What was The Buzz in May?
Our monthly roundup of real estate industry news.
Here are a few of the stories that caught our attention in May. From a $450M bankruptcy exit plan for WeWork and the Crown Estate’s investment into life sciences to a market-first flexible warehouse leasing model, there’s some major shifts occurring in the UK CRE industry.
Prologis UK launches Flexxtra, a market-first flexible warehouse leasing model
Prologis UK, a leading owner, developer and investor of logistics property has launched a market-first flexible warehouse offering, Flexxtra, at Prologis Park Wellingborough West DC4.
Flexxtra, a warehouse-as-a-service offering, provides agile additional warehouse space to businesses on an as-needed, pallet-by-pallet basis. Both a convenient and flexible way to manage logistics needs, Flexxtra enables customers to react quickly to market conditions and manage peaks in demand, without the long-term commitment of traditional leasing. The all-in-one turnkey solution acts to simplify leasing by taking the operational responsibilities off the customer.
The Flexxtra service will be fulfilled at Prologis Park Wellingborough West DC4, a new building which has been fitted out to accommodate 70,000 pallets. As part of the service, Prologis UK has appointed Kinaxia Logistics, working alongside Visku and their Pallet Hotel platform to manage inbound receipts, insurance, and outbound fulfilment for customers so that they have a seamless experience.
James Hemstock, Capital Deployment & Leasing Director at Prologis UK said: “Flexibility is something that we know businesses of all shapes and sizes are looking for when they lease warehousing space, especially to help with demand spikes throughout the year. Flexxtra is something we’ve been working with Visku on for quite some time and we’re certain it’ll bring something new – and much-needed – to the logistics property market. We hope to be the incubator space for UK PLC’s next big success story.”
Related Argent appoints John Forrester as Strategic Advisor
As 1 May 2024, the former Argent LLP business was absorbed by Related Argent, bringing the assets of the two businesses together in the final phase of a year-long transition. This move to one company will see them become one of the UK’s largest privately-owned regeneration specialists, and the developer and asset manager of the King’s Cross estate, a role held by Argent LLP since 2008.
To mark the day, Related Argent announced the appointment of John Forrester as Strategic Advisor to the Board. John has more than 35 years’ experience in the property industry – most recently as Global CEO and President of Cushman & Wakefield – and brings with him an unparalleled wealth of skills, knowledge and understanding to the business.
John Forrester said: “Being appointed as Strategic Advisor for one of the most exciting and innovative property businesses in the UK is a fantastic opportunity. Having worked closely with many of the best people and projects throughout my career, I am delighted to now be supporting a business I have always admired and which has the ability to drive positive change for our cities and the people who live and work in them. The UK real estate market is crying out for scale solutions from proven developers and Related Argent is without doubt the leader in that field.”
Crown Estate to turn Oxford Debenhams store into science lab
The Crown Estate is converting a department store building in central Oxford into a laboratory space, as the British monarchy’s property group launches a £1.5bn science and technology investment strategy.
The £16bn property group, which manages the Crown’s historic land portfolio, will invest £125m to buy and redevelop the former Debenhams site which closed in 2021 after the retailer collapsed during the Covid-19 pandemic.
Alongside the acquisition, they have entered an exclusive partnership with
Oxford Science Enterprises and Pioneer Group to develop specialist real estate facilities for fast-growing science, technology and innovation companies.
Crown Estate chief executive Dan Labbad told the Financial Times the redevelopment of the building, and the estate’s new sciences strategy, was designed to address a shortage of good lab space and specialised real estate for start-ups, and help persuade such companies to stay in the UK. It is planning to invest £1.5bn in similar projects over the next 10-15 years.
Brookfield Properties selects The Instant Group for 100 Bishopsgate’s managed offices
Brookfield Properties, a leading global developer and operator has appointed The Instant Group, the world’s largest global marketplace for flexible workspace, to deliver 11,000 sq ft of managed offices at 100 Bishopsgate in the City of London.
The Instant Group will deliver a flexible and fully managed workspace offering for companies of all sizes at the BREEAM Excellent rated building located next to Liverpool Street station.
Instant’s managed office solution has been selected in direct response to demand trends in London’s office market, with SMEs and corporates both seeking space on flexible lease terms and low upfront costs. Recent research by Instant found that 53% of UK landlords see occupiers increasingly valuing all-inclusive, fixed costs for their office space and 47% valuing shorter leases.
Tim Rodber, CEO of The Instant Group, commented: “Our appointment by Brookfield Properties at 100 Bishopsgate will meet a growing market requirement amongst companies both growing their footprint and transitioning to higher quality offices in a strong amenity-rich location. Managed offices sit perfectly between a conventional office lease and serviced space, with a fixed all-inclusive cost. Occupiers benefit from high-quality fit-out, on-site services, and the ability to move in almost immediately in a manner that aligns with hybrid working strategies.”
Yardi becomes WeWork’s majority owner in $450M bankruptcy exit plan
Anant Yardi, who, alongside his wife, founded the widely-used commercial real estate software Yardi Systems, took a majority stake in WeWork through its bankruptcy process. In total, he invested more than half a billion dollars in debt and equity. Japanese investor SoftBank and hedge fund King Street now own minority stakes.
WeWork catapulted to a household name on the heels of founder Adam Neumann’s eccentric leadership and SoftBank’s billions of dollars in investment, and fell from grace in 2019 for largely the same reasons. The company’s ensuing turnaround was constrained by the pandemic and long lease obligations inked under Neumann, who failed to buy back the company out of bankruptcy.
Yardi said he’s planning to expand WeWork’s marketing to focus on small businesses. That represents a major shift for the company, which has spent the last several years courting enterprise businesses, including under Neumann. Companies, especially in tech, prioritize bigger businesses in hopes that those customers will provide more stability and value than small startups and freelancers — WeWork’s original customers.
WeWork will also look to use technology similar to the hotel industry, like real-time booking, and partner with other coworking companies, Yardi told the FT.
“WeWork is such a popular and well-known brand, it didn’t seem right to let it go down,” Yardi told the FT. “I realize financial decisions are not made on right and wrong. But there’s also a tremendous opportunity in terms of turning around WeWork.”
