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Meet The Man Trying To Stop London’s Biggest Office Market From Becoming Obsolete

Shravan Joshi has a number of problems to address, all of them interlinked, none of them easy: How much office space will the City of London need in the future? What will happen to obsolete offices? And how do you build an urban centre fit for the future without killing the planet? 

The City of London Planning and Transport Committee chairman last April took up the role of overseeing the development of the City, the UK’s largest single office market and the centre of its financial services industry.

His tenure began as the role of the office was in flux like never before. It also came as the world was waking up to the reality that the business model of knocking down buildings to develop something bigger and more valuable was emitting huge amounts of carbon. 

The City's Shravan Joshi

The City of London Corp.’s planning division has come up with a number of key policies to attempt to balance economic and environmental sustainability on Joshi's watch, a priority in a district where 59% of jobs are office-based and risk is high as the way society works changes.

If those policies work, they have the potential to be quietly radical. 

“Our approach is that developers should think about retrofit first and have to justify where you’re not retrofitting,” Joshi said in an interview with Bisnow, referring to planning guidance issued in March by the City of London.

According to the guidance, developers must undertake a whole-life carbon assessment at the earliest stages of the planning process, highlighting the amount of carbon emitted by different strategies for a scheme. The strategies range from keeping the existing building and undertaking a light refurbishment to a comprehensive retrofit or knocking down a building and redeveloping.

Newer buildings are much more energy-efficient in operation than older ones, but the embodied carbon produced in their construction — the carbon emitted from the manufacturing of concrete, glass and steel — is huge. Embodied carbon accounts for 50% of all emissions over a new building’s life span, a study from academics at the Karlsruhe Institute of Technology found. As electricity grids across the world draw more on renewable sources rather than fossil fuels, that figure is expected to rise to 75%.

The City’s planning guidance aims to avoid situations in which developers end up emitting more carbon by developing new and supposedly sustainable buildings than they might save by keeping existing buildings in operation.

The City is the first planning authority in the UK to demand such an assessment of developers. And while it is not quite fair to say that developers could knock down buildings at will previously, making developers think before demolishing is a change for a district based on growth and tall towers. 

Joshi said the aim is not to reject schemes that have not properly considered the carbon emitted over the whole life of a project but to guide developers and ensure they are considering embodied carbon early in the process.

But, he said, “Developers can put forward any scheme they want, and the committee has the absolute right to reject any application.”

The City worked with developers and bodies like the City Property Association to draft the guidance with a view to finding a balance between environmental and economic sustainability.

“We wanted to make sure we are not stifling economic growth or sectoral growth, or overplaying the responsibility developers need to take,” he said.

It was important to provide the real estate industry with clarity about what was expected of it, particularly as schemes are being rejected in London because of concerns over embodied carbon. 

M&S’ plan to demolish its flagship store on Oxford Street was rejected by Secretary of State for Levelling Up, Housing and Communities Michael Gove partly because embodied carbon emissions had not been properly addressed by the retailer.

“Our policy was adopted in March and has been met with approval by the sector. Having that clarity is helpful,” Joshi said.

“The key thing nobody wants is stranded assets.”

Joshi said a path needs to be found for office buildings that still won't be attractive to potential office occupiers via refurbishment or retrofitting. To crack that nut, Joshi is looking at future demand for office space in the Square Mile. 

The City of London Corp. commissioned a report earlier this year from consultants Knight Frank and Arup looking at future job growth in the City, a key indicator of future office demand. The widely publicised headline figures spurred glowing coverage of 85,000 new City jobs between now and 2042, based on Greater London Authority projections, necessitating nearly 20M SF of net new office space. 

But a look at the calculations in the report paints a more nuanced picture. That figure of 20M SF of new office space is predicated on a full return to in-person work, which seems a stretch given current working patterns. 

The City of London, including a rendering of the oblong tower 55 Bishopsgate in the centre.

A second scenario, which the report calls “hybrid peak,” is more aligned with current working patterns, with occupancy higher in midweek but still below pre-pandemic norms. That would mean a need for 13M SF of net new space.

A third scenario, what the report calls the “new diverse City,” envisions a future in which higher rates of working from home become the norm. In that case, just 6M SF of new space would be needed.

With more than 5M SF of new schemes in the pipeline, the level of required future new development in the City, both refurbishments and new schemes, has a wide spectrum of potential outcomes. 

“The City has a huge history of supporting financial services, and I don’t see that changing. I see that growing because of the exciting ecosystem we have here,” Joshi said. “We’ve had huge growth in the tech sector, and you’ve seen big-name companies like Apple taking space in some iconic buildings.”

A second key policy being drawn up on his watch aims to both deal with potentially stranded assets and make the City more appealing to a broader array of occupiers.

Until now, the City has very much been “offices first,” Joshi said: If a developer wanted to convert an office building to another use, it had to pass a viability test, putting forward a strong case as to why it could not be used as an office in the future. 

Under new rules being drafted, those viability hurdles would be reduced in a kind of fast-track system for converting older assets if owners wanted to convert an office building to a hotel, educational use or cultural use, Joshi said. 

Such conversions will still not be easy. The report commissioned by the City underlined that a significant proportion of the City’s offices do not currently meet energy-efficiency standards, and money will need to be spent for them to legally be re-leased. 

But he said there would be enough demand from hotel, cultural and educational uses to pick up any slack from offices that can no longer be used for their original purpose.

“We need to create more diversity in the City’s ecosystem at the same time as maintaining its position as a global financial leader,” he said, adding that educational and cultural space will help to attract more office occupiers in sectors like tech and media. 

One thing not on the agenda is fast-tracking conversions from offices to residential. While districts like Midtown Manhattan in New York are setting up new processes in order to facilitate transforming obsolete offices to multifamily, the City is maintaining its policy of businesses first, residents second: 587,000 people work in the City each day, but only 9,000 people live there. 

“We see that number rising, but not doubling anytime soon,” Joshi said. “We don’t want residential pepper-potted around the City. We don’t think we can provide the amenities or the services they deserve.

“I don’t look at it as replacing X use with Y alternative use. It’s about whether adding a new use can help us to innovate and can help all of the people that use the City succeed.”