Many public figures have described the current situation as the War Against The Coronavirus and with a military background, I appreciate and understand the importance of preparing for any eventuality.
So, at Sirius Real Estate, where we manage over €1bn of German real estate through a London and Johannesburg-listed vehicle, we had for some time been planning for a “Black Swan Moment”. Prior to 2020, we had not foreseen that being in the form of a pandemic, but we felt it was inevitable that some form of geopolitical event would affect the momentum of the economic cycle.
So, when Covid-19 arrived, Sirius launched a series of pre-planned actions, starting a week before the 22 March lockdown and national curfew as the global pandemic began to spread.
First, it is important to stress that not everything has gone smoothly in Germany, which sadly has suffered nearly 9,000 deaths from Covid-19. But that’s still a relatively low number for a nation of 82 million people and Germany has won praise for testing more people than other nations, allowing it to track cases better than elsewhere.
As a UK-listed company with German assets how did we embrace that efficient German spirit?
We saw warning signs about coronavirus from January. A week before lockdown, many of our 250-strong team worked around the clock to prepare for the virus to take a grip. One weekend, most of the executive team worked all day and late into the evenings to finesse our action plans.
These plans included the safe transportation of workers; the opening of business continuity suites in case specific locations were infected and cordoned off; and the division of the workforce into high- and low-risk workers with different routines and patterns to make sure Sirius could continue to function throughout the crisis.
We also used Google tools to track demand and followed trends that had already developed in China, in particular the increased demand for storage facilities. Across our business parks, self-storage units and warehouses — covering 65 properties and over 5,000 tenants from Bremen to Hamburg, Essen to Berlin – we were determined not to be caught on the back foot.
As a result, our April and May 2020 rent and service charge collection was at over 98% of normal levels, we anticipate no significant reduction in rent and service charge prepayments in June either. Enquiries for new space have returned to normal levels, at 1,200 per month. We agreed 115 new lettings in April, covering 80,025 sq ft, and 85% of our on-site business park staff returned to work in May.
Life here is rapidly returning to a kind of normal, with the Bundesliga football league returning and bars and restaurants open again, albeit with a 1.5 metre social distancing rule. But the situation needs to be monitored and as a recent outbreak in the Guetersloh slaughterhouse shows, German authorities will act very quickly to contain future outbreaks locally. This will be the key for Germany’s 16 different Federal States: making sure any outbreaks are contained locally, avoiding any future national lockdowns.
Adapting to a new existence
We are now exploring how German real estate can adapt to this new existence in several ways. First, we are expecting a reaction against the relentless densification that has taken place in cities across the world, with people no longer willing to sit on packed public transport and already preferring to drive to work in edge-of-town locations, often near their homes.
There is scope for warehouse or industrial buildings, with their open spaces, to be converted to offices, including utilising the big industrial lifts to carry people rather than goods. Corridors are much wider in industrial buildings, again allowing for social distancing, and we are now exploring the creation of sealed office pods that can be placed on open-plan floors. We are also trialling disinfectant which can prevent viruses spreading on work surfaces for several weeks.
Germany’s example shows that business can prosper even in the midst of a pandemic with the right, firm guidance and a willingness from corporates to prepare and deliver to a plan.
The British military played a key role in building Britain’s Nightingale Hospitals and there is a lot to be learned from the principles and logistics used to achieve this.
Organisation, preparation and innovation will be more important than ever in the post-lockdown world — and we should also heed the lessons from Germany in the wider business world.
Andrew Coombs is chief executive of Sirius Real Estate
No comments yet