25 Sep 2017

What Workers Want

Without income property has little value. It is surprising, therefore, that the industry spends an awful lot of time looking at design, construction and investment, but relatively little on occupation.

What Workers Want has been published by the BCO and Savills twice, in 2013 and 2016. The latest research draws on a survey of more than 1,100 office workers conducted by YouGov. We have found it gives insights you wouldn’t normally get from asking the workers’ representatives at C-suite level. Who’d have thought that smell was so important?

The factors deemed by over 70% to be highly important were: the length of commute; cleanliness; toilet provision; wifi; private space for focussed work and public transport.  Meanwhile, factors affecting wellbeing specifically were comfort; temperature; light; noise; smell and security.

The study also measured the gap between importance and satisfaction. Areas for improvement included the provision of quiet space; wifi; cleanliness and internal design. Perceived productivity in open plan versus private office was also tested, with the (expected?) view that open plan decreases productivity.

We can draw the following inferences:
  • There is some disconnect between what workers actually want and what their employers say they want (or maybe just what the office supply industry thinks they want).
  • The simple things are important and can be provided easily by facilities management (cleanliness) and specification (toilet provision).
  • An engaging fa├žade is nice to have, but makes little difference to occupant satisfaction and, therefore, recruitment and retention. Attention is better spent on:
  • Enabling productivity. This is a subject of a whole new workstream but what is evident is that workers value the ability to work in a focussed way but are frustrated by the lack of provision. 

This is not the same as saying “open plan is dead”. There will be no return to private offices and cubicles, but there is no good reason why optionality cannot be provided.

"While wellness has, in some quarters, become the property industry buzzword for 2017, this is one of the most visible examples we have seen in practice and it certainly won’t be the last. Developers are increasingly including these innovative features at design stage, creating the first wave of ‘well buildings’ across the country. This phenomenon is not unique to the office sector; the industrial market is also starting to understand the benefits of putting staff first." -Property Week

-Author: Bill Page, Chairman of the BCO Research Committee.
-For more on 'What workers want' download the full report here.
-Access the BCO research page and download reports. Become a member, join the debate and help to shape the future of the industry

21 Sep 2017

An unforeseen consequence of Permitted Development Rights

There is a shortage of new homes. The government targets over 260,000 per year in England but the industry has delivered 189,000. Meanwhile, the image of offices sitting empty while there is this undisputed housing need seems like a failure of economics; the planning system has prevented market forces from determining the optimum land use.

Under the prior approval regime established in 2013, there is consent in principle for office to residential conversion. Local authorities can either examine notifications or wave them through. Authorities can nominate areas for exemption and have until 2019 to do this.

In March 2016 the rights became permanent. One year on from this permanence the BCO were intrigued to see what impacts there had been and commissioned CBRE to revisit its 2015 research.The number of notifications has been declining gradually. 

We think this is because much of the “low hanging fruit” has already been identified. Nevertheless, notifications are running at 750 per quarter. Local authorities are examining more, but there is no consistency in approach.Almost 13,000 homes were created in 2015-2016 through PDR following 6,600 in 2014. This is a meaningful proportion and equivalent to the output of a couple of good sized house builders. 

We estimate 18 million sq ft of office stock has now been lost since 2013 with the conversion rate running 5 times greater than before 2013. English office stock has fallen since PDR was introduced. In London specifically, 7.5million sq ft has been converted with a further 5.8 million sq ft expected; 5% of Greater London stock.

For office investors PDR has provided optionality and can mitigate obsolescence risks. However, there are reasons for caution. Some local authorities are concerned about what PDR has done to local environments and its piecemeal nature has frustrated consistency in top down planning policy. It is reducing the Grade B and C options on which the SME economy relies. 

We cannot prove empirically resultant harm, but anecdotes have been persuasive. Finally, a bigger office workforce is now being accommodated in less office stock. An unforeseen consequence of PDR is increased office utilisation.

Access the BCO research page and download the report to find out more on PDR.      
Blog post by Bill Page, Chairman of the BCO Research Committee.        

15 Sep 2017

Launch of new report ‘Permitted Development Rights: One year on from permanence’

A year on from Permitted Development Rights (PDR) becoming permanent, the BCO commissioned a new study to establish the impact on the office market and the extent to which the regime is contributing to the conversion of offices to residential. The report was commissioned by the BCO and carried out by property consultants CBRE.

A total of 13.3 million ft² of London office space could be lost to office-to-residential conversions carried out under new Permitted Development Rights introduced in 2013, according to the research.

This figure comprises of 7.5 million ft² of office space in London which has already been converted to homes since the introduction of the rights, with a further 5.7 million ft² of conversions in the capital having approval. An average of 2 million ft²/year has been converted each year since the rights were introduced in 2013, or 0.7% of the total London office stock.

