Global commercial real estate and investment management company JLL says
there are reasons for cautious optimism as we're beginning to
see green shoots emerge.
Joining us now to break it down,
JLLCEO Christian Albrecht. Christian, welcome.
I want to zero in really on industrial here because
you say in logistics that there's a limited supply of
ESG
compliance.
I guess real estate, what is it specifically that's going
to need to be developed,
redeveloped in order to get compliant?
Well, the whole topic around ESG is a topic which
is not only around industrial.
It goes also into offices.
Just remember, about 2/3 of the Fortune 500 companies have
significant commitments around reducing their carbon footprint and that has
obviously to be reflected in their build environment,
which they are picking up.
And what we see in the office sector is that
we have three times as much demand in carbon reduced
office space versus the
offering over the next five to six years.
And we have a similar picture on the industrial space.
So ESG will be a major driver of the property
markets over the next couple of years.
So tell me since this stretches across not just logistics
but also data center,
there's a lot of talk especially with AI and these
accelerator chips running so hot on what's going to be
necessary to fulfill requirements there.
But then across into office,
is this a lot about solar?
What is it that is really going to need to
be purchased
to, to not only from an energy perspective bring these
sites into compliance,
but also just make them more efficient?
Yeah, I think it starts with the efficiency of the
buildings that you have just
much more efficient buildings so that you just use so
much less energy for heating and cooling of the building.
Data center is a specific topic because they're the need
for power is coming from
the the wrecks in the data centre and there you
want to combine that with the purchase of green energy,
but also that the technology in the data centre is
obviously as efficient as possible.
It doesn't need that much energy,
but whatever they need, it needs to be green.
Going forward, Kristen, I'm interested in how rents in office
space are holding up and and not just the rent
level,
but the length of leases that you're settling for.
You getting slightly shorter leases than you would have seen
a decade or so ago,
not necessarily, depends a little bit of the quality of
the buildings.
We still have a highly bifurcated market,
which means that the best space with the best amenities
is having or is meeting really high demand.
And and if companies can secure that type of space,
they are happy to secure that for 10 years or
even 12 years.
But then if we look at more commodity type of
space,
kind of the type of office space you can find
around every corner there.
We see leases obviously much shorter because people don't want
to commit as long into those type of buildings.
So it's it's not a,
it's not a one-dimensional picture.
It depends very much on the quality of the underlying
building.
I'm interested as well Kristen,
your view broadly on on the sort of office sharing
space which obviously
was all a rage when we work was in the
headlines first time around in the headlines again today with
the
the talk that Adam Newman might be trying to buy
the company out of out of bankruptcy.
Do you think it's peaks?
Do you think it could have a resurgence we work
specifically and office sharing more more broadly.
Well, the whole concept of flex space is obviously very
attractive for potential tenants because as the name already says,
it provides them with lots of flexibility.
Now that was for the last two years obviously significantly
under pressure because there was so much supply space in
the market at at very low rental levels.
And So what was flex space before moved a little
bit into the sublease market.
But overall, we believe there is room for flex space
going forward because it is attractive for for clients
to pick up those type of space for parts of
their overall occupancy demand.
What hasn't worked so well in the past and that
was demonstrated also by Wework.
It didn't work so well for the other side because
they had these long commitments and and and and then
short term income.
And so they have to adapt their business model so
that it works for both sides.
Christine Ulbricht, thanks so much for joining us.