all the news and all the views from Allsop

Autumn 2018

LONDON’S CHINESE DRAGON

RESIDENTIAL TECH

A FISHY TALE?

THE LATEST FASHION IN FIT-OUT

GRAFFITI TO GALLERY

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03 / Asia investment into London Commercial Investment

05 / Build to rent: mobilisation Build to Rent

07 / Clicking with tech boosts residents and building owners Letting and Management

09 / Alternatives becoming mainstream at auction Commercial Auctions

Welcome to the 5th Edition of all, Allsop’s bi-annual magazine…

At the time of writing, we are just entering in to a fascinating final business quarter of 2018. Traditionally, and from a transaction perspective, it is the ‘Business End’ of the year… but this year we are also entering the Business End / Eye of the Storm in the Brexit negotiations. With the term ‘No Deal’ reverberating around many corridors in the country, we all hope that ‘No Deal’ does not mean ‘No Deals’ for the rest of us and the wider market.

It is interesting that whilst Brexit negotiations seem to move at a snail’s pace, the market place and environments in which we work are changing at lightning speed. This issue highlights numerous examples about how property, tech and expectations are moving and changing fast – from Build to Rent mobilisation and Service Tech, to Wellbeing-led design in today’s student housing, to creating 21st century communities, how auctions may look in 10 years’ time and what we now expect in levels of office fit out and the meaning of Category A+ – to name a few.

Finally, I want to highlight our excitement in signing an alliance with Millennium Group which will hopefully bring more business to Allsop by capitalising on the huge demand from Asian investors in to the UK. Indeed Nick Pemberton of Allsop and Marty Kaye of Millennium share their thoughts on the huge impact the Asian investor has had in the London office market over the last year. Enjoy the read.

Scott Tyler FRICS Senior Partner

27 / From vandalism to valuable: the transformation of Shoreditch street art City Office Leasing

29 / Commercial deals

31 / Residential deals

33 /Allsop life

11 / Wellbeing-led design should be at the core of today’s student housing Residential Valuation

13 / HMO investment: the impact of Article 4 Residential Investment

19 / All about MEES Lease Consultancy

21 / AI – the future of auctions Residential Auctions

all Autumn

23 / Fixing broken blocks Residential Investment and Development

25 / Rating red flags – busting common myths and misconceptions Business Rates

15 / The fashion for fit-out – how traditional landlords are embracing new levels of office fit-out Office Leasing

17 / Fish Island – selling a new 21st century

‘village’ community Commercial Valuations

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In this issueall Autumn 2018

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the UK more attractive to foreign investors. Purchasers from Asia in particular have seen a substantial drop in Sterling against the Yuan, giving these investors a significant discount when purchasing assets in the UK.

The Yuan is now also suffering its own depreciation, partly exacerbated by the US–China trade war. With a weakened Pound and strong US$, coupled by the Hong Kong dollar pegged to the US$ and most of Asian trade denominated in US$, we are seeing investors looking to increase their exposure.

This comes as the world is seeing a 13% increase in billionaires, according to the Wealth-X Billionaire census. Figures by UBS and PwC reveal that Asia is leading the way in this global increase. The region (including India), now has the highest number of billionaires in the world and the UK is on a par with America in educating them. Individually, China tops the list with just under 350 billionaires and one billionaire created in the country every week.

China and the wider region’s burgeoning, highly-affluent middle-class are seeking to grow and invest in assets – whether at home or overseas. The UK market, particularly London, still remains a top destination for capital among these billionaires and millionaires alike, and despite an element of caution, we are likely to see this trend continue throughout the rest of the year.

Various headwinds – trade wars, Brexit and China’s capital control regulations may dampen expectations slightly, however, we are expecting London, and in particular, the City to benefit from continued inward investment from Asia. Investment from Hong Kong’s ‘old family money’ is also likely to continue to dominate the market in the second half of the year, as it did in the first; driven and underpinned by the strong fundamentals behind London’s real estate market.

In the short and long-term, we envisage the outbound capital flow from Asia into global markets to continue, with London the first gateway city outside Asia.

This trend has continued in 2018, particularly in the City where Allsop tracked almost 80% of the £6.35bn City turnover coming from Asian buyers in the first half of the year.

Investors from Hong Kong, Singapore and China have continued to dominate the market this year, with Korea more recently providing significant inward investment into the capital. High transaction and volume levels from these regions combined are a positive sign and signal a huge vote of confidence in the London market.

Three stand out deals are illustrative of the demand for London commercial real estate from the region. Five Broadgate, a recent purchase by Hong Kong ‘old money’ – Li Ka Shing’s CK Asset Holdings, for circa £1bn and achieving £1,364 per sq ft, is only the fifth building to trade at over £1bn in the UK.

In August South Korea’s NPS purchased Goldman Sachs new HQ at 40 Shoe Lane, EC4 for £1.16bn, reflecting a net initial yield of circa 4.1%. Goldman Sachs will lease back the entire office space on a 25-year lease (break at 20 years) and at a rent of around £63 per sq ft. In addition, China purchased five acres at Royal Mint Court EC3 from Delancey & LRC Group for £255m in one of the largest ever owner-occupier deals in the City. The building will house a new 600,000 sq ft Chinese Embassy.

But why is London seeing such demand? Particularly at a time when the UK’s political and economic landscape is in flux?

Asian investors continue to debate – London’s still safe-haven status, legal system and the fact it still offers good value in comparison to other major cities

globally are all key fundamental principles driving purchase decisions.

Core office markets in Asia such as Tokyo, Hong Kong and Singapore continue to see exceptionally strong investment demand with net yields in the 2-3% range. Many other global ‘gateway cities’ look attractive but London continues to draw the most interest as for many, US & European laws and taxes are seen as more challenging.

One of the benefits of the London market has also been its political stability, and whilst many believed the outcome of the EU referendum and the ensuing upheaval would have shaken confidence in the UK market, a fall in the Pound has only served to make

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Commercial Investment

The City office market has proven particularly attractive with Asian buyers – in the first half of this year, Asian capital was responsible for almost £5bn of the £6.5bn traded

Hong Kong and China have dominated the market this year

Scott Tyler, Martin Kaye, Nick Pemberton and James Abrahams

Allsop Asian AllianceTo capitalise on the demand from Asia, Allsop has recently announced a formal alliance with Hong Kong based property firm Millennium Group to expand our reach in the region.

Together, we concluded the first transaction in London post the EU referendum result – the £70m King’s Cross Royal Scot Hotel.

Our alliance has further strengthened our reach across China, Hong Kong and Singapore and primarily focuses on UK-Asia transactions in the London capital markets, offering full downstream services to Asian investors, including asset management, office leasing, rent reviews, development consultancy, buy-to-let residential, commercial and residential auctions, business rates and valuations.

The joint venture with Millennium is being headed by James Abrahams and Nick Pemberton, both partners in commercial investment at Allsop and Martin Kaye at Millennium Group.

Born and bred in Hong Kong, Martin launched his real estate career there in 1984, and headed the Asia-Pacific investment and development divisions of Richard Ellis before forming Millennium Group in 1998.

Asia investment into London

Nick Pemberton West End Investment and Martin Kaye Millennium Group Hong Kong

Last year London’s share of the UK’s £60bn commercial volume was close to £20bn – almost half of this came from Asian investors signalling a huge vote of confidence in the London market from the region.

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Why is mobilisation a relative unknown?

An unfortunate consequence of a successful mobilisation is that most of the work goes unseen, as it is often only when problems emerge that the importance of mobilisation is appreciated. If no one has thought about worst-case scenarios, such as what happens to all the new technology when the power goes out, or planned how 100 people are going to move into the building on the first weekend, then the building hasn’t been mobilised correctly. If mobilisation had a motto perhaps it would be Murphy’s Law – anything that can go wrong will go wrong!

