London Development

Spotlight London Development
 
How we live and work in new ways: 5 key trends

4 April 2017. Words Steven Lang & Katy Warrick

The habits of Londoners are changing; and what they expect from their workplaces, homes and neighbourhoods is in a constant state of change

 

Following years of failure to build sufficient new homes, living in London is increasingly expensive. Singles in their twenties are sharing with friends in rented houses. Couples in their thirties are still living (or moving back) with parents to save for a deposit, and renting has become the new norm. Now, those renters want more choice.

Millennials typically value convenience and experience over material goods – ‘stuff’ is out. Workplaces and homes need to keep up with these changes. With a greater emphasis on sharing and living collectively, along with the need for affordable housing, we welcome these five key trends as part of the solution.

 

 
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1. Micro living. Small becomes big

For more affordable urban living, micro living is increasingly popular. More developers are including smaller homes in their plans. While this won’t single-handedly solve London’s housing crisis, it does plug a gap and offers choice to people with limited budgets.

Smaller homes for purposedesigned Build to Rent got a welcome acknowledgement in the Housing White Paper, having previously been constrained by the space standards in the Housing Supplementary Planning Guidance. London lags behind New York, Tokyo and Munich in the supply of micro-units, although that may be set to change. Pocket Living provides compact homes at 38 sq m/409 sq ft (above national minimum space standards). Other developers are going smaller, in central boroughs and in Croydon.

Micro living (and Build to Rent more generally) ticks another box by being well suited for modular construction, which keeps build periods short and quality high – enabling swifter delivery and, over time, greater volumes. Pocket Living has produced more than 100 homes in Lambeth using off-site factory construction methods, and Legal & General is set to accelerate housing delivery as its housing factory in Yorkshire comes online.

2. Co-living. The sociable option

Providing exceptional communal living space and amenities, co-living rental spaces offered by providers such as The Collective and Roam entice young professionals with a sociable environment and lifestyle offering (such as access to games rooms, community events, cinema, sauna and spa), all with a hasslefree system of paying just one bill.

For those looking for the ‘experience’ but who don’t want to forego personal space, some Build to Rent schemes are setting new standards for premium rental products, with amenities ranging from resident lounges to privatedining facilities. Tenants want better quality and facilities, and they’re willing to pay for it. A quarter of the tenants we surveyed moved out of their last rental due to poor management – an obvious sign of a gap in the market.

3. Co-working. A rise in flexibility

Co-working has increased in popularity as companies seek greater flexibility from their operational environment. The obligations associated with a longer-term traditional lease can constrain formative companies seeking to establish their direction as well as grow or mature – clear requirements for both start-up and scale-up companies.

The locations in which co-working environments are provided are key to catering for this increased demand. While we’ve seen examples of well-located large landlords offering this type of space, questions remain around the appetites of more traditional landlords to provide it.

The growth of co-working space, across all qualities, tenures and price points, has been impressive for London. We expect to see corporates increasingly using their own space to attract start-up and scale-up organisations, particularly seeking to draw in companies within similar business sectors. Real estate that is not formally office space – hotels, libraries or universities – may also be able to provide opportunities for co-working environments.

4. Affordable workspace. New Mayoral plans

The affordability of workspace is a key issue for small and mediumsized businesses in London. Permitted Development Rights have done much to aid the delivery of new homes, but ‘office-to-resi’ conversions have constrained the availability of affordable workspace.

In light of this, the Mayor of London, Sadiq Khan, announced the creation of The Workspace Providers Board to advise on securing and creating affordable workspace. Khan has asked local authorities to sign up to a ‘workspace pledge’, which seeks to limit the conversion of office space to residential space as well as encourage funding and partnerships to create new space for start-ups, small businesses, the creative industries and artists.

Some local authorities have also introduced new policies that ensure a certain level of a new development is affordable workspace, or at capped rents. There's an opportunity for developers to allocate areas as co-working style office space, but these restrictions may limit the marketability of the space, and reduce financial viability.

5. Health and wellness. Workers value satisfaction

A company’s most valuable asset is its employees. According to a British Council for Offices (BCO) report last year, 15% of businesses’ operational costs are real-estate related, while employee costs account for 55%. Much has been written on the role of a building in relation to the wellness of employees, but how employees are impacted by workplace location should be considered, too.

The report showed a quarter of London workers believe that their office environment has a negative impact on their physical and mental health. Just under half of those surveyed are satisfied with their proximity to green spaces. The most important factor was the length of commute to work (ranked higher than office cleanliness).

Workspaces in locations outside central London could solve many of these issues – being closer to relatively affordable housing will reduce commute times. In addition, many outer London locations have good access to high-quality green space that clearly contrasts with the high-density, built-up environments of central London.

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