I am a man who loves his coffee. My mid-morning coffee run is an integral and non-negotiable part of my working day, as important as brushing my teeth and a reward for making it a quarter way through the day. You can therefore imagine my disappointment when, after a hectic morning recently, I ordered a flat white only to be served a steaming coffee in a half empty cup. Alas any protestations that this was not, in fact, the flat white I requested fell upon deaf ears. You see I have just returned to London after a six year stint in Sydney, Australia, the world’s coffee capital (in the author’s opinion of course) where any self-respecting barista knows that a flat white is served luke-warm in a cup filled to the brim. The concept of a flat white is understood in both London and Sydney but delivery of the product differs, as I discovered on this particular morning to my cost.
Considering corporate real estate (CRE) in London and Sydney, it struck me that the hard lesson I had just learnt pertaining to coffee also rings true for occupier trends. Take tech occupiers for example. In both Sydney and London the high-level trends are broadly consistent: rapid business expansion; the requirement for an accessible office location with proximate retail, entertainment and amenity; and a workplace which delivers a non-corporate environment to entice talent. Beyond this, however, tech occupier trends in London and Sydney diverge.
London is a highly connected city offering a range of historical and modern office premises of all shapes and sizes. These are situated over a large geographical area providing extensive locational choice for tenants. Major tech occupiers in London have sizeable headcounts and do not necessarily need to cluster with similar businesses. As a result, major tech occupiers are dispersed throughout London and are often removed from the traditional City, West End and Canary Wharf markets, instead being situated in fringe areas such as Kings Cross (Google), Regents Park (Facebook), Shoreditch (Amazon), Hanover Square (Apple), Euston (Twitter) and Covent Garden (LinkedIn) as well as the emerging markets of Clerkenwell and Aldgate (see our Understanding Digital London report).
Sydney CBD fronts a stunning harbour which provides breath-taking views from tall buildings but which also restricts transport accessibility in fringe locations. The harbour creates a finite supply of land, restricting the major office market to a tightly defined area of approximately 2km composed of modern, high-rise buildings. In this context major tech occupiers in Sydney, who employ comparatively fewer workers than London, actively target prime office floor space in the centre of the CBD. A cluster of tech occupiers is developing in Sydney’s City Core submarket and the financial heartland of Martin Place (the equivalent of the City of London/ Canary Wharf combined) where Apple, Atlassian and LinkedIn have committed, as well as along George Street (the equivalent of the West End) which has or will soon accommodate the likes of Amazon, Facebook and Intuit. Contrary to London, major tech occupiers in Sydney are more concentrated, centrally located and more likely to occupy floors in modern, high-rise offices where they rub shoulders with a more eclectic mix of institutional, finance, insurance and real estate occupiers than their equivalents in London.
To understand global CRE trends but assume that these will manifest locally in a consistent manner would be a mistake. All cities and their real estate offer have evolved in a unique way and the expectations of the talent, the most precious resource of occupiers, also varies between them. It is only through framing global CRE trends in the context of local nuances that fully informed CRE decisions can be made. There can be no one-size-fits all model for CRE. Our latest Global Corporate Real Estate Survey indicated that 61% of respondents anticipated greater centralisation and control of CRE functions over the next three years. In our increasing globalised world, ensuring that CRE teams seek out, maintain and enhance detailed local knowledge becomes ever more imperative.