How can mobilisation benefit everyone?

Mobilisation is often about finding mutually beneficial solutions to problems. For example, how can customers be encouraged not to wheel their bikes (and the dirt, wet and mud that entails) through reception, into the lift, and through their apartment to the balcony? By installing fit-for-purpose bike lockers in the building, we can make life easier for the customers, while also reducing maintenance costs for the owner.

Similarly, we have sourced and placed parcel lockers in The Forge, a new 283-apartment purpose-built build to rent scheme that will be the first of its kind in Newcastle. These state-of-the-art lockers not only make life easier for residents, who benefit from their own post office, but also make the building more efficient, by avoiding the need for the concierge to become a sorting office.

By adding to the lifestyle offering available to tenants, these amenities become a real selling point for the building and can also produce additional income for the investor.

Is it only amenities?

Whether by choice or necessity, people in the UK are now taking a more European, long-term approach to renting. This means they are looking for a greater sense of community, which we are meeting by altering designs to increase the amount of communal space in our buildings.

We also consider trends in technology and lifestyle, in order to future proof the building as much as possible.

What about the bottom line?

Ultimately, mobilisation is about creating a product that is 100% based around customer service and making life as easy as possible for these customers. Today’s rental market means that people will move if they have a reason to. By mobilising a building effectively, we make life as easy, convenient and smooth for our customers, giving them good reasons to stay, and in doing so, maximising the rental income of the building for investors.

Why is mobilisation crucial for a build to rent scheme?

Historically, the rental market in the UK has been dominated by product originally designed for owner occupation and converted to rental, with less consideration given to a renter as the primary audience. Purpose build to rent schemes being designed and built today cater specifically for the renter, and centre entirely around the consumer’s needs, their ‘product’ experience and a lifestyle offer.

What do you mean by mobilisation?

While it involves everything from looking at lift usage patterns and creating multi-million-pound operational budgets to figuring the best pet wash location and choosing the best communal coffee roast, mobilisation essentially boils down to maximising the potential of a building for occupation, both for the investor, management and customers. We ensure our experience of managing buildings feeds in to the design process to inform operational efficiency, optimising space

and a best in class customer journey. The goal is for a building to run like clockwork and for our customers to have a seamless and delightful experience at every touchpoint from the moment of first engagement and for that to happen, every facet of the asset, product and service, needs to be considered and managed.

What are the benefits to investors?

Maximising a building’s potential is a win-win for the customer, owner and operator, which is always of benefit to the investor. Where all considerations are mapped out and put in

place during the mobilisation period, we can ensure that when the development is launched, lease up rates and rents are maximised and high level investment performance is sustained.

How do you mobilise a building?

Mobilisation involves taking the architectural plans for the building, from six to 12 months before practical completion, and examining how these can be optimised to best suit the tenants of the building and the management. It involves thinking about how customers will want to use the building and influencing the design to reflect these usage patterns. Whether this involves altering the bathroom to create new storage space, or minimising dead space in the corridors, mobilisation can greatly increase the quality of the end user experience. The fun part is then bringing the building to life.

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Build to rent: mobilisation

Build to Rent

In the last issue of All Magazine, Andy Pointon explained the delicate juggling acts required to balance the challenges of investment and development in creating a viable build to rent scheme. In the latest edition of All Magazine’s build to rent series, Allsop’s Head of Mobilisation, Matt Smith, discusses the importance of mobilisation in creating a successful build to rent scheme.

Matt Smith Build to Rent

Maximising a building’s potential is a win-win for the customer, owner and operator

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Furthermore, residents and managers can be in touch more frequently about key service related matters, such as rental and service charge payments, maintenance and general property related functions. Web-based technology streamlines this process and makes it easier for both parties to communicate.

Technology is helping to bring renters together too. A growing number of customers and building owners are using tech and social media to get residents together and foster a sense of community. This is not only popular in build to rent, but also in co-living, student accommodation and owner occupier apartment blocks.

In building management, technology has improved efficiency and results in both monitoring and managing a building’s heating, ventilation and air-conditioning (HVAC) and other services such as fire safety systems, lighting and lifts. The Internet of Things (IoT), allows real-time monitoring with for example, moisture sensors picking up leaks or other system malfunctions, so that action can be taken even before

residents become aware of an issue. Building Information Modelling (BIM) is also affecting a revolution in lifecycle modelling and maintenance performance.

Now, systems can be interrogated, faults diagnosed and action such as replacement of a chiller unit fan or a pump can be done before breakdown. This avoids breakdowns from escalating, preventing major damage to a building’s systems, significant disruption and all of the expense this entails. The latest intelligent building solutions also provide a boost for energy efficiency, ultimately saving residents money.

For investors and property managers alike, quality and breadth of service for residents is essential. Unhappy residents move and this results in more voids and disrupted rental revenue.

The effective use of technology is imperative for professional management of large scale residential property, boosting the experience of residents, investors and property owners alike.

This applies to all residents, whether they are owner occupiers or renters. For owners and investors, an effective property manager will protect their asset, drive returns, mitigate risk and add value to all aspects of the investment. Underpinning this best in class property management, are systems and technology. Advancements in this area have transformed the sector and are enabling managers to place customers, clients and convenience at the heart of delivery, whilst concurrently driving asset performance and managing risk.

Technology now provides us with the ability to have a single central data source which holds significant information, from rental and lettings analytics to real-time data on gym usage patterns, and energy efficiency tracking. This valuable intel

provides us with amazing insight to drive asset performance and to tailor services to clients and residents alike. Clients also have access to real-time dashboards which help to align strategy and oversight.

We are fast moving to a world where all residential occupiers will have apps and web-based technology as an integral part of their living experience. Useful tech already enables residents to self-manage parcel delivery and collection, undertake viewings virtually and remotely approve access at any time of the day and night. Residents, particularly those among us that are time poor and digital savvy, have come to expect this level of service.

However, residents will also expect to be able to communicate directly with building managers and vice versa via apps. This might be as simple as accessing their concierge, arranging a washing machine repair, picking up a parcel or scheduling a dry-cleaning service delivery.

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Clicking with tech boosts residents and building owners

Letting and Management

Service is the latest buzz word in residential property. Whether for serviced luxury apartments, new, build to rent blocks or traditional rental sector portfolios, residents are rightly demanding more prompt and effective service from their property managers.

Adrian Bunney Head of Block and Facilities Management

Technology as an integral part of their living experience

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3.1% being achieved in March this year for a virtual freehold NCP in Queensway.

These three sub-sectors suggest that the motor car is quite literally driving one section of non-retail investment.

Ground rents

Also, we must not overlook the humble ground rent. Arguably the most boring of investments, they won’t make you rich quickly but in terms of wealth preservation, the children and grandchildren of our investors might be grateful one day.

With a similarity in investment fundamentals such as security, growth and length of income behind both alternatives and High Street assets, it is no surprise that experienced investors have woken up to the potential of non-retail investments.

Demand continues

This year private investors in our auction room have demonstrated time and time again that they have cash to invest and the appetite to deploy.

While the High Street continues to undergo a period of unprecedented change, alternatives are in increasing demand. Yet it remains to be seen if existing levels of supply can quench the growing thirst of this demand.

Evidence suggests that assets perceived to be internet resilient and away from the threat of online competition are attracting a price premium of approximately 20% in the auction room.

This premium for internet-immune investments is nothing new; rather morbidly, as far back as 2013 the average yield for retail units let to funeral directors across the country was sub-5% which suggests that supply of these assets, not demand, is the issue.

At Allsop’s commercial auctions, non-retail assets have accounted for approximately £85m, or 25%, of our sales thus far this year.