The office development market has historically been able to outrun losses from conversion. Between 2001 and 2015, office stock in England has increased by an average of 7 million ft²/year, while conversions to housing have averaged 2.6 million ft²/year. However, in 2014, an estimated 6,574 homes were created from offices, leading to a loss of 5.3m ft² of office space. The creation of 11,155 homes from offices resulted in a 9m ft² loss of office space in 2015, almost double the figure from the previous year. 

The report finds that while Bristol, Birmingham and Leeds have all experienced high levels of notifications to local councils, London remains the city most affected, with 36% of all notifications in the capital. Furthermore, a higher proportion of these have been converted compared to the rest of England - London’s implementation rate is running at 57%, compared to an estimated national average of 50%.

Boroughs in outer London have been the most affected. Croydon has seen the most significant loss of office space so far, with estimates indicating that more than 1.3 million ft² over the last 4 years has been converted. A further 750,000 ft² of developments granted prior approval have not yet been converted. Hounslow and Sutton have also been significantly affected, with an estimated 529,500 ft² and 492,625 ft² of office stock lost to conversions to date.

In this podcast, Bill Page, chair of the British Council for Offices Research committee, explains the key findings from its latest report into office to residential conversions. 

Miles Gibson, Head of Research at CBRE UK commented on the findings:

“The new Permitted Development Rights have made a significant contribution to housing supply. However, following its introduction we have seen a decline in office stock in England for the first time in over ten years. There is strong evidence to suggest that this decline is due to these new rights, rather than economic or other regulatory factors.

“There are a couple of reasons why London in particular has seen significant take-up. Heavy use of the new rights in the capital may reflect the fact that certain London boroughs, such as C

amden and Islington, have traditionally had strong policies protecting office floorspace from conversion. In boroughs which have historically been protective, great losses are less surprising once that protection has been withdrawn.

“London is also where the housing crisis is most acutely felt. Supply shortages in its housing market make conversion of office premises an attractive choice for landowners with the right stock, especially given CBRE’s forecast that UK office capital values in 2017 will fall by -0.2%, compared to a 2% growth in house prices. As such, it seems likely that we will continue to see a growth in conversions in London, as well as the rest of the country.”

Richard Kauntze, Chief Executive of the British Council for Offices, added:

“There is no denying that more housing is needed in many parts of the UK, and the conversion of some older buildings which are no longer suitable as offices is a sensible solution. However, once office space is lost to residential development, it is often lost for good.

“This loss means that many businesses will not have access to office space of the right quality, in the right location, to succeed and drive growth. London boroughs such as Richmond upon Thames have already expressed grave concerns about the threat of lost office space, as has the Mayor of London.

“To ensure future economic prosperity, local authorities must take a more active approach to reviewing and approving notifications from developers in order to protect the workplaces needed by local businesses.”

For more on PDR download the report here which is free to BCO members.

Nicola Plumley or Jenni Edwards
British Council for Offices / Blue Rubicon
T +44 (0)20 7260 2700

11 Sep 2017

'The office of 2035: what it will look like, and how it will support the way we will work’. The BCO NextGen Competition

Competitors are asked to consider ‘the office of 2035: what it will look like, and how it will support the way we will work’.  The free-to-enter competition is seeking forward-thinking and innovative responses, challenging the conventionalities of today’s workplaces and anticipating future needs.
The NextGen programme allows the BCO to mentor the next generation of professionals – designers, agents, developers, consultants and others – and provides a platform for emerging talent to share their ideas.
With social, economic, cultural and technological progress changing the way people work, employers and workers’ expectations are in flux.  Ubiquitous and instantaneous technology; a growing interest in health and wellbeing; a greater desire for organisational flexibility; and an increased awareness of individual’s needs are now all competing factors within the workplace.
Multi-disciplinary teams of between two and four members are invited to enter the competition. Individuals are also encouraged to register, and will receive the support of the BCO to form teams. Each team must contain a minimum number of BCO members – full details available on the BCO NextGen website.   
Competitors will need to submit a 15-20 page report, including at least 10 images, graphics and diagrams and with additional media (including a five minute video) encouraged. The deadline for entry to the competition is Friday 6 October 2017.
During the competition period, teams will be invited to participate in ‘hackathons’ led by senior industry figures, and will be offered the opportunity to receive one-on-one mentoring and advice from an expert in a relevant field. A number of regional launch events are planned for the coming weeks, to promote the competition to young professionals throughout the UK.
Entries will be judged by an expert panel drawn from a range of disciplines and including David Hamilton.  The winning and highly commended teams will be announced at the BCO NextGen Awards Dinner on Wednesday 15 November.
The competition’s first prize is an invitation for the winning team to attend the 2018 BCO Conference in Berlin, including tickets to all conference events, flights from the UK only, hotel accommodation, and a financial contribution towards transfers and subsistence. The runner-up team will receive an invitation to an exclusive private dinner hosted by two key industry figures.
For full details of the competition, including team and submission requirements and the detailed brief, please visit the BCO NextGen competition website at http://bconextgen.co.uk/competition/. We have started revealing more details of mentors and judging panel.