Commiserations to all those who thought they had their Christmas summer sun organised with a trip to the Canary Islands and now find that their air bridge has been closed. It seems impossible to plan anything with any certainty at the moment.
At the start of the pandemic there was concern that the real estate sector’s growing commitment to tackling climate change would go on the back burner, as it did after the GFC. On the contrary, it does seem that Covid-19 is being seen by many as a wake-up call for the threats posed by climate change.
Both problems require collective action on a global scale although dealing with climate change will take decades and there will be no vaccine that can help us. With some 40% of global carbon emissions coming from real estate and the built environment, it is clear that the sector has to take responsibility. Just this week we have seen both The Crown Estate and the Grosvenor leading on this with the launch of their pathways to becoming net zero in 2030.
I was delighted that my final podcast of the year was with Grosvenor Britain & Ireland CEO, James Raynor to mark the launch of their pathway to net zero in 2030. Raynor’s aim is for London to be the greenest global city and I particularly liked his skiing analogy to explain why starting earlier to combat climate change allowed us to stay on the easier slopes rather than leaving it too late and having to navigate the more challenging red and black slopes.
Listen to the podcast here or on whichever podcast platform you use:
Real estate has historically put very little investment into R&D compared to other sectors. This is now changing and the UK construction industry has increased its R&D spending to a record level of £351 million according to the latest Office for National Statistics data. Much of this can be attributed to Government-led initiatives to promote modern methods of construction (MMC), and the emerging proptech sector.
More resources have been put into MMC to enable the UK to become a leader in offsite construction. Last year the Government invested £30m of equity and debt funding into the JV between Japanese house builder Sekisui and Urban providing a boost to the UK’s modular housing industry.
We will see robotics become a more common feature of our construction sites. Architects Foster + Partners are already employing Spot the dog designed by Boston Dynamics, to supervise construction at London’s Battersea Power Station. The four-legged robot which is able to walk up and down stairs and travel across uneven terrain, is being used to monitor progress at Battersea Roof Gardens.
In further technology news, Darabase, a provider of an augmented reality (AR) advertising platform, which I have written about before, has announced that, alongside Landsec, the owner of the Piccadilly Circus Lights, and Ocean Outdoor, a media and advertising services company, it is testing AR technology which will connect the iconic screen in Piccadilly Circus to audiences and trigger interactive 3D experiences.
Delivered through Darabase’s platform, the technology includes a virtual model which will replicate the Piccadilly Circus screen to deliver a large scale mobile AR experience to amplify the large screen content on mobile handsets. The technology can create engaging audience experiences at the location, including interactive games. As another example, fashion models could appear to walk a virtual catwalk above Piccadilly Circus and retailers could even drive footfall and sales from the screen using mobile AR directions and arrows to their nearest store. This could be another first for London.
A landmark has been reached this week with practical completion of AXA and Lipton Rogers Developments’ 22 Bishopsgate. The sleek 62 storey commercial tower will become the tallest building in the City of London. Described as London’s first vertical village, the building will include 100,000 sq. ft. of amenities and social spaces with facilities to dine, relax and exercise, all within the workplace. The building will house Convene’s first London venue. There will be ground floor art installations and at the top there will be a free public viewing gallery. The 1,500 bike racks along with around 100 showers and a repair shop aim to encourage people to cycle to work.
Can we agree that physical retail isn’t dead? The pent up demand released onto our city streets as non-essential shops reopened seems to confirm this. We have relied too heavily on retail to populate our high streets and it has become boring and samey but, as someone that regards shopping as a leisure activity, nothing beats being able to browse and search for new ideas and inspiration.
If you look back at the original department stores Whiteleys, Selfridges and Harrods when they opened, they were bastions of entertainment and showmanship. It’s no coincidence that many digitally native brands such as Warby Parker, Allbirds, Everlane, and Glossier to name a few have chosen to go offline to enhance customer experience with physical stores.
For all the ease of online retail, returns present a largely unacknowledged problem for the retailer. CBRE predicts that in the US up to $70.5 billion worth of holiday purchases this year are expected to be returned. The surge in online sales has created an increased demand for warehouse space to handle the huge number of items going out and coming back in. CBRE predict up to 400 million sq ft of additional warehouse space could be needed in the US over the next five years just to deal with returns. Online sales tend to have a higher rate of return, (up to 30%) than items purchased in store. Presumably we are seeing similar issues in the UK.
If you are thinking about Christmas presents, and don’t want to buy further goods to clog up those warehouses, think experiential. Many of us got into zoom cocktail making during lockdown and now The Cocktail Man delivers boxed cocktail ingredients straight to your door and they are available on subscription. Mine will be The Chocolate Espresso Martini Cocktail Experience!
Susan Freeman is a partner at Mishcon de Reya
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