One of the clearest examples in one of the more traditional alternatives and purely income-led, is the sale of a package of

seven solicitors’ offices in the North West. For these assets, let on new 15-year leases to the 12 partners of an established Lancashire law firm and with index-linked reviews, the average yield was 5.95% with a low of sub-5% which rather goes against the more common held pricing for secondary or tertiary offices in the North West.

Away from these traditional sectors, alternatives are performing well. This year, we have seen education, medical and roadside alternative investments all faring well in the auction room.

For example, a rare long lease to a private school trust located in the affluent Surrey suburb of Mitcham was highly sought-after at our July 3rd sale. With lines of gleaming four-wheel drives parked outside of the school at pick up time, investors clamoured to buy this 8,661 sq ft school with the eventual buyer paying £2.27m at a yield of 4.5% on the fall of the hammer.

Medical / dental properties

With an ageing population, the medical sector is seen as a safe haven for investment. Often GP practices will be let to the partners with a rental guarantee from the NHS. One can easily find out the patient numbers and CQC rating of a particular practice to help make an informed decision. The availability of information also applies to dental practices – many of which historically have occupied former residential properties

within a community. The secure income coupled with underlying residential values in many instances has seen the average medical yield remain in the mid-5% bracket.

Motor trade investments

Motor-trade investments continue to appeal – again because of the physical nature of their offering and the perceived immunity from the internet. Black Circles may sell you tyres cheaper online, but they still need to be fitted. Properties let to Kwik-Fit are the most commonly seen tyre-depots in the auction room, the most recent example in Bournemouth achieving £730,000 at 4.5%.

Prominently located petrol filling stations are also considered popular where there is a good site to allow for charging points going forward or simply clear alternative use. This potential is highlighted by the pricing achieved for a lot in Golders Green, North London, let to Co-operative Group Food Limited, which achieved £3.3m (2.9%), a strong yield in anyone’s book.

Further linked to the motor trade are car park investments. The technology facilitating parking and payment continues to advance (often rather frustratingly) and despite political pressures over reducing air pollution, unless city centres become car-free, there will be no decline in their utility. The average yield over the past three years for car parks let to NCP (including those held leasehold) is 5.6% with a low of

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This year, we have seen education, medical and roadside alternative investments faring well in the auction room

Alternatives becoming mainstream at auction

Commercial Auctions

Private investors are joining the march to ‘alternatives’, paying premium prices and the only challenge is supply.

Will Clough Commercial Auctions

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So, how can student housing help support wellbeing and mental health?

• Open and green space – communal gardens or green areas, courtyards, trees and flowers.

• Indoor air quality – ventilation and circulation systems, openable windows and access to outside space.

• Social and inclusive design – enabling students to socialise through collaboration and social space such as coffee shops (students love coffee!), games rooms, group study rooms, cinemas and bars. Operators could organise events throughout the year, particularly in the

opening weeks of the academic year, making it easier for shy students to integrate in their new environment.

• Light – installing high and large windows.

• Space – internal layouts should be open plan as much as possible whilst more collaboration and communal space should be provided in micro housing.

• Wellness – physical wellbeing space isn’t a necessity but if included, (as outlined in my last blog) they must be done well; basic gyms are not the answer. Physical health can be better encouraged via bike racks, sports activities and fitness studios and even relaxation areas such as saunas or steam rooms.

The future

The value of property for developers and investors is in the success of the occupier willing to pay higher rent and stay longer in return for a good quality product. This is evident in my experience in student schemes that are well designed; I am seeing current tenants rebooking for the following academic year. I have seen retention rates of around 25%, which for PBSA used to be unheard of.

As room sizes are shrinking, it is important common areas are provided with dedicated wellness space designed for social interaction.

Wellbeing / mental health

We are aware today more than ever of the importance of mental health and associated conditions due to advances in technology, medicine and prominent campaigns such as Heads Together led by the Duke and Duchess of Cambridge and Prince Harry. It is now more widely accepted that #ItsOkToNotBeOk.

It is therefore not surprising that we now know that one in four people experience mental health problems each year. However, the growing number of students with mental health difficulties is alarming. On average, five times more students are disclosing mental health issues compared with ten years ago and there are calls for this to be addressed.

How is property linked with wellbeing?

The World Health Organization reports that people in Europe spend over 90% of their time indoors (what else do you expect with the great British weather…). This is why buildings impact our mental and physical wellbeing massively. Studies have shown that

access to open and green space improves productivity and mental health. Whereas collaboration spaces encourage social relationships, which is one of the primary functions to human health and wellbeing.

These concepts are promoted through assessments and certifications such as the international WELL Certificate, BREEAM and through the planning framework via planning design and access statements. The International WELL Certification promotes health and wellbeing through the built environment; key considerations include air, light, fitness, water, nourishment, comfort and mind.

As a result of our improved understanding of the relationship between mental health, wellbeing and the physical environment, wellbeing is shaping the design of developments and the amenities they offer. We are already seeing this change in product design through the evolving build to rent sector.

Why are more students suffering from mental health problems today?

Students have always had the adjustment of leaving home for the first time, especially for overseas students who are adapting to a new culture. In recent years there has been a shift in students largely residing in PBSA rather than HMOs, which has resulted in a loss of ‘social glue’ generated from living in a shared house. Whilst increases in university fees since 2012 has added to student debt.

There is also more pressure for students today, who have to deal with the challenges that come with digital life and an increasingly competitive career ladder.

Student accommodation – getting it right

Student accommodation providers must not ignore the rise in mental health issues and recognise the implications of the design of the accommodation. Rooms are getting smaller (within the requirement of 30 sq m for a studio) and we are now seeing ‘micro student housing’ becoming more common.

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So, how can student housing help support wellbeing and mental health?

Wellbeing-led design should be at the core of today’s student housing

Residential Valuation

Wellbeing today is more than just a tick box; it is at the forefront of leading employer agendas, building design and is now considered a social norm.

Rebekah Donaldson Residential Valuation

#ItsOkToNotBeOk

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The problem is students need a place to live and there simply is not enough purpose-built accommodation to house them. Regardless, living in a house in multiple occupation (HMO) is part of the student experience and always will be. For the past 35 years, private landlords have been capitalising on what feels to be an ever-increasing need for student bedrooms. They have been converting former family homes into HMOs and unintentionally created areas that many refer to as student ‘ghettos’.

There are two significant issues with these ‘ghettos’. Firstly, the areas lack any sense of community spirit, they are transient and without a sense of ownership. There is an average of six students to a house causing parking chaos, untidy streets and anti-social behaviour. Secondly, there is a housing shortage and it is perceived by many that houses in these areas should be should be returned to family occupation.

Under the General Permitted Development Order property owners can convert a C3 family house into a C4 HMO without planning permission and vice versa. In 2010 the government stepped in, delegating power to local authorities, allowing them to enforce – by their own discretion – an Article 4 direction. The Article 4 direction prevents a change of use without planning consent.

Since then, many local authorities have implemented Article 4 zones. Cities with a significant student presence, such as Manchester, have utilised the power very quickly, with a host of towns and cities following suit, including smaller university destinations such as Falmouth.

But for student investors, what has been the impact?

Confusion

If you are acquiring student houses in multiple towns and cities, understanding the constraints imposed by the Article 4 direction can create confusion. This is because there are no set Article 4 guidelines or a standardised approach to managing dense student populations. As a result, all local authorities are implementing the Article 4 direction differently, with some enforcing it more strictly than others. It is also important to understand that local authorities are using Article 4 to achieve different outcomes. Some may wish to completely eliminate students from a particular area; others are trying to create a more balanced community, whereas some simply want to exercise an element of control.

