I’m getting to know quite a bit about the New York property scene having been invited to join my second New York real estate panel in a week.
The latest was an in-depth CAPRE Media webinar about New York City’s recovery from the Covid-19 pandemic moderated by Lois Weiss of the New York Post. It included a line-up of top New York real estate entrepreneurs, advisors and lenders. I was asked to join the panel to give a UK and European perspective. There are clearly parallels between New York and London, for instance the move towards the ‘hotelification’ of offices, questions about whether the future of office working is in the city or close to home in the suburbs, or a hub and spoke approach that involves both and the pressure on retail.
But, in New York unemployment is already at record levels whilst in London the furlough scheme is still masking (excuse the use of that word!) the true situation. Some of my New York co-panellists saw the pandemic as a once in a lifetime opportunity to access deals at bargain basement prices whilst I am still holding onto the hope that we have a once in a lifetime opportunity to recalibrate and to do things differently going forward.
It is good to see that innovative ideas are emerging to optimise the use of empty city hotel rooms. There was news just this week of US based flexible workspace operator Industrious teaming up with a Brooklyn hotel group to provide office space on a daily rate in empty hotel rooms. The idea being to provide a safe office option closer to home and away from Manhattan’s central business areas.
As a result of the New York panel, I was contacted by a UK business Spacemize which was established well before the pandemic to provide flexible work space in a range of participating hotels. This is an interesting option and no doubt we will see more of the utilisation of underused hotel and restaurant space as people seek out a ‘third space’ in which to work.
As we grapple with what the long term changes in the real estate sector are likely to be, I attended a Lowick webinar on how we expect the development industry to change after lockdown. Panellists were Damien Egan (Mayor of Lewisham), Tom Copley (Deputy Mayor of London for Housing) and Claire Kober (MD Homes, Pinnacle Group and former Leader of Haringey Council), whom I had the great pleasure of interviewing recently for my podcast series.
Kober made the valid point that few of the government’s Covid-19-related interventions have been aimed at getting London back on its feet. London faces an existential threat that could affect the boroughs for decades. Copley said that we could even see some London councils go under. Egan made the point that in the face of increased centralisation there needs to be more dialogue between government and the local authorities. He also commented that lockdown has changed our view of home and that new developments must link in to existing communities. Copley said that he thought it was the wrong time to be ripping up the planning system at this time.
Attention turned to the problem of the car which Copley identified as a major problem. People feel safer in their cars and are still reluctant to return to public transport in any numbers. The fear engendered by Covid-19 threatens to destroy all the years spent reducing car use. This must be right as we have closed streets to encourage outside dining and increased cycling lanes to encourage more bike use but as London returns to work and with fears about public transport there will be more cars than ever with less road space to accommodate them.
By way of example, the Euston Road, a bottle neck at the best of times, has apparently been reduced to just one lane for cars. Unless we address this issue quickly, London will grind to a complete standstill when people return to work in earnest. As I commented, half-jokingly, at our virtual real estate ladies dinner group this week it may be time to convert some of our disused retail to stables and bring back the horse as a means of transport.
In the webinar, Copley mentioned the mayor’s commitment to the proposed Bakerloo line extension which will unlock parts of South London including Southwark and Lewisham. It remains to be seen the toll Covid-19 will take on the cost and timing of our infrastructure projects.
In some positive news, this week Muse Developments and Get Living announced their £252 million forward funding deal to accelerate the delivery of the second phase of Lewisham Gateway. Mishcon de Reya were delighted to represent Get Living. This residential-led neighbourhood will provide homes for rent, retail, food and beverage space, a gym, offices and Lewisham’s first major multiplex cinema. Will we see more focus on these outer London communities as people question the need to work in central London?
The week ends with face coverings, rather late in the day, becoming mandatory in UK shops and other public places. At least we now know what the rules are. But how will this affect our already decimated retail footfall? JD Sports chairman Peter Cowgill has said “I think masks will be a further deterrent for indoor shopping centres. Maybe it will be a positive for older customers, but I think it will be a deterrent for younger ones.”
We will find out soon enough.
Susan Freeman is a partner at Mishcon de Reya