Spec Finish

Office life www.thefis.org 23 The power of place The true cost of inaction ISG’s research and insight report – a UK perspective ISG’s Power of Place report was conducted by the Centre for Economics and Business Research. Download ISG’s full report at www.isgltd.com/en/campaigns/the- power-of-place-2022 The transformational changes to working patterns have thrived since the pandemic and it is clear that hybrid working is here to stay, so scaling back on facilities could seem a logical option, but ISG’s research shows that 46% of employers have seen no reduction in the utilisation of their office estate and some have even seen increasing use. High-quality workplaces are associated with increased employee productivity, as well as revenue growth and outperforming businesses report that the workplace is becoming a lever of competitive advantage and an asset, not a simply a cost. Adapting to people’s needs Commercial property owners and investors operate to maximise returns and success is reliant upon attracting tenants and, as businesses with a commitment to recruitment and retention have learned, understanding and adapting to people’s needs is essential. So, for owners and investors to provide the best offer and ensure their stock is sought after, it’s not just cost per square foot that attracts tenants – but understanding the nuances of occupier demands, and responding with an offer that factors in bespoke demands. What keeps investors awake at night The environmental, social and governance (ESG) agenda – including the role the built environment has to play in reducing emissions – is a topic that has remained consistent in recent years. However, the rising cost of living and soaring energy prices have brought ESG aspects into even sharper focus. Everyone with a stake in the UK built environment has a role to play in rising to this challenge. It must be a team effort, with landlords and tenants approaching these issues together – but for investors with a keen eye on margins, it’s important to be able to demonstrate which investments can yield the greatest returns. Legal climate commitments and ESG requirements are the key considerations shaping our response to physical assets. Some 92% of investors are taking action to improve property performance. Energy- efficient equipment is by far the most common way for investors and landlords to boost energy performance (64%), followed by climate-friendly heating and cooling systems (42%) and better insulation (41%). A notable trend is decreasing lease lengths – the average term having reduced by over a year compared to pre-pandemic levels. This suggests that the benefits of being agile and responsive remain at the forefront of occupiers’ minds as they evaluate their next moves. Further positive indicators in the report show that key occupier demand remains strong, with just 21% of investors having divided properties into smaller assets in search of more tenants – and owners of commercial office stock are least likely to have done so. It’s clear that as well as people valuing quality workplaces to help reshape communities and encourage people back into economic heartlands, places need to perform as part of a wider offering that supports both the environment and human need for connection. Net zero Given the importance of net zero performance in attracting occupiers, it doesn’t appear that this driver is met by demand-side incentives provided by local planning authorities. Just 11% of respondents stated that buildings with net zero commitments result in significantly faster planning permissions. In fact, most owners – particularly in the datacentre world – report longer planning permission periods for buildings with net zero commitments. An explanation may be increased bureaucracy, as authorities often need to verify that a building is in line with net zero commitment. This ISG research demonstrates that workspace is an essential cog in commercial performance, as well as a core influence in the health of our economy, the vibrancy of our communities, and our nation’s ability to attract global talent. This is welcome news for FIS members and building back better across the UK has never been more crucial to achieve long- term return on investment.