Crystallisation of HMO numbers

Generally speaking, investors have stopped buying C3 properties in the hope of achieving C4 status within Article 4 zones because the risk is perceived to be too great. As a result, we have witnessed a crystallisation of HMO numbers. The issue for investors is the lack of opportunities to add value. These opportunities are restricted to operating HMOs requiring refurbishment or those that provide an opportunity to extend.

Value of C4 properties

C4 values are strengthening because of the shift in supply and demand; whilst the requirement for HMO accommodation is increasing, the number of new C4 properties coming to the market is constrained by Article 4. Conversely C3 values in these areas have generally plateaued. Market competition for C3 properties has diminished significantly since investor appetite has waned, creating a widening gap between the value of a house with C3 use and the value of a house with C4 use.

We have seen examples whereby C4 houses are now achieving in excess of 50% more value than an identical C3 house. For investors therefore, investments are becoming more expensive and yields are hardening.

Rents

HMOs remain popular amongst students despite the constant growth of the purpose-built sector and the amenities they offer. Rents have therefore continued to grow and will do into the future as a result of continued demand by students, against the stunted growth of HMOs in light of Article 4.

Portfolios

We are witnessing a growing debate: portfolio ‘discount’ vs portfolio ‘premiums’. If an investor is acquiring 15 HMOs, should they be benefitting from a discount for their bulk acquisition? This is standard investment; many would argue they should.

The problem is, it is not so simple with HMO investments anymore. Article 4 has added spice to the argument. If the values of C4 houses are increasing (as we have already established they are), and opportunities to create more C4 houses are limited, then perhaps an investor should pay a premium for a portfolio offering operational HMOs. It would make sense because the ability to create a portfolio of 15 C4 houses has grown ever more difficult.

Conclusion

The government set out to give local authorities more power to control the studentification of their towns and cities and we have seen many implement the Article 4 direction since its introduction. The rationale behind its use differs among local authorities, so it is impossible to say if Article 4 can be judged a success at a local level.

However, it is fair to say that most were hoping to achieve a better demographic balance and revive a sense of community in areas that had become transient and home to a large population of students. In reality many of these areas, dubbed student ‘ghettos’ still exist. Streets with abandoned homes during academic holidays, where there are no Christmas lights at Christmas time and homes with overgrown gardens and over-spilling bins are plentiful. Permanent residents in these areas probably feel little has been achieved. If anything, owner occupiers could feel disheartened by the value of their C3 dwelling in contrast to C4 properties close by.

For investors, it may be more difficult to seek good opportunities now than it once was, but their stock is on the rise. Whilst these investors may have benefited from Article 4, I am not convinced local communities really have.

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Understanding the constraints imposed by the Article 4 direction can create confusion

HMO investment: the impact of Article 4

Residential Investment

“Undergraduates have moved into areas of Britain’s big cities ripping the heart out of our communities and leaving devastation” (The Independent 2004). This seems slightly unfair but there is no mistaking that a conflict exists between students and local residents due to the ‘studentification’ of neighbourhoods throughout the country.

Vicky Bingham Residential Investment

CAT A+MARKETING SUITE

CAT A+DEMO

CAT A+PLUG & PLAY

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This new trend is being driven by cost, convenience and competition from co-working providers who have become known for offering hassle-free, ready to move-in-to space. Landlords that have begun to test this new concept, are already starting to see the benefits.

Category A+ fit-out sits in between a landlord’s basic provision of space, Category A, and Category B – a full, interior designed space instructed by tenants. Category A space has always been widely offered by landlords in the market. As well as requiring minimal investment, this basic provision enables building owners to target a wider variety of occupiers – all with varying needs. Tenants have come to expect this level of fit-out to provide basic mechanical, electrical and fire detection services and air-conditioning and ventilation, painted walls and toilet facilities. To entice occupiers and offset some of the expense of fit-out, landlords have typically offered tenants rent-free periods whilst their fit-out takes place.

Market change

But in a positive move to engage with and attract occupiers, landlords have begun testing the demand and benefits for three new tiers of Category of A under the umbrella of Category A+. These new levels of fit-out provide tenants with almost-ready-for-occupation office space to varying degrees, helping to significantly reduce the cost for tenants and speeding-up the move-in process.

Some landlords have embraced this approach, whilst others are still testing the market. Those landlords that have implemented Category A+ fit-outs have undoubtedly reduced void periods and have seen a positive impact on rents. Offering ready-to-move into space has helped building owners to secure tenants quickly and tempt those that struggle to envision how space can be utilised when viewing Category A space.

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Office Leasing

Rachel Lockhart City Office Leasing

The fashion for fit-out – how traditional landlords are embracing new levels of office fit-outChanging tenant demand has led to a growing number of office landlords offering a wider range of office fit-out – Category A+.

Three new tiers of Category of A under the umbrella of Category A+

This level of fit-out requires no actual work to be undertaken and comes with a minimal capital investment made by the landlord. Unlike the traditional Category A model, part of the space is furnished with aspirational furniture and / or finishes and displays. The main objective of this model is to help showcase the space with desirable furniture, helping to differentiate space from one building to another and support the marketing strategy. Once leased, this furniture is often transferred to another building. A number of landlords, such as Derwent and Dorrington, have been offering the Category A+ Marketing Suite model for some time and have found it effective in providing prospective tenants with a sense of scale, helping them to gauge how much furniture they will require.

This approach offers building owners some of the benefits of the Plug & Play model without the significant outlay. It is also most adopted by landlords that are not quite confident enough yet to invest in the fit-out themselves.

In this model landlords will make a larger capital investment, taking a light touch approach to fit-out that is likely to include a tea point, meeting room, high speed fibre installation of backbone telecoms and more furniture than in the first model. As well as showcasing space, the other key incentive behind this option is removing some of the burden of fit-out and speeding up the move-in process for tenants. Some elements of this fit-out are complicated and time intensive. For example, to deliver fully working telecoms can take six weeks, but within this model, landlords are offering space with a telecoms contract in place that can be transferred to tenants.

Whilst landlords that have implemented this approach have found it has boosted interest levels and enquiries, helping to reduce voids, it has been less effective in generating a direct uplift in rental values.

This cost intensive approach provides prospective tenants with a fully fitted solution to enable tenants to take immediate occupation of the floor. This can cost landlords anything between £45 – £95 per sq ft, dependent upon on the level of quality of the fit-out. Landlords confident that they will get a return in investment are most likely to consider this a viable option.

Along with all the fittings offered in the other models, Plug & Play space comes fully furnished with a reception, meeting rooms and desks. This model is most popular with building owners looking to create a ‘show floor’ in a newly refurbished empty building or a newly-launched building with multiple floors to let. As well as enabling prospective tenants to visualise how they can use the space if they take a floor, they also have the option of taking space fully fitted out as demonstrated by the Plug & Play fit-out.

Due to the capital investment needed, Plug & Play is most commonly seen on offices with smaller floorplates as it is most attractive to small businesses. These businesses are more likely to consider traditional office space alongside a serviced office option and are less likely to have a dedicated member of the team to manage complex fit-outs. The time and cost saving of Plug & Play is seen as a significant advantage.

So far, the Category A+ models have proved effective for every party involved and offer businesses greater choice. Whilst the co-working sector has changed the rules of the game, Category A+ fit-outs demonstrate that traditional landlords can, and are, evolving to keep up with fast-changing tenant demand.

CAT A+ MARKETING SUITE

CAT A+ DEMO

CAT A+ PLUG & PLAY

17

One developer is marketing the area as ‘Fish Island Village’, to sell the promise of a community to new residents and businesses.

Fish Island has undergone significant transformation in recent years and it continues to be an area with high development demand. In the late 19th century, Fish Island was developed as a small ‘factory town’ with street names such as Roach Road and Bream Street, which gave the island its ‘fishy’ connection. By pure coincidence H. Forman & Son, purveyors of smoked salmon, occupied a smokehouse on Stour Road adjacent to the canal and produce some of the finest smoked salmon in the world.

