London Loves Business
Why we’re in danger of losing our independent restaurants
New restaurants are struggling to launch and expand in London as demand for space has outstripped availability, says DeVono Property director Adam Landau
London is a victim of its own success. The losers, in this case, are a raft of existing, recently launched and aspiring international restaurant brands desperate for their strategic spot within one of the Capital’s busy footfall zones.
Without spending money on marketing, simply having a decent position in central London guarantees customers will come in to sample your food. This has allowed many restaurants to survive and thrive for decades, until now.
What’s rung the alarm bells? Our retail and leisure division has had an influx of more than 300 new international restaurant launch enquiries in 2014 alone. As we solely act for occupiers we’re at the receiving end of daily enquiries from these restaurants directly. Enquiries have tripled since March 2013.
We’ve also had many enquiries from existing brands looking to open their second crucial site. The problem is that there are near to no spaces available.
How did this happen?
We’re spoilt for choice compared to a decade ago before the mass franchise of popular brands such as Pret A Manger and the increase in coffee-culture began to monopolise every available West End corner.
We’re now in a position where we’re having to advise new restaurant brands that they may have to wait up to a year to find suitable leisure premises.
The lack of availability is partly down to the expansion, in the past five years, of a number of hugely successful restaurant high street brands such as Cote, Bills and Byron or Le Pain Quotidien, for example.
The industry is a victim of its own success which feels very much like a chicken and egg scenario for the retail and leisure sectors of the commercial property industry. There are also very limited prime retail A1 and restaurant A3 in London’s development pipeline, which is chocking supply.
The upside is that London has never had such a buoyant restaurant and drinking scene, with every conceivable cuisine now on offer, from Korean, Ecuadorian to Ethiopian - a complete change compared to a decade ago.
Why the money always talks
Many landlords are attracted by the security provided by the larger restaurant brands. They may be in better positions to put down larger deposits or pay premiums to secure sites. Landlords see them and less financially vulnerable compared to the independents. For example, Five Guys, the burger and fries brand, recently paid huge sums to secure prime central London sites in the past 18 months. Niche and independent operators cannot compete on this level making the problem worse.
Any ‘good guys’ landlords out there?
The outlook isn’t entirely bleak. There are a few institutional landlords who look out for diversity, such as Shaftesbury, who control many parts of the Carnaby Estate, Soho and Covent Garden.
So who’s the aspiring Nando’s of tomorrow?
Location: Fitzrovia (since 1 December 2014)
Owners: Barry Hilton
About: Levantine cuisine: Freshly prepared mezzo style food from Cyprus, Turkey, Lebanon, with a contemporary twist.
Expansion dream: Sites in Soho and Southwark / Borough Market area
Challenge: “Many of the restaurant groups (even the smaller ones with 5/6 units) have private equity behind them, where as independents like us do not. Agents in the wider market place tend to only look out for the interests of their clients, the landlords and are less inclined to show independents like us everything available, be creative and open to the next big thing. So, either you become a ‘destination’ dining experience, or you get yourself closer to the areas of footfall. We’re aiming for both!”
Restaurant: Café Caldesi
Location: Marylebone (12 years)
Owners: Chef, Giancarlo Caldesi
About: Traditional Italian focusing on different regions of Italy giving more variety. Giancarlo his wife travel around different regions of Italy every year ingraining themselves in the local cuisine bringing back produce, ideas and new menu items beyond the tried and tested. They publish books on their experiences with recent publications on the Amalfi Coast and Venice.
Expansion dream: Another one to two sites around the West End
Challenge: “Lack of availability, and if you do find something it’s outpriced. We’re up against the big chains with larger buying power. We take issue with them as they occupy sites which may not even be profitable simply because ‘they need to be there’ – this hampers our ability to expand, but we’re still hopeful!”
Restaurant: Boopshi’s (just over a year)
Location: 31 Windmill Street, W1
Owners: Brothers, Ben and Ed Robson
About: “Schnitzel and Spitz” – Austrian / middle European style cuisine.
Expansion dream: To open their second site in the West End
Challenge: “We’ve been searching for nearly two years for an additional site mostly due to lack of availability, so in the interim we’re doing street food and pub popups until we do.”
Adam Landau is director of DeVono Property, which exclusively represents tenants.
