The retail unit is dead. As is the corporate office. And the hotel.
An overstatement? Almost definitely. Of course, these physical real estate assets aren’t dead; they exist, and will do for the foreseeable future. But what is on life support is the property industry’s historic ability to mentally neatly silo retail, office, industrial and other uses when it comes to development, investment and occupation.
Those involved in mixed-use development (a large proportion of the industry) will probably feel pretty aggrieved by me saying this, and justifiably so.
They will argue that for several decades they have taken an all-inclusive approach – incorporating, for instance, retail and leisure facilities next door to residential development and looking at the entire ecosystem of how uses complement each other – and they would be right. But what I’m talking about here is the switch-up from different uses in different buildings to different uses in the same space, often concurrently.
It’s almost impossible now to think about retail, logistics, offices, residential or leisure as individual sectors – any new development is going to include at least two uses, if not more. Take hotels for instance. Since the 1970s, many have included business centres, but these tended to be tucked away in separate wings, away from the leisure guests.
The hotel of 2018 is a different story. I challenge you to find a hotel opened in the past three years that doesn’t incorporate some more informal workspace, with lobbies including fewer sofas and more desk space for both guests and visitors to plug in their devices and get online.
The ground floor of the Hoxton Holborn, for instance, has prominent long tables and is often packed with workers glued to their MacBooks. The evolution of this is WeWork setting up serviced office spaces in hotel lobbies – we’re not quite there yet, but it won’t be long.
Staying on hotels, everyone’s favourite opening last year – The Ned London – has taken the combination of uses further. This time it’s the leisure/hotel mix that is the focus.
High-end hotels have always partnered with well-known chefs to draw the crowds but the restaurant tended to remain secondary to the main hotel use. Not anymore. At The Ned the eight different dining options on offer are as important, if not more so, than the accommodation. It’s no longer on the periphery of the hotel; it’s a dominant component.
In retail, the shop is no longer purely a place for money to be exchanged for goods. It’s a mini-fulfilment centre for click & collect orders and returns and, increasingly in bigger stores, a leisure destination with bars and coffee shops incorporated alongside retail. Likewise, the office isn’t just a place to work; it’s a social space, with restaurants and cafés no longer isolated on the ground floor but incorporated in the same spaces in which work occurs.
Industrial warehouses, meanwhile, are increasingly seeing flats being built above – ‘beds and sheds’ – which are proving popular with people who want super-fast deliveries.
“The office isn’t just a place to work; it’s a social space, with restaurants and cafés no longer isolated on the ground floor”
In the face of these changes, we as an industry can no longer stick to our delineated sector lanes, as comfortable as they may be. Real estate no longer just satisfies a need; it must also deliver on the wider aspirations, desires and lifestyle choices of those within it via multiple uses – it’s a service.
It’s the successful combination of different uses under one roof that holds the key to the longevity of buildings. It’s up to us advisers to mix things up. We need to share our decades of expertise in our individual sectors with our colleagues to give our clients the best possible advice.