Wonderwall: Adaptive Reuse and Sustainable Development in Europe

On a recent trip to London, we found a cityscape bustling with cranes and other equipment, signs of development in the air. It's a trend that's not all about new construction. It's being driven in large part by a push towards the rehabilitation of existing buildings. On this episode, Grab a Hard Hat, we're on site at CBRE's UK headquarters in the West End to hear tales of construction, of office real estate and more in the UK and other markets across Europe. I think it's a much more positive environment in Europe than it was at the start of due. That's Steve Skinner, CEO of Development for HB Reavis, a pan-European investor, developer and asset manager. HB Reavis has a portfolio of properties that include office, retail and hotels, plus millions of square feet that are ready to be developed with projects in those sectors, as well as various forms of residential. We sold two sites this year to co-living groups for conversion opportunities for existing buildings. So there's quite a deep and resilient pool of alternate bidders for smaller assets. And that's Alistair Perks, a CBRE executive director who's head of London Development and Asset Renewal, work which, in the US, we often call adaptive reuse. Alistair advises clients broadly on development and has particular expertise on the retrofit of existing properties. As a dynamic market, it's scarce in terms of the amount of land there is and the opportunities that present themselves get taken. And last but not least, CBRE's head of UK office research, Simon Brown, will help us dig deeper. Simon has specialized in office research, providing thought leadership data and reporting at CBRE since 2011. Coming up, development in the UK and beyond, with a focus on asset renewal. How and why that practice may be leading a revival. I'm Spencer Levy, and that's right now on The Weekly Take. Welcome back to London, and to help us talk about development, we have with us Steve Skinner, the CEO of development for HB Revis. Steve, thanks for coming out. Pleasure to be here. Thank you. Great to have you, Steve. And we have our own Simon Brown, head of UK office research. Simon, always good to see you. Good to see you too. And then we have Alistair Perks, executive director and head of London Development and Asset Renewal CBRE. Thanks so much for coming out. Great to be here, Spencer. Great to have all of you here today. Let's start with you, Alistair, if you don't mind. I think the hottest topic for a while in the United States was the conversion of obsolete or older office into multifamily or another use. But the challenge in the United States has been it's very difficult to do, very expensive to do, very hard to get the permitting, and in some cities there's almost none of it happening. What's happening here in London? So I think there is more happening here in London. We've got a city that's categorized by different types of building stock. We've got some large commercial areas with large buildings that are of course very suited for continued commercial use. But we also have much smaller grain properties. We're here in the middle of the West End at the moment. This is an area that's categorized by smaller street grains, smaller blocks. And these smaller buildings really are very good candidates for conversions. Clearly we have the issues with permits and planning. Not all local authorities in the capital are as persuaded by conversion arguments. But just to give you a couple of stats, 90% of the transactions that we advised on last year were for conversion. 90%? 90%. In the last few weeks alone we've done five different land deals and four of those were for conversion purposes. It's one thing to advise on, it's another thing to actually swing a hammer. How many of them are actually happening? Yeah, they do happen, but one thing I would think we should point out is it's not a one way street. Most people think about conversion in the sense of office to other use because of changing office use. But again, we're sitting here at Henrietta House, over the road, big department stores. About a million square feet of Oxford Street department stores are being changed and the majority of that into office space. And one of those buildings, the former Debenham's now called the M Building, CBRE has pre-leased that building in its entirety before completion. So that's really just the story of London, which is that uses adapt, areas change, and the mix of real estate has just evolved over time. And a lot of actually the biggest West End office to other use conversions happen prior to 2020. So we've got the old U.S. Embassy in Grosvenor Square, former JLL headquarters even turning into part hotels. All of these things were before 2020. So let me just clarify a comment you made. Much of the retail or older big box retail that's on Oxford Street, you're suggesting is being converted or has been converted into office. By no means a majority of it, but roughly a million square feet. So a significant amount, but the total volume of retail space in Oxford Street significantly outstrips that. Just from a developer's point of view, I think for us historically, we've delivered more new build than refurbishments. But I do think there's an argument today that with build costs so high, permitting taking so