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British Land Continues to Prioritise Mixed-Use Real Estate in Annual Report

British Land Continues to Prioritise Mixed-Use Real Estate in Annual Report
21 July 2020 | Updated 29 July 2020
 

As part of their “Places People Prefer” approach, British Land plans to focus on developing their mixed-use offering, to drive demand for their spaces.

British Land saw the value of their retail portfolio decline by 26.1 per cent, as ongoing structural challenges were exacerbated at the year-end valuation date by the early effects of coronavirus. However, offices saw an uplift of 2.3 per cent so overall the portfolio was down 10.1 per cent. 

The UK property company prides itself on providing places that reflect the needs of the people who use them – and with interactions with buildings so far changed due to COVID-19, they are looking to promote the benefits of a mixed-use portfolio. 

The report also states that the company will remain flexible in their approach, with an awareness that it remains early days in terms of assessing the effects of the pandemic.

“The impact of COVID-19 will rightly and inevitably dominate both our own and the national agenda for the coming months. At the same time, we are very conscious of our broader responsibilities to deliver value for our shareholders on a long term, sustainable basis.”  

–Tim Score

Non-Executive Chair, British Land 

 

COVID-19 Accelerating Already Identified Trends

 

Although British Land are asserting this as an attractive post-lockdown offering, their focus on mixed-use portfolios is part of their wider strategic plan. They say that COVID-19 has merely accelerated many of the trends that inform that strategy, such as more flexible working and the shift to online retail.

According to Chris Grigg, Chief Executive at British Land, most occupiers of offices feel that it is too early to make fundamental long term changes around their requirements. 

However, British Land are mindful that the trend towards greater flexibility may accelerate following this prolonged period of working from home. At the same time, there will be a greater focus on high quality, modern and safe environments, which provide more space per person and they expect the trend towards higher density offices and hot-desking to reverse. 

Grigg commented: “Where occupiers are looking for smaller spaces, on a shorter timeframe progress has been delayed due to remote working, and uncertainty around fit-out and timing of occupation. 

“We are conducting virtual viewings and have now commenced physical viewings and are encouraged by the level of activity we are seeing.” 

 

Why Mixed-Use? 

 

The way people use real estate is changing and the most effective way to drive enduring demand for British Land’s space is to evolve their offer in line with those trends, the report says. This means providing a wider mix of uses in one place.

But what is the appeal of this approach?

 

  • In the wake of COVID-19, there is likely to be an increasing emphasis on workspace which is high quality, modern and supports more flexible working. Places which benefit from green and open spaces are also more likely to be preferred 
  • The ability to shop quickly and efficiently near to the place of work is a key advantage in the short term, and long term, people will again want opportunities to socialise or be entertained nearby
  • There is also a growing expectation that businesses and places of work minimise their impact on the environment and make a positive contribution to local communities. Workspaces which meet these expectations help businesses attract and retain talent and support productivity and effectiveness
  • By helping drive enduring demand for space, it supports the delivery of long term sustainable value through rental growth and high occupancy. At British Land’s campuses and multi-let spaces, they control not just the buildings, but the spaces between them. As such, investments made into the broader environment has a positive impact on the value of the individual assets 
  • As long term owners and managers of space, British Land are also fully incentivised to develop buildings which are sustainable and to invest in local areas to support the local communities around which they operate
  • British Land’s scale and network means they have the flexibility to re-allocate uses within their places over time to better reflect the needs of their customers as they change, and ensure that they always make the best use of our space.

 

To deliver this plan, British Land is looking to concentrate on a smaller, more focused retail portfolio with high quality, accessible and well-located assets which are affordable to retailers and can play a role facilitating online fulfilment such as click and collect. In London, assets will be focused on transport hubs, especially assets with mixed-use potential.

Picture: 100 Liverpool Street at Broadgate London. Image Credit: British Land

Article written by Ella Tansley | Published 21 July 2020

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