London Loves Business
Why tech companies are choosing Hackney over overpriced Clerkenwell and Farringdon
DeVono Property’s Adam Landau on London’s next tech hotspots
Tech City and its surrounding areas is currently a victim of its own success. Many start-ups originally located on the fringe of the West End & City who were seeking more affordable rents and larger offices to accommodate growth have prospered.
Our research, which is based on having acquired the highest numbers of offices for companies moving into and around London over the past eight years, has indicated that interest for offices in Hackney has doubled over the past nine months, with the principle reason being that office rental levels have doubled in prime ‘Tech City locations’, over the last two years.
Surrounding Tech City areas including Clerkenwell, Farringdon & Old Street are no longer affordable for the very companies that landlords were looking to originally attract. Rents have increased at such an alarming rate that in some cases they are surpassing levels achieved in prime central London office locations such as Fitzrovia and Liverpool Street.
Start-ups and SMEs are now actively looking for the next hot spot and with this office migration, comes new office destinations that fit their financial and creative needs. Landlords’ aims are to achieve the highest possible rents and this has a direct effect on the next wave of entrepreneurs who we all hope become the next billion-pound business owners. Hackney due to its connectivity, pricing and availability offers them a solution.
Hackney has always been a fringe location that never really supported the central London office market until now. With the right types of buildings and the opportunity to refurbish these to fill the needs of fledgling companies, this will support the already booming local residential market where many London workers live.
While Hackney is certainly proving its competitive value, the next areas to watch are within the eastern fringes of the E1 heading into E2 postcodes as well as Silvertown, E16 which are all set for major infrastructure, retail, residential and commercial development. The fast-approaching construction of Crossrail will only add to their wider appeal, but the real attraction at the moment is the low office rents that these areas are commanding. South of the river, Southwark continues to host more SMEs than ever before. With rents significantly lower than Clerkenwell in most instances we’re expecting the continued growth of tech, communication and general startups and SMEs relocating to the SE1, London Bridge, Waterloo, Bermondsey areas.
London’s burgeoning ‘Silicon Valley’ will find new areas as these start-ups will always need affordable and reasonable rental costs to grow and thrive. This is only good news as we expand our pockets of industry, rather than confining them to expensive clusters.
Adam Landau is director of DeVono Property
London Loves Business
Is the end of the office nigh?
By Gabriella Griffith
Has technology killed off the need for an office once and for all?
The Olympics left us with a number of important things. A renewed admiration for Danny Boyle, a massive stadium for football teams to squabble over and an obsession with flexible working.
The Olympics wasn’t the reason flexible working came to the fore, an increase in mobile technology has long been arming workforces with the ability to work from anywhere.
But the 2012 Games were something of a catalyst for the conversations around flexible workforces as a huge percentage of UK business, especially those in the capital, implemented flexible working during the Games with successful outcomes, proving the model to work.
This new way of working was lauded from Canary Wharf to Whitehall as a revolutionary productivity driver and a way for companies to access new pools of talent. It has been touted as one of the greatest legacies of the Games and has since been adopted by companies from start-ups in East London to blue chip firms in The City.
“Last year we pushed the limits of flexible working and encouraged our entire Slough headquarters to work from home for the day,” says Ben Dowd, Business Director at O2.
“Not only was our pilot a success, but we also discovered that our employees were just as productive as on a normal day in the office. And it’s not just in our own business that we’ve noticed this trend - we recently conducted a study of 2,000 UK employees which revealed that three quarters of British workers now say they are most productive when they can change when and where they work.”
The benefits are clearly being felt up and down the country but what does it mean for the office? Once the very foundation of a company, the buzzing hub and heart of a business, has the death knell for the office been sounded?
According to a recent study by Cisco, 35% of businesses feel that location of work will become irrelevant in two to three years, with 15% believing it already is. Cisco isn’t the only company finding these results.
“We recently carried out an independent study which found that UK SME owners and directors believe over a third (35 per cent) of their workforce will be working from home in seven years (2020),” says Richard Coleman, Director of SME, Zurich Insurance.
“In fact, 37 per cent of SME owners believe they will no longer need a central office/business location in the near future (2020) as most of their employees will be working from home.”
The move towards a flexible workforce that operated away from the office has signified a change is priorities for businesses. They no longer judge an employee’s productivity by the amount of hours they spend sitting at their desk, but by the amount of work they produce.
