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BCLP's Big Real Estate Debate


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Summary: In real estate today, it seems like the only certainty is uncertainty.

Rather than a clear narrative as we head into 2019, analysis points at several intertwined trends distorting the picture for investors and businesses who are mulling over their options during this turbulent political period.

With that in mind, Bryan Cave Leighton Paisner gathered the great and good of the UK real estate sector together on a chilly night at Adelaide House in London for The Big Real Estate Debate. Following a scene-setter from Robert MacGregor, BCLP’s Senior Partner for Europe, Middle East and Asia, six panellists attempted to make sense of the current landscape, provide insight into where the industry is heading and debate whether, in fact, the fundamentals of real estate have changed forever.

Taking on the burning issues were:

  • Robert Evans, Partner at Argent LLP
  • Manish Chande, Senior Partner at Clearbell Capital
  • Stafford Lancaster, Investment Director at Delancey
  • Rebecca Stevenson, Global Head of Property at Deliveroo
  • Oliver Knight, Flexible Office Director at Landsec
  • Mary Finnigan, Head of Transactions, Real Estate at WeWork

Although our inaugural event could only pack 200 people in, we wanted to ensure the insights travelled far and wide. These were the main talking points and takeaways:

Today’s customers want more than just real estate

There has been one real estate story that has united the sector in wonder this year: the rise of WeWork. The co-working space company was founded in 2010 and recently estimated to be worth $20 billion. Mary Finnigan, Head of Transactions at WeWork, said customers want more than just desks and chairs, they want to be part of a community. “It’s not just about the space,” Mary said. “Half of our customers do business with each other; they want the ability to grow together and leverage off each other.”

The panellists agreed that company culture is becoming a massive consideration when firms look to new real estate, and they want to know the office is a reflection of their own positive values. Landlords with established businesses as customers, in traditionally large corporate buildings, will have to become more flexible and bow to the demands of a new breed of customer in the next decade or they risk becoming irrelevant.

Globalisation vs USP

Clearbell’s Manish Chande feels investors are changing the way they think about real estate and are more considerate of the kinds of brands they want to be associated with. “There is a mood for doing more for the community, impact investing, to help other people around them,” he said.

Manish said he felt globalisation had been triggered by over-innovation, which is now getting pushback. “The community and customer base does not want another big name, they want something local,” Manish said.

This would run counter to the success of WeWork, Mary refuted, pointing to the swathes of the firm’s enterprise base signing up for leases based on the ability to join a global network. “They come to us because we are everywhere. At least half of our enterprise membership is taking desks in London, New York, Shanghai: they want global access,” she said.

Rebecca Stevenson, global head of property at Deliveroo, offered that London is more willing to embrace independent shopkeepers and restaurateurs, whereas outside the capital people still want what they are comfortable with: high street brands. She feels there is also a disconnect between the property market and their customers – particularly those new to the food and beverage sector. Deliveroo and WeWork see themselves as offering a service – an easier route into real estate, and, as a result, have different goals of how they want to expand compared to the incumbents.

Where are we in the real estate change cycle?

The discussion on risk versus reward turned to the different strategies employed today, and whether investors are looking for long-term or short-term gains.

For Stafford Lancaster, Investment Director at Delancey, it is relatively straightforward, the days of quick in-out are over, and, particularly in the residential space, investors are taking a longer term view. This approach looks at property as a business, not just the bricks and mortar, recognising that goodwill is a key part of this. “It comes down to mind-set,” noted Oliver Knight, Flexible Office Director at Landsec. “Are you in the ‘develop let up trade’, or the sustainable mind-set of creating value and generating better earnings?”

But even traditional notions of long-term and short-term are being skewed by the success of WeWork and its ilk, the panel noted. Flexible workspace and serviced real estate can’t be accurately valued using traditional models based on concepts such as the internal rate of return (IRR), as their value proposition is about more than just the value of the bricks and mortar and  straight line income.  From the valuation side, how much of a premium you put on those services is key, said Oliver; how much value you can capture is the question underpinning it all.

This is endemic of the revolution we are experiencing, said Manish. “It’s less about cyclical change than structural change ,” he said. “It has shifted, and is being driven by demographic changes, changes from ownership to rental, we have an ageing population, smaller households, all of this is making that change. Remember: you can eat profit and cash, you cannot eat IRRs.”

Risk and uncertainty is the new normal

Brexit Shmrexit, who remembers 2008? Or the Millennium Bug? Or the Berlin Wall coming down? The panel argued that today’s choppy political climate in fact bears less of a threat to firms and investors than the financial crisis of 2008 (and other historical meltdowns), but a new kind of risk would bubble up if the real estate sector gets complacent in its ability to navigate these waters.

“Political risk is around social impact and change, and for real estate I think that is a major issue as we navigate the next 10 years,” said Stafford.


The pace of change in real estate is going to increase markedly over the next five to 10 years, our panellists believe, faster than we have ever experienced before due to advances in technology and a shift in attitudes from the end consumers. This brings threats but also opportunities for those with the right mind-set.

Clients want sustainability, but also for their workspaces to better reflect their values and enhance their branding. It is no longer enough for landlords to ask “Who are our customers?”, but “What experiences can we provide?”.

Landlords are being forced to confront culture too, both their own and the brands and business they lease to, as the seemingly never ending sequence of geopolitical shocks and rise of populism riles the markets and threatens globalisation.

It is a balance, however. Flexible workspaces are in vogue, but their attraction has played into the hands of innovative SMEs who are demanding solutions some smaller landlords may struggle to offer.

Chris de Pury, Global Head of Real Estate at Bryan Cave Leighton Paisner, rounded off the evening by asking the audience if, after all they had heard, bricks and mortar are needed at all in commercial property, given the advancement of the digital world and its ability to bring shops and workplaces to the home.

Evolution or revolution, there was only ever one answer from the crowd; a resounding ‘Yes!’.


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