long, the high carry cost of both that and equity for a substantial period to do new development, plus the sustainability angle of less embodied carbon to do refurbishment rather than new build, that it can make more sense than ever before to look at refurbishments. My only caveat to that was I don't think we should have a prescriptive approach to it. I think we need to focus very carefully on the building's individual configurations for play depth access to natural light to see if it's appropriate that the building can be reused or repurposed. And I think here, especially in the UK, we need to make sure we'd have a prescriptive approach to refurbishment over redevelopment and actually end up long term with poor quality buildings. I think that's a bad outcome for people. Alistair, how many of our clients on the occupier or the user side are saying this is a material advantage versus a new build? I think both our investor and occupier clients are taking sustainability and ESG performance very seriously across the board. And I think they're seeking the best buildings, the best performing buildings, and that's very important to them. At a corporate level, it's very important to their employees, and it's still very much at the top of the agenda. I think in terms of how that's achieved, and to Stephen's point, whether it's achieved through a sustainable use of a plot of land, and look, we're in the middle of central London here. This is an incredibly accessible and sustainable location, and should actually this be the place where we are permitted to deliver new build, ground up construction, and does that have a better whole life carbon story than perhaps a suboptimal reconfiguration of an existing building. There are arguments about that and discussions going on all the time. But in terms of what our clients are seeking, I think it's the best performance. And I think they're actually kind of open minded as to whether that's achieved through a ground up scheme or through a repositioning of an existing building. So Simon, how much new builds are we seeing in London? The total amount of space under construction in central London is high at the moment, but what's really notable is that a lot of these schemes, the majority of which started speculatively, are actually pre-let. At the moment, we've got about 13 million square feet under construction of office space within London. 46% of that is already pre-let. To figure out if the city is higher is about 58%. So whilst you do see a lot of schemes under construction, a lot of those have been pre-committed even several years. So pre-let building, not a lot of spec construction? Not a whole lot of spec construction coming through, and I'm sure we'll come onto it. But whilst we see a lot of cranes currently, the dynamics that we're seeing in the market at the moment make us question the viability of that development pipeline beyond this set of cranes. So if you look at what's penciled in for 2028, 2029, it's starting to look really quite thin. Before we switch to continental Europe for just a moment here, we had on this show actually a UK-based Swire properties who own the Mandarin Oriental down in Brickle in Miami, and a very interesting case study where they have this beautiful hotel only 25 years old, but the highest and best use of it was demolition. They're demolishing the hotel, putting up a new hotel, plus 200 residential units starting at $5 million each. My question is really, are we going to see a massive demolition cycle here versus a refurbishment cycle? We all agree that it's greener to reuse the existing structure, but we have the math which is so difficult on these reuse buildings. What's your point of view? We're seeing far less demolition today than we ever have, and the reasons for that are embodied carbon as we touched on, and the planning restrictions that now set a much, much higher bar for demolition of any property. So that's causing people to think much more laterally about how can they reuse existing structures. The other side of this, I would say, however, the London market, we focused on offices, but in most locations there's really good strong competition between other sectors. So if a building doesn't work for offices, and we've talked about flight to quality and large floor plates with all the generous characteristics and amenities, for those properties that don't tick those boxes, those same qualities, maybe smaller floor plates, lower floor to ceiling heights and more smaller grade floor plans, can work very well for living uses. I think it's starting to soften now, but we saw a lot of those post-COVID, a lot of smaller buildings become vacant, so a lot of call on our services to run highest and best use analysis and find alternate economic uses for these buildings. But we're finding there is a pretty deep market for those. We just sold a building a few weeks ago, which was one of these smaller sites, and it sold to a private hotel group. We sold two sites this year to co-living groups for conversion opportunities for existing buildings. So there's quite a deep and resilient pool of alternate bidders for smaller assets. So in terms of whether those buildings inevitably end up being demolished, I don't think they do. The math here is probably easier on refurbishment than it is new build today, because the new