The Imperial Gas Light and Coke Company bought 30 acres of land across Fish Island for new works in 1865, but instead of their planned development, the land was sold on to create a community of houses and factories. During the Second World War the area was badly affected by bombs and post war regeneration led to the clearance of a number of major housing slums.

Subsequently, new factories, warehouses and light industrial units were built and the area became a centre for industrial activity. Towards the end of the 20th century, Fish Island became an attractive hub for artists, owing to the changing local economic landscape and the affordability of once industrial accommodation.

Today, it continues to appeal to a creative population, owing to its eclectic mix of affordable factory and warehouse buildings, as well as its proximity to central London. Dubbed as the ‘new Shoreditch’, it now boasts ‘Fish Island Labs’; a low-cost workspace in partnership with the Barbican Centre, the Crate Brewery Bar and Restaurant and Stour Space; a ‘hipster’ café / gallery adjacent to the canal. The island is also within easy reach of the Olympic Park and Westfield Shopping Centre, Stratford. This has enhanced the area’s distinctive identity as a home for emerging artists.

Local planning policy has helped to create a good balance between high density residential living and affordable commercial accommodation in order to establish the new ‘Fish Island community’. The London Borough of Tower Hamlets describes the area as providing “a key link between the established communities of Tower Hamlets and the 2012 Olympic Legacy – the most exciting regeneration project in Europe.”

The London 2012 Olympics undoubtedly sparked a development opportunity. Under the Area Action Plan published in 2012, key planning strategies were outlined for each of the major areas of Fish Island. The northern, mid and eastern sections will either become residential or mixed use, and the southern section will be employment led, boosting the local economy. Fish Island has been further enhanced by improvements to Hackney Wick Overground Station, which completed in Summer, as well as forthcoming additional cycle routes and access ways.

Average prices for new one-bedroom apartments in the area start from £425,000 and £530,000 for a two-bed. Tower Hamlets envisages in its Area Action Plan that around 3,000 new homes alongside 175,000 sq m of employment space will be created in the next few years. The number of homes is likely to exceed 5,500 and Fish Island will play an ever increasing important role in London’s housing supply. Some major developers helping to achieve this include Peabody, Hill, Weston Homes, Taylor Wimpey, Anderson Group and London and Quadrant. By the end of 2018 alone, 320 units will be scheduled for completion.

Since the Area Action Plan was published, we have been heavily involved in advising developers, property companies, housing associations and banks in relation to development sites on Fish Island. Over a four-year period, research illustrates that the value per acre now ranges from £7.75m to £13.3m for sites without planning and £10.5m to £24.25m for sites with residential-led planning consent. A number of these sites have been owner occupied since the 1960s / 1970s by businesses

18

Today, it continues to appeal to a creative population

Fish Island – selling a new 21st century ‘village’ community

Commercial Valuations

Andrew Hoban Commercial Valuation

associated with activities such as waste management and recycling. Recent land transactions certainly affirm the saying:

“where there’s muck there’s brass”!

Fish Island has witnessed significant change and growth since the 19th century and is undergoing somewhat of a renaissance as a new community emerges. There are still a number of existing sites and buildings which

are underutilised and arguably incompatible with the intended ‘village’ community vision. This includes low rise industrial units, builder’s yards and a waste transfer site; it is Tower Hamlets’ objective to further manage the release of former industrial land to enhance the space for its new community.

Fish Island is one of the last remaining areas within Greater London to witness such

significant change in respect of its built environment and underlying land values within such a short time frame. The aim of Tower Hamlets has been to develop it into “an area where people choose to live, work and visit”; it is clear that creating a community is one of the major ingredients in achieving this.

An island is defined as ‘a piece of land surrounded by water’. Confusingly, Fish Island in East London is not really an island; it is probably best described as an enclaved peninsula bound by the A12, a number of canals and the Olympic Park.

19

Many people have an opinion on what impact MEES have had since coming into force in April 2018, but nobody really knows what all the consequences are and will continue to be. Until there is some case law, the regulation is untested and the law of unintended consequences will probably be in play. Beware of anyone who claims they can give you certainty.

On the face of it you cannot let a building with an EPC rating of F or G and various people will disagree about how this will affect lease renewals and rent reviews. I recently attended a lecture in which the speaker questioned what an unlettable building would be worth to an investor. The audience shuddered as they contemplated the prospect.

It seemed to me that the speaker grew to menacing proportions as he proclaimed from his pulpit “SINNERS!! Ye who let a building with an EPC of F or G shall be cast off and consumed by local authority-imposed fines of up to £150,000 per quarter, per tenancy!” Heavy stuff. We are stoic fellows though in the Lease Consultancy team, so I raised a nervous hand and asked about exemptions. Rather than me being struck down by a bolt of lightning, as I had half expected, I was pleased to note that the speaker became notably less strident. The discussion opened up and focused on what you can get away with.

It turns out that the exemptions cover quite a lot, including anything expensive; begging the question, why are we worried? As long as you jump through the hoops to get your exemptions in the first place, the cost of compliance is not high. The most significant ‘get out of jail free card’ is the exemption

from doing anything at all unless it will pay for itself over seven years. Put that another way: MEES will only affect those landlords who are reluctant to invest on a YP of 7: a 14% annual return! I have simplified this for dramatic effect, of course. As I said in paragraph one, beware of anyone who claims they can give you certainty. The point I want to make is that complying with MEES is not very expensive, so don’t get rushed into expensive pre-emption measures. Exactly how you calculate a seven-year return is not yet clear. Does it, for example, depend how much you, or the tenant, pays for electricity?

How MEES will be enforced seems to be unclear too. We were told that local authorities will enforce MEES and keep the revenue generated from fines, but whether these fines can be backdated, whether they are cumulative and whether they apply if you have an inaccurate EPC that shows C but is really F, all seemed to be rather uncertain.

After all that uncertainty, here is a little practical advice borne from recent experience. If your building has an EPC below E:

Firstly, get a new EPC done; you will quite likely find that a well conducted EPC will result in a dramatically improved rating compared to the EPCs created five or ten years ago. Ten years ago, nobody cared what the rating on the EPC was as long as you had one. Consequently, nobody paid for a thorough one and they got an EPC based on the worst-case scenario.

Secondly, make sure the new lease assumes a decent EPC for rent review purposes. Nobody seems to be talking about this, but in five years’ time buildings which do not meet the MEES will supposedly be ‘unlettable’ for the purposes of the hypothetical transaction of the rent review. Ask your solicitor how you might deal with this – before the draft lease is finalised.

“SINNERS!! Ye who let a building with an EPC of F or G shall be cast off.”

All about MEES

Lease Consultancy

Minimum Energy Efficiency Standards (MEES) and their impact on landlords.

John Banbury Lease Consultancy

20

21

Artificial Intelligence and big data may have brought about significant changes in property auctions over the last ten years, but I still have the same pre-auction butterflies and excitement that I have always had.

Technology has helped to advance many aspects of the sector and we have seen auction houses embrace these changes, enhancing the auction experience for our buyers and vendors, whilst streamlining processes for auction teams. Ballroom auctions are as popular as they have always been, albeit with fewer peppered throughout the year, alongside a cycle of online-only auctions.

In fact, artificial intelligence is one of the reasons why we are expecting a particularly full auction room today. Using data analytics and bots, we have been able to better identify and target potential buyers. This data has enabled us to tailor our digital marketing campaigns and ensure we are providing potential buyers with the information they need and details on properties that are most likely to be of interest to them.

