The spotlight was thrust firmly on the occupier on day one of the ninth PERE Summit: Europe conference in London today. In the opening address, Matt Brittin, vice president for North and Central Europe at Google, talked the conference’s 300-strong audience through the growth of the Internet giant in London, culminating with its January announcement to commission a £1 billion (€1.17 billion; $1.53 billion) regional headquarters.
Brittin explained how Google had struggled for a decade to find available property with floor plates big enough to satisfy its swelling workforce. This ultimately lead to the acquisition of a 2.4-acre site between King’s Cross and St Pancras stations, where a 721,000-square-foot complex now will be developed.
Brittin also described how the firm was ambitious to appropriately position itself in preparation for what he described as the “asset-light generation,” which will spend up to 50 percent of its time on the Internet via mobile devices as soon as next year – and which could precipitate the need for less real estate space as a consequence.
All that set the tone for the first day of the two-day conference, as panels underscored the importance of meeting and servicing occupier requirements in the face of generally poor leasing markets in the UK and across Europe.
In the first panel session, Michael Spies, senior managing director at US developer-cum-fund manager Tishman Speyer, noted that Europe’s occupier markets on the whole were poor. “Can you respond to what is happening?” he asked. “If you can get in front of a Google, you will be okay. If you can provide real estate to meet the needs of businesses that are competitive, that is an advantage.”
Andreas Katsaros, director of real estate at InfraRed Capital Partners, the real estate and infrastructure business spun out from HSBC in 2011, said: “If the occupier market is poor, then buying an asset cheaply won’t be enough. We mustn’t be driven by market momentum.”
Katsaros added: “We need to locate those pockets in the markets that have positive occupier trends. It is a challenge to find these segments where occupiers really can make positive decisions.”
In a later session, Manish Chande, senior partner at private real estate firm Montgrange, identified various UK markets where occupier trends had produced positive results for private real estate investors. One example is Glasgow, where four universities had prompted employers in Scotland and the North of England to relocate or increase their occupation in the city.
Another example is the Old Street roundabout east of the City of London, where technology companies had gathered. “About 10 years ago, you would have needed a passport to go there,” Chande said. “Now, you’ll find all these tech businesses wanting to accommodate each other. They’ve adopted a ‘hug a mugger approach’. There are clusters like that out there, and the trick is to identify where the next cluster is going to be.”