ER-Insights: November 2023
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Market Insight
The London office market: it’s tough, but navigating with knowledge and expertise can still generate rewards

2023 has been a tough year for office investors. Rocketing interest rates, inflation, hybrid working and accelerated obsolescence have all taken their toll on values, drawing the inevitable comparisons with the last significant downturn following the Global Financial Crisis (GFC). 

While the valuation impact is similar, the conditions and anticipated consequences now are crucially different from the GFC; policy is tightening, with higher interest rates piling pressure on cashflows and interest coverage ratios. Another key difference in the office sector is the ongoing impact of the Covid-accelerated hybrid working patterns and the resulting shift in tenant demand.

But, in the best locations – the City, the West End, or Midtown, areas where the influence of the Elizabeth line has made itself felt – we continue to see huge opportunity. If you can deliver modern, best-in-class, fit for purpose space off the right entry price and basis, you will find a very receptive occupational market.

Read more on our website by clicking here.
What’s on at ERI
“Mystery of Banksy” exhibition at Königsbau Passagen 

Farewell Banksy! This month we said goodbye to the “Mystery of Banksy” exhibition following its 4-month residence at Königsbau Passagen (KPS), our prime 400,000 sq ft retail and office complex located in the heart of Stuttgart. Banksy was our first exhibition and welcomed over 50,000 visitors, providing a major uplift in footfall.

In a retail world where the spotlight is increasingly turning to the experiential, operating retail assets requires an open mind and proactive approach to management. The Banksy exhibition provided a real point of difference by allowing us to transform and repurpose an existing vacancy to boost occupancy, as well as attract a new customer demographic. As demonstrated via the successful exhibition at KPS, we are constantly reviewing the optimal tenant mix and generating new ideas to drive footfall.

We look forward to welcoming more new and interesting exhibitions soon - watch this space for further updates, and visit the KPS website to discover more about the complex itself.
Thavies Inn surrender: unlocking 100,000 sq ft office redevelopment in London's Midtown
Our prime office redevelopment scheme on Holborn Circus is pressing ahead, following subtenant Lloyds Bank’s agreement to surrender its leasehold interest in Thavies Inn House. We have therefore secured absolute control of the vacant possession of Thavies Inn House ahead of an anticipated start on site in 2024. Knight Frank and CBRE have been appointed as leasing agents, and Avison Young as project manager. 

We will continue to work with the City of London, our project partners and remaining tenants to ensure a smooth redevelopment of Thavies Inn House into a high-quality, energy-efficient and landmark new office building, befitting such a prominent, gateway location into the City.
Five Questions For...
Alice Lamb, Deputy CEO of LandAid

This quarter we check in with Alice Lamb, Deputy CEO of LandAid - the property industry charity working to end youth homelessness in the UK. We have a longstanding relationship with LandAid, including sponsorship of the fantastic LandAid 10K.
 1. What is LandAid's current priority?    
LandAid’s priority is delivering our current 3-year strategic aims by March 2024 to create vital 1,000-bed spaces for young people. Although this is a huge achievement, it only just scratches the surface of the issue of youth homelessness. We are on track to have raised £10m this strategic cycle, and to broker additional significant value (we are on track to deliver c. £750k) via our Pro Bono Programme - benefitting many young people and charities across the UK.

Recent figures released from Centrepoint show that last year, 136,000 young people between 16-24 years old approached their local council for housing support - almost 50% increase over the last 5 years. LandAid’s mission to unite the property and wider built environment to end youth homelessness is now more vital than ever.

2. What is the biggest challenge in the charity sector and how are you facing it?
The cost-of-living crisis needs no introduction. For charities, this means that securing vital funding is more difficult than ever (perhaps aptly coined the ‘cost of giving’ crisis by the sector). 

There has been more than a 50% rise in young people facing homelessness since I joined LandAid in 2017. With increasing public sector cuts, charities are under pressure to deliver vital services for those in need - and with homelessness services being decommissioned by local and national government, charities are under increasing pressure to tackle need with ever-depreciating resources. 

LandAid is working alongside our partners to deliver innovative solutions to create safe, secure accommodation for young people - working with the BTR sector to allocate units to create vital homes, plus creating routes out of homelessness and into education, employment, and training. There are numerous ways that the industry can raise funds to support our mission - more information can be found here.

3. What is one change or innovation that you would like to see the property industry embrace?
I think that the real estate industry is very astute and aware of the issues that it faces and needs to address - for example, many organisations have a keen eye on improving and making positive changes with diversity, the gender pay gap and wellbeing. But from a LandAid perspective, we are particularly alert to the need to respond to the corporate drive to deliver genuine social value and deliver the S in ESG - ensuring that this is more than just a tick box, but that we support the built environment industry to create real change.

We are advising many of our partners on the best possible way to achieve measurable and tangible impact for vulnerable young people. We are working with HACT (Housing Association’s Charitable Trust) to develop a social value calculator that can help the industry to understand, communicate and celebrate the impact made on your local communities.

We know that ESG matters to our network of invaluable partners, such as Evans Randall Investors, and we want to play a central role in helping the industry to address, understand and achieve that S. There are many ways to create social impact and value - and via LandAid, we can help the industry to make this count. 

4. What is one building that inspires you and why?
For me, it would be Dawson Heights, a large, brutalist social housing estate in Dulwich. As a born and bred South Londoner, you can see this building from miles around. The building was designed by young architect, Kate Mackintosh, when she was just 26 years old - and built in the late 1960s. No corners were cut in the design of this housing block, with each of the 298 flats possessing its own private balcony and amazing views across London. It has guided me home on many an occasion, and during the pandemic, I often sought solace in its shadow as I gazed across the city from on high.

5. Where is your favourite place in London and why?
I think it would have to be King’s Cross, the transformation of that part of town has been astounding. The design and use of the existing industrial buildings in the area are inspiring and I think they give a real distinctive character to the place. Kings Cross always has the most fantastic buzz to it, with so many brilliant restaurants, shops and things to do. And for me, it really has a character like no other place in London.
About Town
London Event Highlights

Here are the ERI team's top picks of what's on in London in the world of art, design and enjoyment.

BBC Earth Experience London
until 31 August 2024
Featuring bespoke narration from David Attenborough, BBC Earth Experience showcases breath-taking footage and music from the BBC Studios Natural History Unit television series Seven Worlds, One Planet, projected on multiple multi-angle screens using the very latest digital screen technology. It is taking place at the Daikin Centre, a purpose-built and demountable venue in London’s Earl’s Court.

The Gingerbread City 
2 December 2023 - 7 January 2024
With professionally built cityscapes by some of the finest architectural minds, the Museum of Architecture's Gingerbread City exhibition is back for 2023. Under the theme of "Water in Cities". over 70 biscuity buildings built with water cycle in mind will make up the mini-metropolis including houses, train stations, markets, schools and museums — all decorated with icing and sweets.

Guildhall Christmas Market
27 -28 November 2023
Taking place inside one of London's most beautiful historic buildings, Guildhall Christmas Market will feature a variety of stalls selling handmade, unique gifts alongside a food festival. All funds raised will go to the British Red Cross, which supports people in crisis in the UK as well as in 191 other countries around the world.