For many years, buyers have begun their property search online and the information they would find often informed their journey and, sometimes, their purchasing decision. Technology has helped us to better inform our customers; photographs are complemented with online virtual tours,

taking customers beyond the limitations of stills and bringing properties to life. Our Allsop chatbots are also on hand around-the-clock to answer questions and provide further information immediately, speeding up the process and ensuring no query goes unanswered.

The auction catalogue is still integral to our marketing campaigns, but as technology has evolved, so too have our brochures. Our catalogues, which are now almost always read on a tablet rather than in print, are real-time brochures, automatically updated with the latest buyer information.

Accurate pricing has always been integral to the success of auctions; lots priced too high can fail to generate good competition on the day to reach the best price. Artificial intelligence now supports our valuation and auction teams by analysing market trends and predicting future outcomes. This intelligence is based on real-time data and enables us to provide a remarkably accurate market valuation. Automated market analysis means that any shifts in the market and in buyer interest (which can now all be measured effectively and efficiently online) during the auction cycle means guide prices can be updated throughout the process.

The use of drones and proptech enables the auction and valuation teams to visit a site remotely to assess each property offered, from its condition to its floorplans and size.

Whilst we continue to recommend that buyers conduct their due diligence and commission their own survey of the property, AI is able to detect structural

problems that may have a bearing on the value of the property and therefore its guide. It’s this information that improves advice pre-auction and the outcome on the day.

As my car pulls up outside the hotel, I know buyers in the auction room will be as exhilarated to be here as I am. The atmosphere and buzz of the room, combined with the familiar sound of the fall of the hammer after a hard-fought round of bidding, remains the lifeblood of auctions. Despite the huge success of online-only auctions, it is the human side of property auctions of old that vendors and buyers still seek.

22

Artificial Intelligence now supports our valuation and auction teams by analysing market trends and predicting future outcomes

AI – the future of auctions

Residential Auctions

It is 2028 and its auction day. I’m on my way to the auction venue and in the back of my driverless car, I am checking my emails for any overnight updates on my smartphone.

Richard Adamson Residential Auctions

23

Market conditions and recent tax changes have dampened the mood among owner occupiers and buy to let investors alike. Homes are now taking longer to sell, increasingly leaving developers in a difficult position.

In particular, a growing number of remaining units in large residential blocks are sticking, and the dilemma of how much to drop prices before it significantly impacts business and development plans – often at the detriment of the delivery of new homes, is a tricky one. Sales revenues are integral to keeping wheels turning and few developers can afford the luxury of holding out for individual buyers to come along. However, an increasingly popular solution for developers and investors is to carry out a block sale of the remaining units to one investor, which brings in revenue quickly.

There are many advantages with a block sale to one buyer. Many investors purchasing blocks are cash buyers or if they do require finance, the vendor is only dependent on one purchaser and them arranging a single source of finance. The alternative of owner occupiers buying

individual units means increased risk of each failing to obtain the finance and complex chains to make the purchase possible with the further hassle of individual valuations and mountains of legal paper work.

In a nutshell, individual sales of units mean higher risk and delay. In contrast, a block sale can be achieved within weeks.

Another advantage of block sales is that financial environment for block purchasers can be more favourable than owner occupiers due to tax advantages. There is the potential saving in stamp duty through multiple dwelling relief or if the asset is held in a Special Purpose Vehicle, this allows some or part of these savings to be passed on to the vendor.

So, what are investors looking for? Ultimately it is either a discount to the true vacant possession value of the remaining units, yield, or indeed a bit of both. Whilst it would be remiss to suggest that there are a multitude of purchasers willing to pay the full vacant possession value of the remaining units within a scheme, we are finding more investors are taking longer term views, especially in London, with forecast exits in 5+ years and using the interim period to collect rents from typical AST lettings or in some cases running serviced apartment operations. When this is the case, we are finding that pricing achieved is often over and above what would usually be associated with block sales.

In an increasingly uncertain climate, driven mainly by market confidence on the back of the political upheaval caused by Brexit, block sales offer vendors a less risky alternative to individual sales. For investors and developers, time and money are always a priority, so it is no surprise that a growing number are giving block sales strong consideration as a solution to a sticky development project.

24

There are many advantages with a block sale to one buyer

Fixing broken blocks

Residential Investment and Development

The residential market in London, like many parts of the country, is challenging in contrast to the growth we saw between 2011 and 2014.

William Shoebotham Residential Investment and Development

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

FOR (BLOCK) SALE

25

Is my property eligible to be taken out of the list if I knock out the toilets and take out the services (M&E, water etc.)?

In short, no. The case that we rely on to achieve an RV of £0 is the recent Supreme Court case – Monk vs Newbigin. This case set the precedent for the physical factors and circumstances that should warrant an RV of £0 – albeit the VOA will usually argue!

In this case there were a number of criteria that were key in affecting the physical condition of the property in such a way that the Supreme Court ruled that an RV of £0 was entirely appropriate;

1. The works undertaken formed part of a wider scheme of works – albeit paused,

2. The building had been stripped to shell and core (removal of raised floor, M&E, suspended ceilings etc).

3. The floorplate was being altered to create a demise that was different to that which existed before.

Therefore, if parallels can be drawn between a building undergoing redevelopment

and the case that is referred to above, a Check to receive an RV £0 should be lodged.

It is important to stress however that thorough evidence is absolutely critical in getting

these cases over the line. Every day we hear of Checks

failing through a lack of evidence.

I have demolished my building and it is out of the business rates list –

there is no more that I need to do

Congratulations on achieving your desired result – however, there may still be more that can be done. If the date at which the building was deleted (or given an RV of £0) is later than the date that the strip out works initially started, then there is reason to make the case for an earlier effective date.

We have assisted with a number of such appeals whereby an earlier effective date has

been achieved – these have led to some significant

backdated savings.

If all of my redevelopments were completed prior to the 01 April 2017 cut-off date; is there anything I can do to address these historic developments?

Yes and no – although it is important to emphasise that there must be clear and transparent evidence to support your claim. In terms of traditional valuation appeals (or Monk based redevelopment cases), there is a strict deadline that means we cannot challenge prior to this date.

However, cases that refer to issues that are dealt with directly by the local authority may apply some leeway to this deadline.

For example, if you have been paying empty rates on a listed building, have not utilised the statutory empty rates exemption or have had issues around asbestos or fire certificates, we can try to reclaim monies that relate to each of these, provided that there is enough evidence to support any claim.

If I have property guardians in my building, does that mean that all of my empty rates concerns are in hand?

Although guardian schemes are now a widely used and accepted means of mitigating empty business rates – indeed many local authorities utilise these schemes themselves, certain providers should be treated with caution. Property guardians are people that occupy the building as a form of live-in security. Various ‘guardian providers’ exist to organise this service, often alongside making an appeal to move the building from the business rates to the council tax list as a result of guardian occupancy. However, we have found that this does not always occur and the saving that is promised, is not always delivered.

This can result in some landlords paying both an ongoing business rates liability and a management fee to the guardian company, despite an appeal having never been made by the guardian company to reduce the property’s rateable value.

I have had completion notices served on a building where the redevelopment is only just completing, is there anything I can do?

Completions notices are issued by the local billing authority to re-introduce a newly built or redeveloped building into the council tax or business rate list. They are issued to alert the developer or landlord to the fact that the building has a three-month window until rates will become payable.

Few people are aware that these notices can be disputed, as long as an appeal is made within 28 days of the date of the notice. There are limited grounds upon which the notice can be appealed, but it is certainly worthwhile investigating if the asset remains vacant and does not have pre-lets. It is also possible to try to engage with the local authority prior to completion to delay the issuance of Completion Notices in the first instance.

The new ‘Check Challenge Appeal’ system is too complicated to use. To avoid the headache, should I just rely on the local council to help?

