Sharing is Caring

28th August 2019

London Living - Sharing is Caring

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“If you can’t share nicely, I will take it away from both of you” – if you have young kids, or even grown up ones, this is probably a saying you have used repeatedly (and even more so right now as we are knee deep in the school holidays).

As the sharing economy continues to grow, this life lesson certainly feels like one that Millennials have picked up and run with. But what are the opportunities in real estate for this relatively new way of interacting with products and services? Jessica Mueller, Analyst at DTZ Investors considers some options.

In last week’s LondonLiving I looked at why the value of ownership is decreasing and how the renting trend is growing in the younger generations. Over the last few years, the ‘shared economy’ has been mentioned countless times in meetings and presentations and there’s a good reason for it – technological advancement has given us the ability to become more efficient with our products and services. The sharing economy is an economical model which is defined as ‘a peer-to-peer based activity of acquiring, providing or sharing access to goods and services’, and is often facilitated by a community based online platform. This has the bases to cover the needs of younger generations.

This type of transaction has become fashionable over the years for Generation Rent, with the introduction of platforms to: buy time in someone’s house (Airbnb); buy peoples clothes (Depop); borrow someone’s car (Drivy) and even borrow someone’s pet (Borrow My Doggy). These platforms create a sense of community with the members whilst also creating a form of revenue for them.

Airbnb has become a great way of being efficient with residential real estate, especially for people owning holiday homes or for people who have a second home they move to for 6 months of the year. Both parties benefit from the platform, by either finding a comfortable, well located, modern flat/house or by earning some cash while your home is empty.

Drivy is one of the newest platforms, advertising all over London. The concept is the same as Airbnb but for your car instead and if it’s not something you use regularly, why not share it with someone else? Zipcar was developed before this, which is based on a business to consumer model whereas Drivy has established itself as a platform for peer to peer activity, which tends to build more flexibility, convenience and has a community touch.

Sharing or renting out our possessions is not something new, technology has just changed the way we do it. Jumble sales, B&B’s and renting cars have existed for decades, but these modern platforms have increased the ability to advertise and widen each person’s market. The population is also becoming more environmentally conscious and the sharing economy is a great way to be more efficient with the goods we own. It’s creating great opportunities in cities like London where space is scarce. Most of the platforms which are successful at the moment are typically peer to peer, but focusing on real estate, there must be more opportunities from business to customer.

The office sector has introduced co-working, which is a much more efficient use of space, the providers have simplified leases so that you can sign up quickly. This could be worked through to retail units and warehouses, for retailers or small companies starting out ‘sharing’ vacant retail or warehouse space for the short term could be a be great way for them to test their model. It would create income for the vacant property which could turn into a full lease if the location and building worked for the temporary tenant. Maybe it is better to let companies have a trial run when they invest into a new area?

There are many ways we might see this play out across all sectors, but one thing is for sure, sharing is both caring and cost saving, two things that Millennials demand from their lives, and landlords should be looking for new opportunities to incorporate this approach into their real estate portfolios.

Jessica Mueller

Analyst


LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future.

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New Chapter

21st August 2019

London Living - New Chapter

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Babyboomer, Silent Generation, Millennial. The generation you were born to may impact your thoughts on the best cover of Leonard Cohen’s Hallelujah (covered over 400 times by the likes of Bob Dylan, Rufus Wainright, Alexandra Burke and Peter Hollens feat. Jackie Evancho) but it will of course go much further into who we are and what we hold dear. In the latest LondonLiving, DTZ Investors’ analyst Jessica Mueller looks at how when you started your life, plays into the every day of how you live your life.

I’m sure you have heard many ways in which Millennials are bringing social change to our way of life. Truthfully, each generation has its own intricacies which develop through the environment in which they grew up, each generation is impacted by technological advancements and the economic environment in their youth.

If we take ‘Babyboomers’ for example: their key characteristics are goal-centric, disciplined, competitive and self-assured. The silent generation are known for their hard work ethic, prudent saving and faithful commitment. Millennials on the other hand, are known for being strong on a work/life balance, being able to question authority and are achievement orientated.

So what made Millennials less hard working and competitive? When Millennials were growing up, there was a social shift towards a healthier lifestyle. More scientific proof was published on smoking, eating 5 a day, exercising regularly etc, this fed into their education. Millennials had lessons all the way through their education on health and well-being as well as the environment, something which both the Silent Generation and Babyboomers never had. This has evoked values around health and climate change for many Millennials, which has affected how they purchase goods and services. Some modern companies can charge £7 for salad in the City now because workers are more interested in their health than saving £5 and having a cheap supermarket sandwich.

Millennials have had the greatest change in characteristics from their parents (Babyboomers), which is not only down to their education but also the economic environment. They were mostly late teenagers or young professionals when the global financial crisis hit, which led to low economic growth for their early years of working. This, along with the increase in university fees and incrementally high house prices, has made them begrudge saving. Median wages grew by an average of 0.3% per year between 2007-2017, compared to three times that between the mid 1980’s and mid 1990’s meaning Millennials are worse off than their parents. It would take a Millennial on average 8 years to save for a house deposit in the UK (10 years in London). However, Millennials are spending more on leisure and activities than previous generations. It shows they are less interested in material goods and more interested in creating memories through experiences.

There has been a clear generational shift to personal care with greater awareness of physical and mental health as well as the environment. This has driven a change in the way people shop, the younger generations are more interested in how their products and goods are supplied, ensuring it is environmentally friendly and sustainable. There is likely to be a slight change in the way each generation lives, shops and plays… at the end of the day most teenagers want to be different to their parents, creating new opportunities for businesses. There is reasoning behind these changes and therefore it is important to understand why and where the new demand comes from to ensure your business or real estate is future proofed.

