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Mixed-use developments: bringing the office to the people

Post by

Jim Connolly

Strategic Development Director

Mixed-use developments: bringing the office to the people

In our last blog, we talked about how the pandemic altered our relationship with green space and reemphasised how important it is to our health and wellbeing. If developers are going to convince local planning authorities and the wider community their next project is worthwhile, they simply have to find a way to incorporate outdoor space into future proposals. If they don’t, they could face an uphill struggle to get the development up and running.

But if we look a little deeper, it’s not just our relationship with outdoor space that’s shifted. With remote and flexible working quickly becoming the norm, people have a completely new outlook on what their office should offer.

Savills recently surveyed employers and workers worldwide to get a sense of how they see working life changing in the short-term, and even in a post-vaccine environment.

From a design point of view, many respondents believe high-density, open plan offices have to be rethought. Hygiene protocol is obviously an issue, with many calling for more space per seat. Employees also expect the office to mirror many of the benefits they’ve enjoyed whilst working from home.

Unsurprisingly, the preference to work in the city just isn’t as pronounced anymore. Having tasted working life in a suburban or rural setting, many people naturally see the return to city life much less attractive. It’s why when Savills surveyed tech tenants worldwide, over half of the respondents are looking to dispose of at least a portion of their space in the next 12 to 18 months.

As a response to worker’s changing attitudes, Savills see more businesses introducing what’s called a ‘hub and spoke’ model – it means keeping a head office in the city centre and opening up smaller regional offices in the suburbs.

They talk more about the solution in a recent blog post, ‘Furthermore, some corporate occupiers might be more likely to adopt ‘hub and spoke’ office networks, with greater presences in regional cities to capture new young workers coming out through local universities who don’t want to pay London’s inflated cost of living. This again strengthens the regional office outlook beyond 2020.’

It could be an opportunity for landlords who own struggling retail units and precincts to redevelop them into mix-used sites. Commercial property Landsec released a report on ‘Reimagining Empty Retail Space’ in February this year and cited several successful mix-used case studies. Several months on these examples couldn’t be more relevant.

Cadillac Fairview, a specialist shopping precinct developer, transformed the former Don Mills shopping centre in Toronto into a multi-functional site that allowed residents to ‘live, work, shop and play’ all in one location. The site now houses 4,500 residents, and the alternative uses of the development have brought a fresh new vibrancy into the area.

In a similar transformation in the US, developer Jamestown turned a Roebuck & Co. store and distribution centre into an urban village. The site now boasts retail, residential and flexible office spaces, with a tenant mix that was carefully designed to the specific needs of the local area.

A multifunctional complex in the city of Metz in France provides a flexible commercial offer many could imitate in a post-Covid world. They only offer short term leases for the office units, with businesses rotated from the building every three or four months. After living through the disruption of the pandemic, some businesses will surely prefer the option of a shorter contract. And mixed-use developments that can offer this level of flexibility are bound to benefit.

And Landsec are keen to follow the growing mixed-use trend. CEO Mark Allan recently announced the group’s strategy to invest in mixed-used developments in regional cities. When mapping out the company’s four strategic priorities – Optimise, Reimagine, Realise and Grow – ‘Reimagine’ pointed to its six regional shopping centres.

A significant number of people won’t be in a hurry to return to the office, even beyond the introduction of a Covid vaccine – the balance between work and play will be too much to give up. But that doesn’t mean they’d be averse to the idea of the office moving closer to them. Suburban mixed-use developments can still provide that same level of balance people have come accustomed to, whilst bringing new life into a failing site and the surrounding community.

You could look at this as a time to be gloomy about development opportunities, but we believe the current trend for multi-use destinations across the country offers plenty of scope for innovation. Effective management of the planning process, including leveraging assets such as our Planning Costs tool https://clsrs.co.uk/planning-costs/, can help reassure decision makers and investors. And give your projects a stronger chance of making it through development.

 

Sources

https://www.propertyweek.com/finance/landsec-signals-non-core-sell-off-and-office-development-in-the-regions/5110634.article?utm_source=Newsletter&utm_medium=Email&utm_campaign=ContentLed_FPSubs

https://landsec.com/sites/default/files/2020-02/Landsec_Re-imagining%20_empty_Retail_space.pdf

 

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