build costs, as I said before, are so high. As a spec, you'll see redevelopment only where you can add seriously a seriously new amount of massing to a site. We have very strict planning regulations here in terms of controlling the height and the massing of buildings. I think if you can't add massing, significant massing is double the massing. I don't think the maths will work to redevelop, and then you're into refurbishment. And I agree with Alistair. When you look at the most valuable land use, even this centrally located often is definitely not officers. Very interesting because I would suggest, and not to disagree, but just to give you a different perspective, a lot of the developers I've spoken to just can't convert. We've had several episodes of the show with people who are active converters, but I would say the majority of the developers are leaning heavily towards land ground up development or even demolition than conversion. I guess what you're saying here in London, it may be the opposite. I think it's our building stock that gives us some optionality, smaller grain buildings that are more readily convertible. Simon, let me just ask you just a very basic question here. Do you have any sense of what the average floor plate size is of a building in London? You know what? I don't. But in terms of the deals being done, where the most activity that we're seeing at the moment with the highest values, they're pretty large floor plates. So if you're a tenant of probably 40,000 square foot plus, you don't want to be split over more than a couple of floors. Now, those are the office tenants that are using it for office purposes. But for conversion purposes, I'm going to speculate that those buildings typically have smaller plates. Is that a fair way to put it, Alster? For all the reasons, we understand access to daylight, conversion of a floor plate to multiple units. We've got a planning restrictions around having too many units that have a single aspect. So having plenty of corners is obviously very useful for conversion of floor plates. So exactly at that point, those smaller floor plate buildings do readily convert. These department stores have got massive floor plates. They're retail buildings, and they've got big floor plates so they're suitable for modern office tenants. I do think it's important to stress it's not an entirely one-way street. This conversion story. It's so important. And if we do think about London in terms of the West End, I mentioned it's got constrained floor plates for much of this area. Oxford Street, there are very large buildings, and that's exactly what tenants want. And that's exactly where the demand for that new space is coming from. And also right next door to us, we had a car park converted into a hotel. I mean, it's a dynamic market. It's scarce in terms of the amount of land there is, and the opportunities that present themselves get taken. Steve, let's pull the lens out for just a moment. We're talking about your mandate, which is not just the UK, but Europe. What are some of the highs and lows of developing in Europe? What are some of the cities that look most attractive, some of the cities that are more challenging? At the start of the year, Europe in general was probably looking at the U.S. with some envy. I think U.S. was in its full expansion phase. I think European companies were fed up with low valuation multiples compared to the flying U.S. equity markets, and in general, worried about much lower levels of growth. So I think that mood has changed significantly over the last few months, and I think the volatility created in the U.S. along with the other ongoing pockets of macro instability elsewhere in the world, as people looking at the relative stability, transparency, and more supportive rate environment offered by Europe, which I think you can see by that dark version of the 10-year German bond. And if you play that factor, how investors are feeling in Europe, I think it depends what they were invested in, in terms of in the zero rate, let's buy anything era, I think people were chasing yield, which probably the real yield didn't exist because of vacancy and capex risk, and those assets have basically turned into a value trap for many investors, so poor quality assets in poor quality locations. And I think those investors are slightly struggling for liquidity today. If you were at the end of investing in or developing high-quality, well-located assets, yes, there was a correction in price, but the bounce back in terms of NOI performance and liquidity in those assets has been significant, so I think if you are sitting there today owning those assets, you probably see quite a lot of opportunity across Europe, especially with a much more rate supportive environment, you know, the ECV has cut down to 2% already. So when you start thinking about investing across Europe, there's probably a positive carry which doesn't exist in the U.K. in terms of your yield over your debt costs. Because the debt costs are so much lower there. So it's so much lower, and the yields aren't that much lower than here in the U.K. So there's a positive spread there, and the NOI is growing very quickly because, you know, just like in the U.K., there's been a real lack of quality of new stock because of the development economic viability, so, you know, there's