AXA IM tackles ‘the essence of a successful office building’

Readers might recall the hype surrounding the Helter Skelter – official name, ‘The Pinnacle’ – in the early 2000s. Yet another office property designed with a quirky façade, it was set to join the growing collection of buildings with fancy monikers – the Shard, the Gherkin – dominating, not to everyone’s delight, the cityscape of the UK capital’s financial center.

Then along came the global financial crisis in 2008; the economic climate became tricky, and the building’s consortium of Saudi investors got the jitters and abandoned ship, leaving behind a concrete stump at number 22 Bishopsgate.

Had the Helter Skelter been completed it would have become one of many opulent glass constructions designed to dazzle those walking through its doors.

New era, new focus

Appearances counted more back then. Living, shopping and working in buildings with beautiful interiors remains important in 2019, but increasingly, people want something more substantive from the spaces they inhabit – and the office sector is reflecting this change perhaps more than other property types.

Gone are the days when people clocked in at 9am, completed their day’s work and left at 5pm, giving little thought to how the environment in which they spent the bulk of their weekdays impacted them personally.

Fast-forward to today and users of property are adopting a razor-sharp focus on issues like energy efficiency, clean air and carbon reduction. Sustainability and protecting the environment matter to them; they want property assets, and those that capitalize, develop and manage them, to reflect those values too. And now there is an ever-growing spotlight on the role the real estate sector can play in improving the health, well-being and mindset of occupants.

AXA IM – Real Assets, an investment management division of French insurer AXA, is one business that says it is on board with the importance of the health and wellness conversation; the unfinished site at 22 Bishopsgate first captured the manager’s attention back in 2013.

But according to Harry Badham, AXA IM – Real Assets’ director of development in the UK, the firm was uninterested in developing “buildings with nicknames” and eager to “deliver something a little different” to the City. With a new consortium of investors – not revealed at the time of writing – backing the project, the acquisition completed in 2015 and, planning permission granted, the manager could set about bringing to life its vision for an office of the future, one with health and wellness at its core. Badham likens it to a “vertical village.”

“We started to think about this project from the view of the individual rather than from the view of the corporate,” explains Badham.

“There’s more and more scientific and anecdotal evidence that the well-being of office staff is directly related to their productivity. And that is really the essence of a successful office building.”

Good for the mind and business

The mission statement on the marketing website for the building, dubbed Twentytwo, reads: “We imagined a building you’d want to work in.” Evidently, deep thinking has gone into what this would encompass, and the type of environment that would allow prospective tenants not only to get the very best performance from their staff but also to drive their reputations as attractive employers.

“Our catchphrase is, ‘Sometimes, not thinking about business is good for business’ – that people’s best ideas come when they are out of the office, not in it,” says Badham.

He explains that the elements incorporated into the building are not something conjured up on a whim. Some serious study went into the types of health and wellness features that have been already tried and tested by other companies, mostly at the tenant rather than landlord level. And Ipsos Mori was tasked with conducting a poll of City workers to find out what their ideal workspace would look like.

The vision is unique in many respects. In addition to features we have come to expect from many modern City offices – a top-floor public viewing gallery, bar, restaurant, outdoor green space and a gym – there are plans for a spa and access to onsite medical services. A climbing wall, perhaps the most unusual and eye-catching feature, will encourage occupants to get active during lunch breaks. A food market will provide an informal social meeting place and offer choices to nudge along healthy eating habits. A learning zone and a library will facilitate further education and skills development.

And for City workers’ growing appetite for cycling, an underground bike park will be onsite with around 1,700 spaces for people to safely park their two wheelers, and with access to lockers, showers, laundry facilities and a cycle maintenance service to boot. A host of other health and wellness aspects are planned into the building.

Wellness as a financial value-add

Of course, there is skepticism surrounding the impact that such features can really have on the performance of businesses leasing space, and measuring the value-add it will ultimately deliver to property assets and their underlying investors remains a challenge. So is it worth the cost of building in such features to office assets? “At the moment, there are few well-established metrics,” Badham admits. “We’re still really waiting for data to come through on how wellness features in offices impact factors like absenteeism and productivity. But we’re looking for ways other than just rent-per-square foot to gauge how successful a building is. People are more productive and successful when they’re happy.”

