Where do we see a historic urban residential neighbourhood cobble stone streets overloaded by hundreds of heavy buses per day running in and out of a dated and run down bus depot. In Antwerp – Zurenborg. Resistance against the depot dates from the 1980s, and promises to relocate the bus depot have been made for more than 10 years. However, planning in Belgium, with is fragmented government structure, is highly complex, and the bus company De Lijn does not stand out in flexibility. Following the announcement in 2016 that the depot would be moved in 2021, De Lijn applied for a permit to keep its depot in the neighbourhood for another 10 years, with the City of Antwerp willing to support, leaving the neighbourhood residents highly upset and embraced once more to pay the bill of the lack of consistency in urban planning. Link to article co-written with Diederik Van Woensel (in Dutch) published in Gazet van Zurenborg local Antwerp newspaper: GVZ-2020-06-a
Who would one year ago have foreseen the dramatic changes in our daily life because of the Covid-19-triggered health crisis. And how this impacted the function of cities, including Antwerp, and including the Zurenborg neighbourhood. Social distancing, working from home, heavily restricted travelling, and much more. With most Covid-19 related restrictions in place for most of 2020, many people and business have been able to adapt, at least partially. Scenario’s appear on which behavioural changes will be temporary and which may be more permanent. And what about living in cities: our home not only as place to sleep, but also as place to work, as place to meet, and as place to entertain. Not a big problem for those with houses with gardens or with spacious apartments. But for those without that level of comfort and with more possibilities to work from home, is the city still the place to be? This also taking into account lower housing cost and local taxes in the countryside. And how could this work out for an urban neighbourhood like Zurenborg. Link to article (in Dutch language) published in Gazet van Zurenborg local Antwerp newspaper. GVZ-2020-06-b
The corona pandemic has clearly changed the way consumers shop. In Holland, the PBL expects vacancy to increase by about 40% in the coming years. It is therefore very important to consider the new role of town centres in the post corona era. In the first instance, it is now up to the municipalities to take the lead, by revising town-centre plans and defining a strategy for reviving retail locations. It is essential to start from a consumer perspective, because lifestyles can clearly differ from town to town. As a result, one can create interesting and distinctive inner cities, which also match the identity of the local community. Article co-written with Andre Doffer, published in DISCvision.nl blog. PDF-link to the article: rethinking-retail-ad-hk-final
Link to article on DiscVision.nl //www.discvision.nl/news/3110/
How changes in consumer behaviour becoming structural may impact property
What was feared by many became reality by the end of November. Many parts in Europe including the Netherlands and its neighbouring countries are back in lockdown, either full or partial. Was the first lockdown still an incident following a health crisis, following the lessons learned of the first lockdown, the second lockdown emphasises possibly on more structural changes.
What are choices consumers will face in the post-Covid period in terms of living, working, shopping, and socialising? What decisions will fade away over time and what changes in behaviour are there to stay? Evidence of past pandemics like the Spanish Flue show that pandemics tend to result in a changed set of rules of the game. What is this going to imply for property investment? Aspects these questions touch on include:
- In retail, the changing role of stores. How the inter-relationship between online sales channels and physical channels will change?
- For offices, will we return to a ‘nine-to-five’ use pattern of workplaces? Or will homeworking become more widely accepted? And how will that impact the need for office space as well the conceptual design of workplaces?
- Will urbanisation continue the way it did before Covid? For people working and living, dense central areas in big cities turned out to be less effective and attractive. Will this be a trigger for suburbanisation? Or will compact mid-size cities become more attractive?
Following the start of the first Covid-lockdown in March, the impact was dramatic and 2020 Q2 became a shock, like a reset, to the economy as well as to the real estate market as many aspects of production and consumption stopped simultaneously.
In the real estate market, the impact of the first lockdown was mainly felt in the retail asset class, as shops and gastronomy had to close. Retail rent collection rates went down dramatically in the UK and across Europe with governments encouraging landlords and tenants to come to a compromise. But, in sharp contrast with the general trend, supermarkets and convenience retail assets have been performing well. Residential and logistics turned out to be resilient. With online trade growth accelerating, logistic facilities are in even higher demand than before. Despite massive home working, most companies have been sticking to their offices so far, with very diverse scenario’s on how the post-Covid office will look like.
With lockdown measures lifted gradually as of May, summer 2020 showed a significant rebound, business and consumer confidence rebounded. Returning holiday makers and pupils back to school resulted in an increase of new Covid- cases. Initially quite gradual, but rapidly accelerating as of October with daylight becoming shorter and outside temperatures edging down.
Back in a partial lockdown in most of Europe, it is apparent that the initial Q3 recovery will not continue in Q4. Though the health systems seem to be better able to handle the current wave, the lockdown-measures are more carefully tailored, and the economy is better prepared to handle lockdown measures, Q4 is likely to be another setback, albeit probably not as dramatic as Q2.
Revised economic forecasts by various organisations including the EU and Oxford Economics indicate a discontinuation of the rebound in Q4 and a delayed and more moderate recovery in 2021. GDP reaching pre-Covid levels is likely to be pushed back into 2023.
What does this imply for the real estate market? While investment transactions took a dive in Q2 and Q3, yields have been holding up relatively well so far, except in the retail and hotel asset classes. These have been the most severely asset classes so far, linked to lockdown-related limitations and travel bans. While Covid has acted as accelerator for ongoing trends in the retail sector to result in an increasing demand for repurposing retail assets, Covid came as a surprise for the hotel asset class which was going through a period of growth. While the impact of Covid on retail is expected to be long term, the hotel asset class has potential to recover in the mid-long term. Logistics and residential are most resilient so far. Residential rent collections continue to be high as tenants tend to prioritise payment of rent, and with logistics in high demand, collection rates tend to be high. Views on the outlook of the workplace in the future and the way that will impact the office market remain unclear. However, as ULI and PWC indicated in their Emerging Trends in Real Estate in Europe 2021 report, a majority of CEO’s expect to see more remote working a lower need for office space.
