EDITOR'S LETTER Forget the politics, follow the demographics

You would have thought that following the UK’s vote to leave the EU and with key elections this month in the Netherlands, France in April and May, and Germany in September, not to mention Donald Trump’s presidential victory stateside, the discussion would focus firmly on politics and the impact they will have on the market.

Far from it, these five professionals opted instead to spend the two-hour affair discussing demographics and technology, and how these will alter the tectonic plates of the occupier world.

They pondered the impact ‘disrupters’ like co-working businesses WeWork or RubberDesk might have on office space. One participant, who works for an institution occupying a massive, single-business skyscraper in London’s Canary Wharf, suggested keeping such buildings going might become challenging for landlords as occupational needs change to suit fast-evolving working habits.

Not that he was convinced today’s disrupters, most of which are still loss-making, make for better lease covenants than his employer. In fact, the prospects of having such firms take residence in their best stock split opinion, with one participant stating that, for value-add capital at least, rolling dice on a WeWork-style organization was a gamble worth taking. After all, should it go bust, at least the building would be left over, was his argument. Another questioned whether such an attitude could be institutionally acceptable.

Getting calls like this right is becoming crucial for decision-makers in this sector given it is being continually squeezed into a barbell by the world’s capital providers. The biggest firms in the sector continue to grow larger products as investors big and small reduce their number of manager relationships, leaving the squeezed middle with the binary choice of either selling up or scaling down into a niche operation with a specialist focus.

Listening to these men, it was apparent we could have been sitting anywhere in the world. In fact, you might have been forgiven for wondering if this was a European roundtable at all.

Enjoy the issue,

Jonathan Brasse
Senior Editor