The real estate industry will be forced to emerge from a period of denial to embrace wholesale change following the COVID-19 pandemic.听
That is the view of听Andrew Roughan, managing director of听Plexal,听the innovation centre and co-working space based at Here East in London鈥檚 Queen Elizabeth Olympic Park.听
Before COVID,听Plexal听welcomed between 400-500 of its 800 members through its doors each day,听with听FSTE 100 companies听and听start-ups听alike听keen to feed off a vibrant atmosphere which Roughan听says听sparked听creativity听everywhere.听
During the first lockdown, as government advised people to work from home where possible, the number dropped to just 12.听鈥泪t’s been quite an interesting eight months, to say the least,鈥� he tells听老九品茶Cloud.听
鈥�We鈥檝e been open throughout both lockdowns because we have companies听classed as essential or critical workers; those serving the local community; and听a few heavily dependent on physical听hardware and tooling which would have听effectively听stopped if they hadn鈥檛 been able to听work on that infrastructure.鈥�听
The centre, established by Delancey, specialises in forging connections between industry, academia, investors, start-ups and scaleups to tackle some of the biggest challenges facing society.听
Its three core services are workspace, events and consulting.听鈥泪t’s听been听a bit of a听perfect storm听for听us,鈥� admits听Roughan.听
鈥淲ith workspace, people were advised to work from home if they could;听with events,听we used to host the likes of Google, but听that market’s completely gone and we’re scratching our heads as to in what form it comes back; and听with our consulting line, our biggest customer is the UK government, which clearly is distracted and challenged from a funding perspective with everything that’s going on.鈥�听
However听Plexal, which听delivers government-backed cybersecurity programme听LORCA听鈥撎�the听London Office for Rapid Cybersecurity Advancement听鈥� has retained a healthy membership of around 750. During the second lockdown, around 130 people听arrived in person each day, with their safety assisted by the sheer scale of the impressive building.听听
Having flipped its twice-weekly networking events to virtual 鈥� with a focus on practical advice around the likes of COVID support schemes听鈥撎�Roughan says听it was quick to support its members.听
鈥�We had companies in quite a lot of distress,鈥� he says. 鈥淲e decided early on that we would not behave like a landlord and a tenant, we would behave like a peer:听we would show companies where we were in distress, we would understand where they were in distress听–听and听we would act fairly and reasonably by coming together.听
鈥�[Taking the example of听one听entrepreneur], we had many, many conversations about听what听was听going on in听her听business, when their revenue may be hit, or funding may be made available.听听
鈥淲e’ve听just acted like normal human beings, which I’m sad to say not a lot of the property industry does often.听We are in this together;听and听when听we come out the other side, our听relationships will be stronger as a result.鈥�听
Roughan is in close contact with The Bartlett Real Estate Institute at UCL听and believes a fundamental shift in the relationship between the property industry and business is coming.听鈥淭hey are saying that there have been three events in history that have fundamentally changed the future of real estate,鈥� he says.听
鈥淔irst was the Great Fire of London, which changed the way cities were designed, with wider streets and the materials used for buildings;听then when听Spanish Flu ravaged society, it changed the government’s mindset around social prosperity and how the quality of accommodation听needed to be stepped up.听
“What they are suggesting now is that COVID is the moment that the office is no longer听the noun, but the verb. Given the technology available to us, work can be performed anywhere. The question is: to what destination is the task required? If property does not change, and fundamentally embrace that, I think it will be forced to.听听
鈥淭he property industry’s ongoing assumption of asset value growth requires asset utilisation to be near 100%. That just won’t be the case for the coming five years as the economy recovers, and people change behaviours about what the office means to them.鈥�听
Roughan expects a 鈥�period of denial鈥� lasting perhaps 12 months 鈥� giving听Plexal听something of a first-mover advantage as it looks to innovate in this area.听
鈥�That’s the period where we听get to market quicker with the more flexible, more reinvented, more capable, more relationship-led offer,鈥� he says. 鈥淲e think those people with more constraints than us won’t get there quickly enough because they don’t want to admit it’s true.听听
鈥泪nevitably, over the five years that follows COVID, even the look and feel of an office will be different. It must be about collaboration and facilitation, networking and engagement.听That’s what we’re attempting to redesign.鈥�听
There are plans to expand the 鈥渕ethodology鈥� of听Plexal听to other parts of the UK, he reveals,听through a model of听subject matter clustering exemplified by LORCA鈥檚 focus on security.听听
鈥�We’re听really intent on working regionally. We’ve got various conversations听at the moment听around potential regional expansion and how we can take what we’ve learned, and how we can bring that into regional presence across the UK,鈥� he says.听
鈥�Look at Sensor City in Liverpool听and its听focus on smart cities and听the听Internet of Things;听the Titanic Quarter in Belfast听is all about听industry for new technologies; and Cardiff and insurance tech.听We’re staring at听all of听these things and seeing how they emerge.听
鈥�I think every city has its opportunity to become something听really interesting.听If our methodology were overlaid, does it create value for the community? And if so, how would we do it?鈥�听
As well as leaning towards multi-use offices, these cities could also undergo a fundamental physical change, he believes. 鈥�I think the towers that have been approved in every city around the UK will stop. That flattening听will force听them to听sprawl wider听and become polycentric cities.听Local communities听will then听start to emerge with enabled capability.听听
鈥�I think both traditional offices and co-working spaces will spread to the edges of cities much more and serve the local communities.听You might not want to work at your kitchen table听鈥�听so听you might听go to the local co–working facility听rather than听travelling an hour to the听one in the city centre.鈥�听