As part of Reading UK’s Business Recovery blog series, we speak with Aaron Pope, Asset Manager at M&G Real Estate. M&G is a global real estate investment manager, currently managing £33.7 billion. Having invested in Reading for well over 50 years, M&G has been responsible for some well-known local building developments including Green Park, Apex Plaza, Forbury Place and the R Plus building. On top of all that, M&G is currently building the large Private Rented Sector (PRS) development, located opposite Reading Railway Station.
As a global real estate investment manager, what can you tell us about the outlook for 2021?
At the start of the year, there was a big question around whether the office was ‘dead’ and where the office environment would move to. And, while at M&G never believed this was the case, I think the third lockdown has really helped people understand the importance of the office and the role it has in the workplace. Personally, I’m currently home-schooling my three children, so like many other working parents, I can see just how vital the office can be! Not just as a break from the home environment, but also its importance as a shared space for colleague collaboration. I’m therefore really hopeful that the Covid-19 vaccine rollout will be successful, and that we’ll be able to return to some sort of ‘normality’ by the end of the year. Within the office market, especially, we’ve also noticed that companies are using this time to rethink how they occupy offices and assessing how they may want to use their office space in the future. Although we were already seeing more of a home-working trend pre-Covid, I think companies will naturally move to a much more flexible approach in the future. So, although I wouldn’t say Covid has created this trend, I do think it has definitely accelerated the need for more flexibility for staff. Also, from a facilities point of view, I think companies will review how they occupy offices moving forward, and potentially there’ll be greater interest and investments in facilities that may address similar diseases in the future, such as different air conditioning units and touchless systems.
Although we were already seeing more of a home-working trend pre-Covid, I think companies will naturally move to a much more flexible approach in the future.
What do you think will be the biggest impact of Covid-19 on the property industry, and how it recovers?
I think there are a few key themes emerging from the pandemic. Firstly, wellbeing - people have a much greater understanding about what they want to see out of their office building. With more of a focus on home-based working, the office is likely to become a ‘destination’ for companies in the future. Staff are likely to actually want to go into the office(!), so this may, in turn, cause companies to think about how they use their space and could well generate an increased demand for our ‘grade A’, newer offices as people start to ask for more from their office space. With that, it’s likely that we’ll see greater focus on environmental, social and governmental (ESG) criteria, such as increased Zero-carbon targets, and this will be very important to us at M&G.
Secondly, I think Covid will bring a greater sense (and need) of flexibility in the property industry as companies begin to respond to Covid, such as increased space, breaks in leases etc. It’s really important we give our companies that flexibility while they rethink what they might need in terms of space, as well as allowing them time in order to make that change.
Lastly, I think location will be a key theme which emerges as a result of Covid – and I actually think Reading is very well-placed for this. Reading has excellent connections to all parts of the country and offers great services and amenities without the commute into London - which may well be attractive to those who are concerned about using public transport, such as the tube. We have seen a good run of companies move their HQ offices to Reading over the last few years, with the most recent announcement of Three, so I’m hopeful we’ll see this trend continue as we move into a post-Covid world.
What hints / tips / information can you share for other businesses thinking about property and relocation?
Staff will want to have a reason to come to the office moving forward – having a desk just won’t be good enough. So, I would encourage businesses to be thinking about how they might use their space moving forward and use this time to reassess what they’ll need. I think we’ll see a much greater demand on wellbeing and better office amenities, such as outside space, storage, changing rooms and cycle facilities – Forbury Place is a great example of this, with facilities unparalleled in the Thames Valley. I also think buildings and tenants will see a greater demand and pressure to make sure that these sorts of facilities will be incorporated into new offices in the future. I’m hopeful that Reading will do well out of that, as it can provide all these services and still thrive, without the commute into the Capital. I think businesses will need some flexibility while they decide what staff space they may need, as well as how previous trends may be affected with Covid (such as how social distancing could impact denser occupation of offices), and ultimately what will need readjusting as businesses decide how to use the space in the future.
I think buildings and tenants will see a greater demand and pressure to make sure that these sorts of facilities will be incorporated into new offices in the future. I’m hopeful that Reading will do well out of that, as it can provide all these services and still thrive, without the commute into the Capital.
What has kept you going during 2020?
At M&G, 2020 was actually very busy for us. We were lucky enough to spend a lot of time with our tenants, looking at ways we could help them adjust to the pandemic and the impact Covid brought with it. What’s also important, is that we just kept going. Luckily for us, the construction industry has been able to continue throughout, which meant we’ve been able to continue with development projects and building new office spaces across the UK, from Edinburgh to Manchester, Birmingham and London. It has undoubtedly been a difficult year for everyone in its own way, so I feel very fortunate that at M&G we’ve been able to develop and build upon our portfolio as much as we can – that’s certainly kept me busy!
What are you most excited about for 2021?
I may be a little biased working in the office market, but I’m excited about a renewed appreciation for the office environment. As a dad, I’m currently home-schooling three children and it really does hit home just how important the office space is. It brings a level of collaboration and interaction for companies and colleagues in a way you simply can’t get from Teams and Zoom meetings. So, I’m really looking forward to the return of the office environment and am hopeful that the bottleneck of requirements of companies wanting to relocate will come through and, when it does, we’ll be there to help and provide that space for them in Reading.
Aaron Pope sits on the board of Reading UK and has worked with us in support of Reading’s Economic Recovery Strategy. More information on M&G and how it's continuing to help businesses develop and relocate their office locations, take a look at their website.