But a view post-Covid trends seem to appear. First, neighbourhood proximity and convenience locations have been performing relatively well so far. Not only for retail, but also for workplaces. In this way, commuters can avoid potentially unsafe commutes. Second, while prime continued to be preferred, anything else have been under pressures, further polarising the market. And third, flexibility became even more important. Not only in terms of time, but also in terms of functions. For instance, a swap from retail into services, or a coffee house used as a workspace. Aggerating and translating this into real estate, the importance of mixed-use is to grow further, with an increase ability to shift between functions. Owners, users, and public authorities must be prepared for this.
While the depth of the Covid-impact and the way to a future normalisation remain unclear, Covid is accelerating ongoing transitions in the real estate sector. Retail repurposing, an increased need for flexibility, and a greater emphasis on quality public space are just a few of them.
For investors and developers, having knowledge in what degree user’s behaviour will show a structural change in the post-Covid- times is essential to define their strategy and conceptualise their projects. Understanding consumer behaviour will be essential to be define post-Covid real estate strategies, because it is the end-user which defines the success of an asset.
- How will the consumer look at shopping and marketplaces? What will be criteria for them to visit these places? How will that affect the setup and hierarchy of retail locations?
- How will employees, especially those who can work remote, organise their work time? How will employers accommodate the hybrid working possibilities? What role will offices play and how will this affect preferred business locations?
- And what will be residential priorities for people? An increased need for space and air ventilation? Will people prefer space over density and explore to live further away from central urban areas?
Real estate is already undergoing a shift from space provision to service provision. The need for more flexibility will be accelerated by Covid, as will the demand for space promoting health and wellbeing. Following this introducing, we will be touching on how Covid is to affect different aspects of real estate via changed behaviour and demands of consumers in follow-up pieces in our blog.
Laiterie d’Orsieres, the new milk factoryOrsières, located in the heart of the Valaisan Entremont region, has a new milk factory since September 2020. A milk factory which is more than just a milk factory, but a nice example of a rural experience linked to agrotourism:
- A modern state of the art production facility for milk and other dairy products including the famous raclette cheeses
- A shop selling local products produced in the ‘laiterie’ and from the region
- A café-restaurant specialised in raclette and cheese dishes among other regional specialties
- An experience centre in which visitors can learn about cheese and milk production as well as other elements of local agriculture
- Polyvalent space which can be used as venue for seminars, meetings, or parties
- And a 24/7 vending machine for those who need raclette cheese urgently
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Situated just before the northern entrance of Orsières settlement on the Grand Saint-Bernard main road connecting to Italy, it is well accessible to locals as well as visitors either staying in the region or in transit.
Those who are familiar with the Entremont region know the importance of cows in the local alpine agriculture, the black Herens cows which graze the high alpine meadows in summer. Geographical mountainous conditions result in a pattern of very small-scale farming compared to international standards. Farming, especially cattle farming of which Herens cows are a determining identity, is a key feature of local culture. Thanks to local farming and herds of cows grazing the alpine meadows, we can enjoy the alpine landscape as it is today with grazing cows preventing the alpine meadows to degenerate.
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The days that each village in the valley had its own milk factory are something of the past. In Orsières municipality, village milk factories in Val Ferret and on the slopes up to Champex merged into the milk factory of Somlaproz in the 1960s, and hamlets o the other side of Orsières organised their dairy production in the milk factory in Orsières. Too small scale for todays economic conditions, the milk factories of Orsières and Somlaproz merged in 2017 with the intention to create a new modern facility. Supported by the PRD Regional Development Program Grand Entremont, the new milk factory opened its doors in September 2020, replacing the dated Orsières and Somlaproz facilities. It has been good to see that locals and visitors found their way to the laiterie in the first months after opening despite all Covid-restrictions.
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The new modern facility has an annual capacity of 1.4 million kg milk, and 26,000 pieces of AOP round cheese. The milk factory has its own air-conditioned cheese-ripening cellar with a capacity of 20,000 pieces, with the latest generation robot technology able to turn the cheeses periodically. Total investment was CHF 6.5 million, of which CHF 3 million support sourced by the PDR Regional Development Program.
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The result is a modern and viable milk factory able to process the dairy output of the local alpine agriculture as well as an experience centre and meeting place where visitors and locals can learn about the local alpine agriculture, milk and cheese production, and enjoy the regional products. A new destination to visit for Orsières. And a nice example of how to connect agriculture and food processing with experience and education.
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Laiterie d’Orsieres: Route du Grand Saint-Bernard 3, 1937 Orsières; //laiterie-orsieres.ch/
Article in Gazet Van Zurenborg local Antwerp newspaper. It seemed as if there had been a dam breach in the Waterloostraat among other streets in the historic Zurenborg neighbourhood in Antwerp on 16 August 2020. Heavy rain showers with extreme rainfall made the street flooded. The amount of rainfall was too much for the sewage system and the soil absorption capacity was too limited. Less visible from the street, but no less disastrous, was the extensive damage in a number of cellars. The pressure of the water caused entire floors to rise and cracks in the walls. This article (in Dutch) elaborates on the background of the events and possible directions for solutions to make the area more water-sensitive.
Link to article gvz-05-hko