growth area”.
Level39 at Canary Wharf Group’s One Canada Square, E14, was opened in 2013 by mayor Boris Johnson and is now Europe’s largest accelerator space for finance, retail and future cities technology companies.
“I think Level39 is fantastic, but it’s a higher level,” said Boleat. “When you start at a much lower level, you do need that choice from people working in coffee shops to taking more space. I think we need much more of such space and that’s a challenge we are seeing a lot in the City.”
Boleat thinks the fintech industry will continue to grow because a City office location means staff can easily meet with the people they want to see. “It is a buzz place where people from any nationality can come very easily,” he added.
Boleat believes healthcare and life sciences-related start-ups in particular represent a “massive growth area”.
Howard agrees. He cited Imperial Innovations taking 80,000 sq ft in central London as an example. The start-up investors in life science and technology companies spun out from the labs of the universities of Oxford, Cambridge, Imperial College London and University College London.
“Big banks are trying to face the disruption and are faring pretty well,” said Boleat. “But in life sciences and leisure, the demand is potentially so much higher.”
The panel:
- Craig Hughes, UK real estate leader, PwC
- Richard Howard, senior director emerging London, Cushman & Wakefield
- Jackie Newstead, global head of real estates, Hogan Lovells
- Mark Boleat, chairman, city of London policy and resources committee
- Henry Bennett, co-founder, YourWelcome
- Chaired by Emily Wright, global and features editor, Estates Gazette
In partnership with:
- Cushman & Wakefield
- Hogan Lovells
- PwC
- City of London
• To send feedback, e-mail louisa.clarence-smith@estatesgazette.com or tweet @LouisaClarence or @estatesgazette