probably a moment in time where you can acquire assets at a very attractive yield over debt spread, plus you've still got the forward-looking NOI growth available, and I think that window is only available for a short period to be able to catch up both of those things. So I think I think it's a much more positive environment in Europe than it was at the start of the year. Alistair, when we're talking about uses, I know we focused quite a bit here on office. Talk to me for a moment about some of the other uses that you're seeing our clients talk about, obviously the conversion to multifamily, conversion to hotels, but other uses that you're finding attractive in the city of London. So this is the great thing about London, it's always evolving, and we always do get interest from a range of different sectors, and frankly it's what makes development particularly exciting, I think, in a city like London. So we, at any given time, will have interest in projects that we're perhaps disposing of from clients from a range of sectors. So there's the mainstream sectors that we've touched on, commercial offices, residential of different tenure types and different varieties and hotels, but alongside that as well we've just transacted actually with a private healthcare group on a major new facility in West London. When you say healthcare, is this like a hospital? Yeah, so a new hospital facility for an overseas healthcare group. That is one of six different healthcare, private healthcare requirements that are active in London at the moment, and the majority of these are coming from overseas as well. We're here actually not far from the Harley Street Medical Cluster, which is obviously a very active zone in the West End, but I'm talking about probably larger space takes than Harley Street, these 100,000 square foot plus requirements for private hospital facilities, and that in turn, just as a small example, is driven by an ageing population in the UK, an increased reliance on health insurance and more people able to access private healthcare than ever before. So that's obeying its own set of kind of economic criteria which is driving that growth. Alongside that, there's private education groups that are also looking at the market. When you say private education, be more specific, is this college or is this primary? So both actually, both. We see interest from, again, this is primarily private groups, often international, international school groups looking for a London foothold, and these are often global systems, education systems that want a London base. There has been quite an uptick in deals to the likes of Northeastern, NYU is in another example of those, several others. Also some English universities taking London campuses, Northumbria, Warwick, Coventry. There's a few of those examples that we've seen as well. We've also seen brand new demand in an area, Stratford, which is where we have the 2012 Olympics. It's being underpinned by a big educational campus, which happens to be University College London. It just goes to the dynamism of London and the nature of London and the nature of European large cities, which is large mix use, as we always say, live, work, play destinations. And it's those destinations that have those mixes of use, education and health being really important amongst those that will win, effectively. Our retail portfolio is absolutely booming after COVID. I mean, I think we were one of the very few people who developed and leased the shopping centre through COVID. I mean, we opened a 2.5 million square foot grow shopping centre in 2022. Where? In Bratislava, in the centre of Slovakia. It's amazingly well located, it has a tram station outside, it has a bus station inside, it has ample car parking, but you look at the seven day a week footfall. We have an annual growth rate there in terms of footfall over 20%, you know, the annual turnover of the tenants and the mix of tenants from international anchors to FMB to vast moving consumer goods there has been huge and that's really been one of our best performing assets in terms of a shopping centre, which I think people wouldn't necessarily appreciate. And the same for the hotel portfolio is now coming out of COVID, we've seen a massive rise in average daily rates, not the ADR, and at the same time, the average occupancy is over 90%. So the REVPAR or the revenue per available room has increased more than 40% in hotels, but to pick up on the demand drivers for students, because we're about to do our first student scheme in London, and I think there's real macro and supply and demand dynamics around students. So if you look at what's happening across the world, not just in the US, but in other locations where they are, really restricting the number of students which can go into a country. If you want your child to go to an English speaking internationally recognised university, you know, really with the way out there in the US at the moment, your option really is to come to London and so what that has created is a massive under supply of beds and some of these universities need thousands of beds and they need them centrally located. I think the macro picture and the supply and demand are coming together to create a real opportunity in student housing. Simon, we're not here to talk politics, but we are to talk about the