No, the CCA system is certainly worth engaging with – we have achieved a high level of success using this new method of appeal.

Furthermore, local billing authorities are incentivised to collect and retain as much rating cash as possible. Despite the fact that they may (if asked) eventually raise a report to the VOA to have a building removed from the rating list on account of a demolition or change of mode or category. It is not in their interest to secure a favourable date for such a removal which means that your interests are not being protected.

In line with cases whereby the precedent has been set in law, property developers and landlords may be entitled to the removal of their rating liability from an earlier and more appropriate date – the date that the site was put into contractor’s hands. There is a very clear conflict of interest and it will hit your pocket not to be proactive!

I have secured planning with the intention to redevelop the building. On this basis, my property should be removed from the rating list.

Not necessarily. A valid planning consent and the intention to redevelop is not enough in isolation to remove the business rates liability. We would not encourage lodging a Check (nb. Check, Challenge, Appeal – CCA – is the new route of appeal) prior to the start of works on-site, rather we recommend lodging a CCA once the building has been stripped out and is not fit for its intended use.

This is because the date at which the Check has been made, automatically becomes the ‘material date’ for the CCA, which means that the case is considered on the basis of the physical condition of the building on that specific day. If the works to the building are radical at the date of the Check, it reduces the likelihood of the CCA being rejected by the Valuation Office Agency (VOA) on the basis that the building is merely being repaired.

My building is vacant and derelict, this means that it will automatically be taken out of the business rates list

Unfortunately this is not the case. Owning a derelict building is not reason enough to secure a Rateable Value (RV) of £0. Despite the physical state of the building, it is commonly argued by the VOA that the building could be repaired to make it capable of being occupied for its original use. A derelict building is therefore likely to be liable for ongoing empty rates until it is demolished, redeveloped or repaired.

For example, a building that has sockets hanging off the walls, a leaky roof and crumbling plaster will, alarmingly, not be eligible for RV £0 unless it tips the economic repair test. That said, the level of disrepair is an important consideration for the VOA to take into account when reviewing a potential case and so advice should always be sought to negate possible rejection.

It is also useful to note that if there is un-encapsulated asbestos in the building, or other issues that would relate to the building needing substantial work to make it safe to reoccupy, there may still be some scope for action.

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Aoife Broderick and Natasha McEntee Business Rates

Rating red flags – busting common myths and misconceptionsFor commercial property owners, businesses and developers, business rates are a major factor and overhead to consider. Increasingly, our business rates team are coming across many industry myths that their clients have come to understand as fact. In response, we have covered a few of our most frequently asked questions to dispel the myths and shed some much-needed clarity

Business Rates

27

Safeguarding street art for the future

The nature of street art is intrinsically fleeting: buildings bearing the works of famous artists are torn down or artwork painted over. But many of Shoreditch’s most prolific artists often return to the same spots and new creations appear all the time.

Moreover, street art is increasingly protected and a growing number of developers are choosing to preserve the work, ensuring its longevity.

A growing number of developers are commissioning street art to ensure their schemes are in keeping with the local area

and are capturing the ethos of the community. For example, at Arnold, a 75,000 sq ft office building in Shoreditch, and department-store-turned-office-space, Dept. W in Whitechapel, graffiti artists were employed to design and create hoarding whilst building work was underway.

Similarly, when we launched Alphabeta, an office and retail space on Finsbury Square, graffiti artists were commissioned to paint the internal walls; and at The Relay Building, contemporary business accommodation in Aldgate, has been elaborately decorated with a graffiti ‘wall tattoo’.

Some worry that with the influx of new development in Shoreditch, new street art creations may dwindle – but it is clear from the above examples that this is unlikely. Whilst Shoreditch is decidedly more upmarket than it was in the 1970s, the nature of street art has also changed. Indeed, research from the Affordable Art fair revealed that nearby street art can add thousands to the value of a property and 29% of Brits would like to commission an artist to paint a mural on the outside of their house. Now a valuable artform, street art has earned its enduring place in the fabric of British culture.

This corner of Hackney is also the home of street art. Once considered vandalism, street art in Shoreditch has been elevated to the mainstream. Street artists, such as the mysterious Banksy and socially-conscious Stik, are no longer outsiders operating on the fringes of legality: their work has become iconic.

Illicit beginnings

Of course, this has not always been the case. Long before Shoreditch was the cultural jewel of the East End, it was a desolate concrete jungle. In the 1970s, vandals took advantage of Shoreditch’s abandoned warehouses, which provided a blank canvas for graffiti and tags.

The graffiti was seen as a sign of urban decay but by the 1980s, tagging had given way to character work. Crews of artists moved through Shoreditch in the dead of night, honing their skills and competing for the most daring locations to display their work.

Street art turned a corner in the 1990s when Banksy burst onto the scene. Known for his sense of humour, Banksy began as a freehand graffiti artist, eventually turning to stencils. The stencils allowed Banksy to work fast and his creations began popping up all over London, although some of his most famous creations are in Shoreditch.

Street art legitimised

In the last decade, street art has shed the last remnants of its bad rep. No longer seen as an anti-social crime, it is now respected as a genuine art form by art institutions and galleries across the capital. Far from being a sign of urban decay, street art in Shoreditch marks the area as one of London’s cultural hot spots.

Recently, galleries such as the Tate Modern and the Serpentine Gallery have featured work from popular urban artists. Indeed, Banksy’s work will be exhibited in Mayfair’s Lazinc gallery this summer. These polished exhibitions are a far cry from street art’s gritty beginnings.

Today, Shoreditch continues to champion the rise of street art by making efforts to preserve pieces already created and by providing space for new artists to showcase their work and develop their skills. Projects such as BSMT have helped emerging street artists gain recognition by showcasing their work.

Furthermore, Shoreditch street art is a pull for tourists. Guided street-art tours are increasingly popular, reflecting the legitimisation of the artform and cementing Shoreditch’s place in the landscape of modern British culture.

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Now respected as a genuine art form

City Office Leasing

Tom Nicoll City Office Leasing

From vandalism to valuable:

the transFormation of

shoreditch street art

Shoreditch today is known for its culture. From its buzzing bars and restaurants to its progressive art galleries, ‘Shoreditch’ is a byword for all things stylish.

Street art at Arnold

Street art at The Relay Building

29 30

Commercial Deals

Commercial Deals

Acute Portfolio, London N1

Sold for £51m (4.1% NIY)

Three North London multi-let office buildings totalling 106,312 sq ft

Office Portfolio

The Relay Building, One Commercial Street, London E1

Sold for £90.75m (5.95% NIY)

Landmark 22 storey tower comprising 105,996 sq ft of office, retail and ancillary accommodation

401 King Street, Hammersmith, London W6

Sold for £15.22m (4.72% NIY)

Freehold multi-let office and retail building totalling 24,566 sq ft, with future refurbishment / extension potential

Office & Retail Investment

65–68 South Molton Street & 32 Brook Street, Mayfair, London W1

Sold for £55m (2.81% NIY)

Virtual freehold multi-let retail and office in Mayfair totalling 14,757 sq ft

The Artillery Building, 10 Artillery Lane, Spitalfields, London E1

Sold for £4.55m (£703 per sq ft)

A vacant freehold building located 150 metres from Liverpool Street Station, comprising 6,466 sq ft of office and ancillary accommodation

Hamilton House, Temple Avenue, London EC4

Sold for £18.05m (£615 per sq ft)

City of London Business Centre investment and refurbishment opportunity totalling 29,349 sq ft of office and ancillary accommodation

Office

Tesla Car Showroom, Chiswick, London W4

Acquired for £10.1m (4.41% NIY)

Tesla’s flagship UK car dealership situated with exceptional prominence onto the A4 and let on a 15 year lease

