Memo from MIPIM

25-Mar-2010

Currie & Brown's Iain Stevenson reflects on the recent annual commercial property conference, MIPIM, in Cannes.

Amid all the familiar industry gossip at Mipim, some general strands of opinion can be pulled together to form a fair assessment of current trends in the commercial property sector.

Within major cities, there’s a consensus that there is a finite window of opportunity created by the recent downturn which allows tenants who are looking to relocate to more efficient premises to do so at improved terms. The window may not last long (although longer than the average football transfer window!) but it is having an effect on financing and marketing decisions across the sector.

Apart from reducing operating costs, tenants are taking the opportunity to “tick the green box” by taking on buildings with more sustainable design and facilities management.

In London, there are signs that office rents are rising once again, signalling that the “ window of opportunity” may be

closing already, especially in the city and west end. However, across Europe and the Middle East, recovery is described by some as “patchy”.

It is anticipated that secondary premises will become available to the market as the banks and other major occupiers consolidate their workplace requirements. Landlords will require to upgrade these premises to make them more efficient if they are to be attractive to tenants looking for quality, cost efficient secondary space.

Another hot topic for discussion continued to be the distressed assets controlled by banks and funders and the need for rationalisation of these portfolios. Put simply, as banks fight to strengthen their balance sheets, they will look to drive best value out of these assets to ensure that their risk exposure is mitigated. This will drive the pace of asset sales as markets and prices recover. Weaker developers will continue to find themselves in difficulty securing debt and liquidity in the markets will be a fundamental driver to recovery.

This has prompted a lot of talk about new market entrants, some of them niche players. Whatever the outcome of the upheaval within the sector, there will be opportunities and threats to many of the traditional players, especially those still burdened with debt.

In the UK, of course, a lot of speculation stems from the likelihood of a May election. Who will win? And no matter who wins, when will they decide to start cutting public spending in order to reduce Britain’s mountain of debt? What effect might this have on the economy?

At Currie & Brown Group, we’ve made our own moves in the UK property market, moving group HQ to new offices at Old Broad Street, in the heart of the City. We’re all on one level now, and we’re managing things in such a way that we achieve greater flexible working. Clients can use our new ‘touchdown space’ with its IT facilities during visits.

We’re also creating a new operational centre in Scotland, at the Maxim office park in the heart of the central belt, whilst retaining offices in the key centres of Edinburgh and Glasgow.

Like many clients, this is all part of making ourselves ready for business, operating as we do in so many parts of the economy.

If you’d like to know more about Currie & Brown’s services in the Corporate sector, including commercial property, contact:

London: iain.stevenson@curriebrown.com

France: damien.bouveresse@curriebrown.com

Jersey: david.morris@curriebrown.com

Scotland: craig.tennant@curriebrown.com

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