changes in the market post Brexit. So the UK is and was a financial services global hub and there was concern about that post Brexit. How has that impacted demand? Where is the financial services industry today in terms of a demand driver in London? It's actually really an interesting story. All of the surveys of top global financial centres, ZDN being the leading one, is always New York and London number one and number two. I think London happens to be number two at the moment and New York's number one, but it does flip and the amount of demand that we're seeing across the market from banking and finance sector is about as high as it has been at any point since the GFC. Now, the GFC was the big disruptor to that market much more so than Brexit. Post GFC, we saw financial regulation. That meant that a lot of these big banks had to shrink and we've been dealing with that consolidation ever since. But in the year since COVID, more so than the year since Brexit, we've seen the central and office market demand being driven by financial services, big banks in the city, small boutique financials in the West End, but the other thing I really want to pick up here, which is probably of relevance to your audience, is the boom in demand from US domiciled lawyers. So if you look at the global leading 100 law firms, the majority of the big ones have got massive premises here in London and it's growing enormously. Those occupies going from maybe 10,000 square feet to in some cases 2,000, 3, 400,000 square feet. There's enormous growth in that sector and that's not directly the banking finance sector, but in many cases, it's linked. It's the ancillary services, so I'm sure accounting firms. Firms that service that sector are growing in law is big one of them. Our firm was a benefactor of the retained demand from the banking financial service industry when we were building a relatively large 300,000 square foot building specularity in the city and actually Wells Fargo came along. They actually bought it. That was their commitment for London and the UK. They acquired the whole building, not on our lease, but they actually bought it from us instead. I just want to say, I think that today's market has actually got all the hallmarks that could see more deals like that. That was back in 2017, but we're seeing a little bit of a resurgence of those owner-occupier led transactions and it's kind of no surprise because capital values are down, so in cyclical terms real estate is cheap. Tenants are very high and have never been higher and I think there's many tenants looking at that rental picture and looking at the value of underlying real estate and thinking, well actually I could just step into an ownership position here. We've seen major banks do that before. We've seen big tech companies do it in London and now we're seeing further clients do it in the West End and the city and my prediction is we might see more of that. One very recent example stays straight to bought a building for their own occupation just this quarter. Steve, this is the moment of pitching. What are the benefits of having a third-party landlord versus the occupiers owning it themselves? I think sometimes people overcomplicate it in officers thinking about actually what needs to be provided and actually if you look at your office building and tomorrow you just swapped all the desks for beds and it became a hotel, nothing should change. You should already be providing all of the service, all of the hospitality, all of the immunity, all of the flexibility from everything you expect from going to a hotel. So you should have a free-to-use gym, you should have meeting room facilities, you should have somewhere to work, you should have high-quality F&B, you should have a nice roof terrace, you should have not a receptionist but a general manager and I think that will require some expertise to deliver that experience over and above being an owner and occupier. For us, we set up a fully integrated business where we're doing everything internally. Part of that is having our own asset property and facilities management team to make sure across 10 million square feet of officers we are delivering and providing that level of hospitality and service and I think it's difficult on a one-off basis to build up knowledge and experience to deliver that. What we're talking about now is the shift from a more static form of ownership to a more operational form of ownership. And so this may be the word of the year because it comes up in every episode that we're taping about how our clients are shifting from traditional to operational. Alistair, how does this operational change factor into your space decisions? Well, my clients are primarily landowners that are seeking to dispose of their site. So it's probably the people that we're selling land to that this question matters most to. But I think we're definitely seeing a shift in terms of all of the roster of parties that are active in developing London sites. So Stephen's business included and exactly the themes that he's just outlined. But I think we're seeing a very rapid re-skilling in terms of what it means to be a good landlord in London and providing these facilities and exactly as you say Spencer, becoming more involved in the life of the building day to day. It's not just signing a 10-year lease