“Our employees are measured on their output, not time inputted,” says Dowd. “This is allowing us to move away from the culture of presenteeism that does nothing for well-being, and concentrate on the end product - delivering great quality work.”
The change in working environment will no doubt have rippling effects on the job market. Those who for some reason or another can’t commit to working 9-5 from an office will become worthy candidates for roles which they might previously have been overlooked for. Even the kind of skills required by employers could shift.
“Employers looking to hire for roles where flexible working is an element will probably look for competencies such as trustworthiness, initiative and the ability to self-motivate without a team around them,” says Barney Ely, director, Hays the leading recruiting expert.
So is it time to let go of the office? The end is nigh? We are only at the beginning of this revolution. Who knows where it will take us? Well…not everyone is as taken by this new way of working. There is one very loud dissenting voice in the crowd. That of Marissa Mayer, Yahoo CEO.
In February, Yahoo’s chief trouble-shooter, Mayer, banned remote working and demanded that all those working flexibly must present themselves at the office from 1 June. Compliance or resignation are the options on the kitchen table. The announcement sent shockwaves through the business world. “We’re going back to the stone ages,” came the cries.
While her demands may seem extreme, Marissa’s anti-remote working stance and subsequent defence of the humbled office is full of worthy points about communication and collaboration.
“We have been used to the working environment for so long yet it seems very easy to think we can just dismantle what we had, but that underestimates the benefits of what going to work gives us,” says Ely.
“The discipline, structure and sharing of information offered by office environments can’t be underestimated. There’s nothing like having a face-to-face with someone - you get so much more than what you get in an email or even over the phone. Offices are also a great way for a company to compound its cultural identity, which can drive productivity.”
It’s not just existing employees that can benefit from an office environment, perspective talent can also be wooed by a buzzing office culture.
“A major benefit of having an office is that they act as recruitment magnets. You’re competing with other companies for highly skilled people with similar salary packages - they’re more likely to choose the company with the inspiring environment,” says Adam Landau, director, DeVono Property.
“Examples of businesses we’ve personally moved include Mimecast and Redbull, both with truly inspiring staff environments. Other well known companies famous for their inspiring workspaces include Telefonika (collaborative space and bright colours), Google, Microsoft and Zeebox.”
The benefits of having an office are still extremely relevant. While many businesses are reaping the rewards of offering flexible working to their employees, they are still seeing results from collaborative working in the office environment. Perhaps rather than a complete revolution in the way we work, we are witnessing more of an evolution.
The office is dead, long live the office.
London Loves Business
Business sectors 'relocating around London'
The hunt for more convenient and affordable commercial property space has seen a number of business sectors move from their traditional heartlands in London, new research has found.
The City of London remains the hub of the banking and insurance industry, but these companies have now been joined by many IT businesses, according to the map drawn up by DeVono Property. While IT businesses have been settling in the City, the map shows that many other sectors have been migrating to new areas of the capital in the hunt for cheaper and more convenient office spaces.
Hundreds of new office buildings have been built in the Kings Cross and Paddington areas over the last few years, with the map revealing a new “business belt” in central London.
Businesses have been attracted by the areas strong transport links, which now includes rail links to the continent from St Pancras International, added to the fact that space is not as squeezed as in the City. British Land’s Regent’s Place complex is among the office buildings to attract new businesses into the area, with Gazprom and Ricoh moving into the building.
A number of financial sectors have also moved to different locations in the capital. More hedge funds are now based in the Mayfair area, while property companies have also opted to operate out of one of London’s more glamorous locations.
Financial services firms are increasingly looking to relocate to the London Bridge area, according to Adam Landau, the co-director of DeVono Property. Landau said: “It is an important extension of the City south of the river with leading legal practitioners, consultants and accountancy firms such as PwC and Ernst & Young having their headquarters there. It is seeing a massive upgrade with developments such as The Shard, which will be the tallest building in Western Europe.”
New media companies have begun to move from their traditional base in Shoreditch and are now creating a new heartland in the Victoria area, while the map also suggests a number of fashion companies have made a home in Clerkenwell. The number of government workers based in Victoria has dwindled, while a significant group of lawyers and accounts remain based in Holborn, but they are now being joined by recruitment firms.