The war for talent has transformed over the last five to 10 years, says Badham.

Professionals are more discerning about where and how they work, and more knowledgeable on issues like sustainability and climate change; employers should demonstrate they are committed to the cause. And for the institutional capital investing in offices, it can only pay to support them in that endeavor, too.

“Every investor has a sustainability policy, and I think we’re seeing wellness become a metric every organization realizes is critical to the future of the industry,” says Badham. “It’s about creating space that is generally attractive to business and to staff, and that will drive performance, because in the long term we’ll see improved leasing performance and shorter void periods.”

Wrapping up PERE’s tour of Twentytwo Bishopsgate, it is clear AXA IM – Real Assets is keen to be part of the growing customer-centric approach of the private real estate sector on issues like environmental protection, health and well-being.

Let there be light
Components as simple as window blinds and glass will help create energy efficiencies, cut costs and deliver a healthier workspace for Twentytwo’s 12,000 workers

“The floor-to-ceiling height space on each floor is 20 percent taller than you would get in a market-standard building. That gives a sense of volume, which seems to have a positive impact on how a building’s occupants feel,” comments Badham.

Triple glazing the building’s windows boosts the level of natural daylight coming into the office by about 60 percent, thereby reducing the need for internal lighting.
Data storage and analytics software will collect every piece of data on how different parts of the building are operating. Should a fault be detected, many of problems that might normally require calling for an engineer can be remediated automatically.

“If a thermostat says we should be cooling a room, then we can press reset to bring it to the right temperature. In around 50 percent of faults, this will be enough to solve the issue.”

Is the sun shining on the façade making the office too hot to work? Sensors will detect which part of the building is being overexposed and heating too rapidly. Blinds will then drop automatically in the specific part of the building impacted.

“If you can stop the space overheating in the first place, then you don’t need to cool it down with air conditioning. And that means less energy is used,” Badham explains.
Sustainability in real estate in action.

Moving in
Convene is coming to London and 22 Bishopsgate’s focus on creating a healthy working environment helped seal the deal on the company making the property its UK home, says its CEO, Ryan Simonetti.

When health and wellness are discussed in the context of sustainability in commercial real estate, property owners are often quick to highlight that they are delivering on tenants’ demand to live and work in better environments. But is this simply good marketing talk, or fact?

In August, Convene, the New York-based flexible workspace company, shook hands with AXA IM – Real Assets to pre-let four floors – 102,000 square feet of space – in the new tower. And according to the firm’s co-founder and CEO, Ryan Simonetti, the commitment to sustainability was a big part of the building’s appeal to his firm.

While Simonetti says that the building’s use of innovative engineering techniques to ensure energy efficiency is absolutely “the right thing to do,” as it will also help reduce costs for tenants, it is the well-being features of the property that ultimately caught Convene’s eye, something that marries well with the company’s own corporate ethos.

“Wellness, as we define it, is not just about having a gym in the building or having access to natural light and great fresh air. Convene sees it as more holistic. It includes the mind, the physical and the experiential; features like the climbing wall are really exciting to me,” he says.

“And AXA IM is not just thinking about dollars and cents, but about workplace experience. As a prospective tenant, that was an important factor in our decision to choose the building and to partner with AXA IM, because Convene is in the business of delivering great experiences to our customers.”

Tenants are also listening closely to what their own employees want from their workspace. And these days, sitting all day at desk under unnatural – sometimes headache-inducing – fluorescent lighting with access to a small kitchen to make the odd coffee or tea just doesn’t cut it now, especially among the younger millennial and gen Z workers.

“As a company, not only do we have to show our commitment to sustainability initiatives to our customers, it is really important to our own talent attraction and retention strategy because, guess what, our employees care about these things,” says Simonetti.

Simonetti is adamant that catering to health and well-being does not mean property owners having to sacrifice the bottom line either. “I think we will have occupied space in around 30 buildings by the end of this year, most of which are institutionally owned assets.

And I can tell you that all of the buildings that have truly committed to sustainability, and to delivering an experience for their tenants, have performed better financially than those that have chosen not to follow that path. At Convene, we believe that you can do good and do well financially at the same time.”