Jessica Mueller

Analyst


LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future. 

Subscribe to LondonLiving here

Transporting London

14th August 2019

London Living - Transporting London

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How was your journey into work today? Considering London workers spend an average of just over 2 hours each day moving to and from the office I hope it was ok, but I suspect it was pretty cramped in parts, slow and during these summer months also pretty hot. When it was created in 1863, the first tube line ‘The Met’ transported 1 million people in its first year, last year this number was closer to 70 million – hardly surprising then that London Transport is bursting at the seams.

In this week’s LondonLiving, DTZ Investors’ analyst Jessica Mueller looks at the challenges commuters face and the options available to them for change.

Have you ever worked out how many hours you take up commuting each year? London workers typically take 74 minutes (148 minutes a day) to commute which equates to 25 days a year, this is almost double the worldwide average. Imagine what you could achieve with an extra 25 days…. 5 weeks more holiday a year? A commute into London can be long, unreliable and hot, which leeds to stressed and demotivated workers or stressed and tired partners/parents, not exactly the right base for a happy and healthy lifestyle.

Commutes in London have been getting longer as Londoners are being priced out of their own city with the rising housing prices over the last 20 years. This in turn has seen the demand for rail increase by 12% over the last 6 years and the dated infrastructure is now starting to struggle to keep up with the constant use as well as the more extreme weather. The current infrastructure is continually being replaced to keep the trains running but it seems an almost impossible to task to complete. The last significant upgrade to the rail infrastructure was in the 1960’s when diesel trains were introduced, since then there has been no large advancement, apart from slowing down trains to check for cracks since the Hatfield derailment.

If London commuters could get back half the time they spend commuting back, they could gain on average 6 hours a week, almost a full working day. Changing the infrastructure would help this but it would be a costly project which would take years to complete and implement. Therefore, we need to come up with new innovative ways to make commuting in London more tolerable.

Some Londoners have resorted to old fashioned cycling, there has been a rise in the number of cyclists commuting into the city. London is not well equipped for cyclists and therefore not exactly the safest option (although statistically it is a riskier to be a pedestrian apparently). Cycling to and from work means you combine both your commute and your workout and minimise you transport and gym costs. This works well for over 730,000 people, greatly relieving some pressure on those individuals and the transport system.

Technology has advanced at an incredible rate throughout this same period which has enabled us to work remotely and flexibly but it is yet to become acceptable in every industry. If everyone was to work at home once a week or work flexible hours, we could relieve a lot more pressure on the transport system – in fact we are already starting to see this in action – the signallers at Bank Station now change the direction and flow of the escalators on a Friday compared to the rest of the week as they know there are fewer commuters coming through the station.

So changes are afoot, however, there is a long way to go and its up to employers to focus on making the employees lives more balanced and take away unnecessary stress by trying to come away from the standard 9-5 day which no longer is necessary.

Jessica Mueller

Analyst


LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future.

Subscribe to LondonLiving here

London's Housing Crisis

7th August 2019

London Living - London's Housing Crisis

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To paraphrase a quote from Leonardo Di Vinci ‘small dwellings focus the mind and large ones weaken it’. As the shortage of affordable quality housing in London continues to grow, perhaps one of the solutions in this week’s LondonLiving – to turn derelict buildings into micro homes, could be beneficial on many levels. Read on for more insight from Jessica Mueller, analyst at DTZ Investors.

Between 1997 and 2016, London’s population increased by c.25%. A net 1.7 million people moved to London during which time just 370,000 homes were added to the stock. The current shortfall in housing stock is only expected to worsen in the future. There have been promises on delivering over 50,000 houses each year (which would match the growth in demand). However, the planning system in London can be slow and bureaucratic, and developers have sought to carefully manage pipelines to keep prices high, which have collectively hindered delivery. Currently an average of 20,300 homes are being built each year. The rate of construction has diminished quite significantly from the 1930s, when, on average 61,460 homes were built yearly, which might be understandable given there was more space then, but even by the 1970’s, 29,420 homes were being added annually – so what can we learn from the past?

Many trends have progressed over the last decade which have caused hiccups for property developers, these vary from urbanisation, planning policy, affordability and social trends. Urbanisation has seen demand for London residential sky-rocket as people want to be more connected. Younger generations are deciding to marry and have children later, which has increased the need for single person households. However, the majority of stock in London has been built according to traditional family models, which is creating a substantial mismatch in the market. One reason behind this shift is that many young professionals want to buy a house before they have a family, which is becoming more difficult and taking longer.

As I have mentioned in a previous article, London has a large problem with affordability. The Local Authorities have tried to help by enforcing large housing developments to have an element of affordable houses in their constructions, however it has not stopped house prices increasing. There has been a flow of capital coming from overseas which has supported the top end of the market in particular. This may have fuelled economic activity, but it has only added to the problem for those who want to work and own a home in London. More people are choosing to rent, including the over 60s, who want to enjoy the London scene without the hassle of buying. On the rental side too then, it seems young professionals in London are being priced out, due to competition.

London is scattered with derelict and empty buildings, there are roughly 22,500 residential homes and 24,000 commercial buildings which have sat empty for over 6 months. Maybe this is where we should look to start to tackle the housing crisis, just the empty commercial buildings alone could create, 40,000 one bed flats (working on the basis that the average one bed flat is 46 sq m). If we create micro-homes (approx. 24 sq m) we could develop almost 75,000 flats, surely this would be the most economical and practical way of helping to resolve London’s housing issues?

Jessica Mueller

Analyst


LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future.

Subscribe to LondonLiving here