MAGAZINE: In the business of offices

Emilie Jaskula, the newly appointed global head of offices at AXA IM Alts, defends the future of the asset class.

The office is dead – long live the office. As the asset class continues to experience polarisation between prime headquarter products and secondary properties with an uncertain future, office landlords are hard at work to shape the destiny of their portfolios. 

Emilie Jaskula was appointed last year to the newly created role of global head of offices within AXA IM Alts’ asset management team. She observes that the resilience that prime office assets have shown, and the ongoing appeal of low-carbon, high-quality offices in prime locations alongside the significant opportunity to lead the transition of older generation office product, has essentially driven the creation of her position.

Jaskula, who has been at AXA IM Alts for almost 12 years, explains: ‘Although our largest office portfolio is in Europe, having a global perspective allows us to be one step ahead, as many workplace trends are similar around the world. My new role also reflects the sectorial approach we have to markets across all territories.’

While admitting that some investors have reduced their allocation to offices, as other sectors, notably living and logistics, are now in favour, she believes that ‘the office is rediscovering its place’. She notes: ‘For many years, it was considered a core and stable asset class, and although investors are today looking at a diverse range of options, it is still a fundamental component of investor portfolios.’

Back to the office?
The real estate and business press has been full of stories of major employers trying to coerce staff back into the office. One version of this tale goes that in the light of recessionary factors and increased unemployment rates, employees would do well to simply toe the corporate line. Will Big Company win this fight? Jaskula is convinced that hybrid working is here to stay. ‘The average working week in the office is between 3 and 3.5 days in Europe,’ she says. ‘It’s a trend that may become permanent. Some degree of flexibility is highly attractive, and frankly a must-have, for the majority of employees.’

The back to the office debate also varies greatly by city. ‘We are seeing much higher office occupancy across Continental Europe. The dynamic in London is slightly different, where commuting times are longer and residential prices are much steeper in central areas.’

One key factor for encouraging employees to work ‘in office’ is an attractive and amenity-rich workplace. Jaskula explains that AXA IM Alts has developed a score card for all its office properties to make sure that they are providing both high useability for companies and supporting productivity and well-being for the individual. ‘We score assets on the six factors of accessibility, comfort and well-being, conviviality, ESG, digitalisation and flexibility. It’s important to drill down into specifics, as we are talking a lot about flight to quality, but we need to quantify what that means.’

Amenity-rich spaces
Amongst AXA IM Alts’ more recently developed and/or fully let properties, Jaskula cites 22 Bishopsgate in London and Monte Rosa 91 in Milan as best-in-class examples within the portfolio. ‘Both assets have similar qualities, and tick all six boxes on our score card,’ she notes. ‘They are high quality real estate assets, and, in the case of Monte Rosa, have been heavily refurbished to add architectural quality, and offer a significant number of amenities. That includes cultural and public spaces, sports and wellness facilities, plus conviviality factors like the Market food court at 22 Bishopsgate, alongside large, activated common areas. They have dedicated areas utilising serviced offices, co-working and event spaces.

She adds: ‘Both assets are high performing buildings in terms of their environmental credentials, with 22 Bishopsgate achieving a BREEAM Excellent rating and being the first building in the UK to apply for the WELL Building Standard. Operationally, they are equipped with smart meters and/or Building Management Systems to measure and control building performance, and offer tenant apps as a centralised tool for the user to manage their experience. Both also have a very strong digital footprint – Monte Rosa 91 is the first refurbished property in Italy to have obtained the Platinum Wired Score certification, which recognises best-in class digitally connected buildings across the globe.’

On top of that, both buildings have elements that are open to the public, which has helped contribute to their ‘iconic’ status, she notes. ‘These assets are part of the fabric of the cities they are in. The Horizon 22 viewing gallery at 22 Bishopsgate is also driving traffic and contributes that cultural element. It’s not possible to incorporate this across every asset we own but their public dimension has certainly given both offices a higher profile.’

Although AXA IM Alts is experimenting with serviced office areas in a number of its assets, Jaskula isn’t sure that this kind of office provision marks the defining future of the sector. ‘Amenities in general are really important, not just the flexible office component,’ she says. ‘While I believe that serviced offices will definitely be part of the value chain of products we need to offer, they aren’t always the answer. Long term, occupying a flex office can be more costly and it might not be suitable for every corporate tenant. I don’t believe that the traditional lease will disappear. What we really like is to be able to offer a range of options to our tenants, with a range of service levels, so that they can get the most out of the office.’

ESG considerations
Unsurprisingly, environmental, social and governance (ESG) considerations play a big part in all of this. ‘It isn’t just specific to offices, it’s a central part of our business. It really matters to both us and our tenants. ESG performance can be assessed through two pillars – intrinsic, and operational. The intrinsic part relies on the quality and performance of the envelope and technical equipment of a building, and we invest proactively to improve this performance. But the operational performance is essential as well: we collaborate on the operational side, with tenants, property managers and facility managers, to ensure that the day-to-day approach is right. We have been developing green leases across the portfolio to make sure we have the right framework to reduce operational carbon, and this has been a success. Even without additional capex, in a couple of buildings we have seen this approach reduce energy usage by as much as 15%.’

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