and popping up again at the rent review and the lease expiry. It's being involved throughout that journey in terms of providing high quality services, high quality amenities and like you say, being part of that operational journey. Your yield on cost is so much better than operational real estate. But obviously that comes with a much larger degree of risk. You compare the operational assets to a fixed lease asset, the operational assets, again, it has the potential to provide you with significant more yield on cost and NOI. And obviously you can affect that NOI yourself every year rather than just relying on the market by providing the great service, driving higher sales, higher occupancy, more ancillary income, et cetera, et cetera. So your ability to affect your real estate return I think is higher in operational assets. I think there's an argument here in the UK that potentially that's gone slightly the other way that people have discounted offices so much and actually the stability of the cash flow that officers can give because there's operational cash flows are actually trading at significantly lower yields, i.e. higher multiples than the static cash flows where you've got a 10-year cash flow, the rents can't go down, all of your OPEX and CAPEX is basically recoverable through a service charge, but yeah, that's trading at a much higher yield and at some point I think that will offer some value to people to go back into offices. Some investors were spooked because they believed the narrative of death of the office, which so obviously has not been the case. And as opposed to turn the table, Spencer, what are your impressions of having been in an office now in the UK versus what your expectations? How busy it is, how vibrant, how high quality this particular space is versus what your typical large U.S. city would be? Sure. So first of all, Henrietta House where I'm sitting right now is spectacular, though I'm sure it is equally spectacular to all of the HB Revis spaces in the city and what makes it spectacular is it's got not just amenities, it's the design of the space, it's designed for collaboration, has a lot of open space here, there's a lot of air and light, all the things you want and so I would say my experience here has been equal or superior to the best office space I've seen in the U.S. But the best office space isn't in New York, LA, San Francisco, it's in sub-submarkets within each of these places. It's the combination of the fit-out but the sub-market. You can't change or it's very difficult to change the sub-market, it takes a long time. So my experience has been positive as compared to some of the best places I've been. Yeah, I have been to some of HB Revis's buildings and Worship Square is as good if not better than Henrietta House, for example. But this is pretty typical of the way that buildings are developed in London. They tend to be developed to a really high standard. In fact, it did some analysis just at the big buildings that have been developed in the last 10 years. And all of them have, we have a certification called BRIAAM, it's a sustainability credential. Every single building developed over 100,000 square feet in the last 10 years has a rating of at least very good. I mean, that's not the be-all and end-all. But the buildings that we have here are pretty good. People come to them. We haven't even mentioned return to work as a question now. It's finished as an argument. I think there's an argument to make that because of people, so many investors being so wrong about the future of offices that they are significantly underpriced. And if you look at CBR Re's most recent European forecasts, five-year total return on average, you're looking double digit for office in the UK, is the best performing sub-sector in our five-year forecast. My developer's point of view, he went very long in highly sustainable, well-being-focused offices around 2018-19, and we delivered in those years and through COVID nearly 10 million square feet of offices. I don't worry for one minute about leasing our office buildings. That portfolio has less than 1% vacancy in office. That portfolio has led to international and globally recognized businesses all over the world on very strong rents, great leases, and return to work is not really part of the conversation anymore. So when it comes to filling the office building, that isn't the problem today with offices. And I think investors, I think the capital markets are way behind the occupational markets. The occupational markets for, like I say, high-quality, highly immunitized, really sustainable buildings are absolutely booming, but the capital markets are not looking at it at the moment. And I think for the wrong reasons that they're just riding a thematic trend elsewhere. And by the way, the trend you mentioned, Simon, I looked at our own CBRE forecast is that we see office outperforming the other sectors in the near term because it's been so devalued unfairly. Well, I mean, sorry to answer your question. If you think about the future-looking performance, you've got a huge amount of NOI growth to come through, and the starting cap rate is one of the highest in all prime sectors. So you've got room for the cap rates to compress further, which I'm not sure is available to the same degree in the other sectors. So when you look at