From another age. Will MIPIM be cancelled? Is it ok to not shake hands? Can we ask the team to work from home? Isn’t Zoom a song by Fat Larry’s Band?
More recently. How long to lockdown? When and how will the lockdown be lifted? Will the FTSE be up or down 10% this week? When and how many of the site team to furlough? Will the ensuing recession and subdued occupier demand lead to a property crash or will asset inflation result in a surge in values on the other side?
Perhaps a little less important to others but on my mind. Will the Barnes wifi hold out with Mrs Mapp on her Peloton, the five von Mapp’s all doing lessons via Microsoft Teams and me holding a company wide video conference? Will we be able to secure another Ocado order? Mask or no mask? What can I do to help my octogenarian parents? Will Aston Villa be spared relegation?
We have been living with uncertainty for weeks, but things are now becoming clearer, and in my world of managing a few buildings here are five things I now know the answer to;
1. The March Quarter
The worst rental and service charge collection rates on record.
Most of us were surprised that the numbers were as good as they were. After 21 days we had collected 55% of retail, 80% of office and 70% of industrial rents due. MAPP seems to have bucked the market norm and broadly collected the same levels of service charge, but it is still a dire set of numbers which might improve a little over the next week or so as monthly payment plans kick in.
2. The June Quarter
It’s going to be carnage.
We are predicting that we will be at least a third down again as a result of the recent government announcements and ensuing legislation. No possibility of forfeiture, no CRAR and no serving of statutory demands means we will be fighting recalcitrant or fundamentally challenged occupiers with both arms tied behind our back and chocolate fireguards and teapots as our only recourse.
One national retailer wrote to us this week (I will spare their blushes) saying that they had remained open during the crisis and had paid the March Quarter in full, but as a result of the government announcements would only be paying 25% of the June Quarter rent and service charge.
3. The office of the next 12 months
Things are going to look very different and I am going to host a meeting this week with a number of clients to gauge their appetite for a variety of measures and levels of invasiveness.
In MAPP managed buildings expect to:
- climb a lot of stairs as opposed to getting into lifts;
- use the fire escape stairwell for the descent;
- keep 2m apart and potentially join a queue to access the building;
- see an enlarged temporary bike store;
- see an air conditioning system (and sustainability targets) struggle to cope if we turn it to fresh air intake;
- find a small army of cleaners trying to keep your customers safe;
- see a few extra MAPP team members in larger buildings working with occupiers to ensure that everyone observes the new protocols; and
- see us launch ‘Thrive’, a series of articles and engagement pieces with occupiers to help them survive in a post lockdown environment.
In the short term, occupiers and potential occupiers will want to know how safe a building is and will seek reassurance over the quality of air, ventilation, water and thermal controls.
In the longer term, the move to better quality space which can attract, inspire and retain the best talent will become increasingly important. Companies will use space to project an image and for their people to belong, to collaborate, and share great thinking as opposed to housing rows and rows of workstations.
We are calling our bit of that V2.0 PM, but it will become our new normal.
4. The future of retail and leisure
Tomorrow’s world has arrived.
The slow decline of physical shopping is now in freefall. The future is here a lot earlier than we had been expecting and it will be a sad and brutal end for many.
Its saviour Leisure will return, but it will take time and many who had over-extended or with weak concepts will not make it.
Managing such a decline gives rise to new challenges around scale, cost and footfall. Some malls will close, some schemes will never reopen and some will need to be repurposed.
5. Service Charges
Swings and roundabouts
Any savings we have made by furloughing the site team, reducing utility consumption, eradicating discretionary spend, not cleaning the windows and pulling back on pretty much everything else for six weeks, is likely to be wiped out by the costs of preparing for and managing social distancing, the army of cleaners, investments in tech and electricity consumption because of HVAC having to treat much more fresh air over the next 12 months.
Things are becoming clearer.
Let’s hope they become a little brighter as well over the next couple of weeks.
Ps – I also know that swallowing disinfectant, trying to get it into your lungs and somehow trying to expel it a minute later is a) hard to do b) likely to harm you.