Research from Savills showed that, in 2013, London fringe locations experienced greater growth than core – 5.7% a year compared with 3% – and vacancy of grade A offices in fringe locations is low and falling.
The sheer volume of residential development in locations once favoured by office occupiers is certainly a factor, as commercial occupiers are being pushed into off-core locations such as Paddington, King’s Cross, the south bank and Stratford.
The structure of tenant demand is another reason for the rise of the fringe. Since the financial crisis, the technology and creative sectors have boomed, and were the largest source of requirements over the past year.
We have seen Tech City spring up on the outskirts of the Square Mile to cater to technology occupiers and in general these industries are more flexible about location than the industries that made up the bulk of tenant demand 10 years ago. In many cases, they actually prefer the vibe of fringe locations to the straight-laced, predictable areas of the City and the West End.
The Crossrail effect is clear here too. New transport links are pulling fringe districts inwards. Areas such as Paddington and Stratford will be moments from the West End, City and Canary Wharf, making them more desirable and attractively priced.
This may well be the future: mass occupiers circling the centre and the core increasingly being converted to niche office developments or higher-value residential.
My next topic is somewhat more controversial but, as a relative newcomer, I feel obliged to point out something that has struck me since I joined the industry. Let me explain. Whether in the core or the fringes, the London property market is a diverse place. The capital’s homes and offices are occupied by individuals from all sorts of backgrounds: British and non-British, male and female, rich and poor, straight and gay, religious and non-religious.
What is surprising is that this diversity is not reflected by those selling or leasing London real estate. Savills estimated that 75% of London new-build residential property was acquired by foreign buyers in 2012/13. BNP Paribas Real Estate data showed that international buyers accounted for three-quarters of the £5.5bn of central London commercial transactions in the first half of 2013. Yet the agents marketing these properties are predominantly – and alarmingly – white, male and middle class.
In one of the world’s most diverse cities, the closed nature of the central London agency world is disappointingly regressive. On the recruitment websites for the main London agencies, statements about equality and diversity abound. Agents are renowned for their ability to talk a good game but, while agencies make all the right noises, the reality is different.
In the time I have been involved in the property world, the women on agency teams I have worked with can be counted on one hand and are almost always among the most junior staff.
When challenged, glib excuses are often cited as to why women and ethnic minorities do not apply for agent roles. These include the suggestion that the need to work late does not suit childcare arrangements or the unusual idea that ethnic minorities tend to be attracted to other types of work only serve to highlight how outdated the agency world is and how little it does to attract a diverse workforce.
Its inherent “clubbiness” and the proliferation of nicknames among a predominantly white public-school environment does little to encourage women and ethnic minorities to become involved. The agencies themselves are multinational groups only too willing to boast of their global reach, so this narrow mindedness seems to miss a business opportunity.
Employers should always seek to attract the best talent, choosing people who have the skills and attitude required to be able to do a good job and who will work well with their existing teams. When background becomes more important than ability, and when “team fit” is judged by the wrong criteria, however, there is something seriously wrong.
London agencies do not reflect London’s diversity and more effort needs to be made to turn around this unwelcome culture.
Jonathan Goldstein is head of European real estate and direct investment — senior managing director at Guggenheim Partners
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