your total return, at the two together, the outperforming should be there. Right. I think this is probably worthy of note just to make two points directly related to that. By the time this podcast comes out, that 5.75% city yield will be 5.5%. I mean, that's locked in now. So we'll be able to report some yield compression already this year. So that's really important point to make. The other thing, again, which is really important, a lot of people maybe forget about the UK markets versus maybe other global markets, is that we did move yields out quite significantly. This market does react. We have higher levels of transparency here than in most other markets in the world. So when things move, they tend to move first in London because we're able to report them. And if the yields go up, it also means that they can compress as well. So all of this spells opportunity for investors, in my opinion. I would just like to have your wrap-up thoughts. I know this was about development, UK and beyond, but we focus largely on the UK, largely on London. Let's just stick there. What's the next two, three years look like in UK development? Alistair. So I think the market ahead of us looks really exciting, actually, and whether that's linked, as we've been discussing today, through the value opportunity in offices, which I think really exists at the moment. We're seeing upticks in terms of overseas investment, allocations towards London again. We're seeing the return of larger deal sizes. So I think there's some really exciting future steps and opportunities to participate in that rental growth that we're seeing across the board and we've talked about. So I think that's one part of it. But as I've said, London development is about a range of sectors and a range of other things and the kind of mix that we have in London between different types of building use, whether those are living uses, whether those are hotels, whether those are retail or increasingly around things like life sciences, technology we haven't talked about today, the sort of knowledge clusters that are growing in different parts of the city, or things like education and healthcare. So it's an exciting two years ahead. Simon. I think that the point I'd like to make is that what we've seen overwhelmingly in the past 12 months in the London office market is what I would describe as normalization. We've moved on from this period of what was characterized as flight to quality where only the best quality development space is being taken. And now we're seeing vacancy fall driven not by lower levels of development completions but by withdrawals of sublet availability with absorption of secondhand space. And I think that this is potentially one of the consequences of what I expect to be a lower level of development completion over the next five years versus the previous five years, which is that buildings, as long as they're able to offer what the tenants want in terms of immunity and location, I think we're going to start to see a resurgence in activity of maybe not the C grade stock, but definitely the B plus and A minus stock. So that's the takeaway. Not about the development market, it's just in general about normalization of the market, lower levels of development completions, higher levels of activity within that slightly more secondary space. And Steve, what's your outlook? I think if we're focusing on London and officers, I think the key trends which will emerge will be an increase in operational expertise needed to drive general customer satisfaction and NOI growth, I think maybe a move towards a more EBIT/DAR type model of valuation for officers to actually reflect the customer satisfaction and how sticky they are, rather than just focused on the length of a lease, I think rent for new well-located assets will just continue to explode because of the lack of supply related to the amount of demand. And I think you will have a significant number of regretful investors who wish they'd acquired high quality assets below replacement costs when they could. And I think you'll see an even longer list of regretful developers who wish they'd started earlier to capture all of that upside, which I think is probably coming. On behalf of the Weekly Take, what a great conversation. And I want to first thank Steve Skinner, CEO, development, HB Rivas, great job, Steve. Pleasure. Thank you very much. Anything for you to spend some. Well, if that's the case, I also want to thank Simon Brown, head of UK Office Research of CBRE. Terrific job, Simon. Thank you. Been a pleasure. And then Alistair Perks, executive director, head of London Development and Asset Renewal. Terrific job. Been a pleasure. For related content, other global insights, and archived episodes, check out our website, cbre.com/theweekletake. Send us your feedback as well. You can do that through our website or wherever you stream the show. We're on all the major podcast platforms that encourage you to not only rate and review the Weekly Take, but to subscribe to and stay on top of our latest episodes. We'll be back next week with more from all across the world of commercial real estate, with a guest list featuring top minds and influential leaders from across the industry. So stay tuned. For now, thanks for joining us. I'm Spencer Levy. Be smart. Be safe. Be well. (dramatic music)