Car Showroom

155 Sevenoaks Way, Orpington, Kent BR5

Sold for £1.78m (5.3% NIY)

Freehold trade counter unit let to Multi Tile Ltd on a new 20 year lease (no breaks) at £100,000 pa

Trade Counter Investment

Date Valley School Trust, Mitcham Court, Cricket Green, Mitcham CR4

Sold £2.27m (4.5% NIY)

Freehold detached building of 8,661 sq ft with car parking providing a private school let at £108,440 pa

Educational Investment

Grays Shopping Centre, Grays, Essex RM17

Sold for £20.2m (9.4% NIY)

Dominant community shopping centre with large scale residential development potential

Shopping Centre

Clutha House, 10 Storey’s Gate, Victoria, London SW1

Sold for £10.55m

Freehold multi-let office and retail building opposite Westminster Abbey totalling 9,416 sq ft

Office Investment & Redevelopment Opportunity

10 / 11 The Highway, Station Road, Beaconsfield HP9

Sold for £2.06m (3.5% NIY)

Freehold corner property, let to WHSmith Retail Holdings Ltd at £77,500 pa on a lease expiring 2024

Shop Investment

70 Gracechurch Street, London EC3

Disposal of 7th floor comprising 14,701 sq ft of office accommodation

Let to JDX Consulting

6 Chesterfield Gardens, London W1

Disposal of the 4th floor comprising approximately 6,680 sq ft of office accommodation

Let to CTF Partners

15 Bonhill Street, London EC2A

Disposal of part 2nd floor comprising 10,142 sq ft of office accommodation

Let to Nexmo

R7 Handyside Street, Kings Cross Central, London N1

Disposal of the part 10th floor comprising 4,245 sq ft of office accommodation

Let to Toyota Connected Europe Ltd

St Magnus House, Upper Thames Street, London EC3

Acquisition of 10,992 sq ft

On behalf of IFF Research

No.1 Clink Street, London SE1

Leasing campaign of 11,841 sq ft of office accommodation with 3 floors let and one under offer

INVESTMENT OFFICE LEASINGAUCTION SALES

Office Investment

31

Residential DealsResidential Deals

George West House, Clapham, London SW4

Sold: offers in excess of £18.5m

Landmark office building overlooking Clapham Common with planning consent to convert to 57 and 61 residential units

Bolton Studios, Gilston Road, Chelsea SW10

Sold

11 individual leasehold apartments comprising 10 x one beds and 1 x two bed

Residential Investment

1 Burns Street, Leicester LE2 6DJ

Sold for £4.4m (6.5% NIY)

Student investment comprising of 70 bed spaces

Student Investment

Vacant – Freehold Building

21–24 Queens Road, London NW4

Sold for £1.25m

A long leasehold self-contained purpose- built three bedroom ground floor flat

Vacant – Long Leasehold Flat

Unit 3 Wolsey Business Park, Hertfordshire WD18

Sold for £12.5m

Two prominent freehold office buildings with permitted development consent for conversion to 107 residential units

Investment – Freehold Building with planning

Regent House, 27 London Road, Leicestershire LE2

Sold for £1.54m

A freehold building internally arranged to provide ten self-contained flats. Total current rent reserved £89,940 per annum

Investment – Freehold Building

47 Cadogan Street, London SW3

Sold for £3.175m

A freehold five storey building with consent for conversion to provide a five bedroom house

Vacant – Freehold Building With Planning

The Basildon Portfolio

Portfolio of houses in Basildon (various)

Sold for £10m

Residential investment portfolio comprising 48 houses

Residential Investment Portfolio

The Arrow Works, 65 Hampden Road, Kingston Upon Thames KT1 3HQ

Sold for £6.1m

Vacant commercial premises sold to a residential developer for c.80 units

Various locations across the North of England (Liverpool, Carlisle, Sunderland, Stockton and Durham)

Sold for £11.55m (7.4% GIY)

Six freehold residential investments providing a total of 162 flats in Liverpool, Carlisle and the North East

Residential PortfolioCARP

32

Meadow Mill, Stockport SK1

Sold prior to auction, guide £7m+

A residential led conversion opportunity benefitting from an existing planning permission for 213 apartments

108 Fitzjohn’s Avenue, London NW3

Sold for £2.5m

A well located freehold, five storey mid-terrace building

Conversion / Development Private Treaty with Auction Backstop

10/11 Watkin Road, Wembley HA9 0YG

Sold: offers in excess of £9m

Residential development site with potential for c.150 units

Residential

Pennington Manor, Tunbridge Wells TN4

Sold for £3.08m

A freehold purpose-built block, comprising 31 self-contained flats

Vacant – Freehold Block of 31 Flats

INVESTMENT AUCTION SALESDEVELOPMENT OPPORTUNITIES

33

DOWNING STREET CALLEDContrary to rumours that Scott Tyler and Vicki Lloyd-Jones were invited to Downing Street to advise on Brexit and the housing crisis, they were in fact attending a reception in aid of Honeypot Children’s Charity, who offer respite holidays to children who are full time carers for their parents.

SPORTS DAYAnother athletic triumph for our boys and girls at the Annual Sports Day in Hyde Park, raising funds for LandAid and Honeypot.

DIGGING DEEP UP HIGH

Our raffle at the Allsop summer party

at Landing 42 raised £1,400 for RedTribe

bringing our total for this clean water

supply project in Kenya to over £12,000.

TAKES MORE THAN A SKIRT AND A COMEDY WIG BOYS…Convinced they could take on the girls, our Allsop boys challenged our netball team to a tournament. Misguided, but as it turns out, not humiliated, the girls beat them 7-2. Huge fun and £12,000 raised for Bowel Cancer UK and Shine Cancer Support.

CIT Y SAY GOODBYE TO FOOTBALLAfter England slipped quietly out of the World Cup, the disappointed boys and girls in our City Office donated their foosball table to Honeypot for the children at their respite house.

Allsop form alliance with Hong Kong based Millennium Group to strengthen their relationship with Asian investors.

Scott Tyler and Martin Kaye

CONGRATULAT IONS TO NEW ALLSOP MUMS AND DADSKate Murphy, Annabelle Ripley. Anna and Andy Pointon, Emily Norman, Arbnor Salihi, Zoe Driscoll and Anne Housden.

ALLSOP WEDDING BELLS

Best wishes to: Matt Millman, Chris Room and Sarah Bathurst Brown.

And to Tom Nichol, Rose Eden and Rebekah Donaldson on passing their APC.

FOOTBALLT he Allsop football boys kicked off the new season in April and are back on a winning streak…

Sport

Congratulations

NewsCharityAllsop Life

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CHARIT Y SPORT IVEPartner, George Walker, hosted this year’s charity Allsop Sportive, an 85km ride through beautiful (and hot) Cotswold country. Huge thanks to George and his family for very generous hospitality and to everyone who donated to Alport UK.

LANDAID 10K RUNNERSWell done to our team who raised over £2,000.

CRICKETCongratulations to Allsop’s cricket team on winning the Prideview Cricketer’s Trophy at Merchant Taylor’s on 15th July. T hanks to Prideview for a great event and generous hospitality.

Allsop Life

NEWLY QUALIFIED Congratulations to Tammy Wilkins who is now a Registered Fixed Charge Receiver.

Head office 33 Wigmore Street London W1U 1BZ +44 (0)20 7437 6977

City office 2 Copthall Avenue London EC2R 7DA +44 (0)20 7588 4433

Leeds office 8th Floor, PlatformNew Station StreetLeeds LS1 4JB+44 (0)113 236 6677

Brighton office Princes House 53–54 Queens Road Brighton BN1 3XB +44 (0)1273 322 000

allsop.co.uk