Simon Iatrou is a senior content strategist at Magenta Associates and was previously editor of Facilities Management Journal and i-FM
Adapt or die
When Charles Darwin developed his theory of evolution, he probably wasn’t thinking about converting commercial property into residential flats. But the phrase cropped up again and again at the 2025 UK Real Estate Investment & Infrastructure Forum for exactly that reason. My first visit, but its fourth outing at the Royal Armouries Museum and Leeds Dock.
“The real estate industry is facing a tangle of threats, but can it adapt?”
I heard similarly big, ominous phrases at this year’s event: “climate emergency”, “geopolitical uncertainty”, “brittle, anxious, non-linear and incomprehensible” (BANI is the new VUCA, in case you missed the memo) – and they all pointed to the same stark challenge. The real estate industry is facing a tangle of threats, but can it adapt? Is it ready to change?
In other words, do the solutions match the rhetoric? This tension showed up most clearly in several familiar areas: sustainability, real estate strategy and technology.
A green revolution is coming
At an ESG breakfast briefing, Matt Mace, editor of sustainability news site Edie, repeated a now-familiar stat: 80 per cent of the UK’s current non-domestic building stock is already standing and will still be up in 2050. This, he explained, highlights the critical need to finance a “retrofit revolution”.
Research by the UK Green Building Council, Mace added, suggests that even a shallow retrofit approach – tackling the “low-hanging fruit” – could deliver up to a 30 per cent reduction in operational energy use. In turn, this could lead to deeper net gains.
However, plenty of roadblocks remain. Edie’s latest Sustainable Business Tracker, a survey of 170+ in-house sustainability professionals (25 per cent from the construction industry), indicated a lack of funding for long-term ESG projects, hampering big, innovative work and upfront capital investment.
Mace also mentioned the elephant in the room. “2025 has been the year of ESG rollbacks, despite Labour’s efforts to speed up the net-zero transition in the UK,” he said. “We’re feeling the ramifications of the US election, Trump, and tariffs, so if you have those on your bingo card, you can tick them off. Funding that was in green or ESG-labelled funds – totalling $8.6bn [£6.35bn] – has flowed out in this first quarter alone.”
Still, there is cause for optimism. According to Mace, 88 per cent of Edie’s respondents reported that their chief executive is either somewhat or highly engaged with sustainability, suggesting the boardroom isn’t closed. Meanwhile, JLL research in the US found that 42 per cent of investors and 34 per cent of occupiers are focusing on green office space, which continues to attract a premium.
Progress, Mace said, depends on moving beyond simple pledges to detailed, long-term plans, particularly Climate Transition Plans. “A pledge is just that – empty words on a page,” he added. “If you can build your long-term plans, you can negate the short-term pain points that we see with these big macro trends, impacting supply chains and markets.”
A real estate arms race
Across several sessions focused on real estate trends, much of the conversation was about how occupier demands continue to shift post-pandemic. Office space will have to evolve with them.
In a session titled ‘Beyond the Amenities Arms Race’, David Porter, a partner at Knight Frank, predicted that hybrid settings would remain the norm for the next three years, with his firm already seeing “a slant towards office-first and office-only” models. At the same time, Knight Frank data has found that the gap between the vacancy rate for new and Grade A spaces (now at 6.4 per cent) and the total vacancy rate is the widest it’s been in 11 years. Porter characterised this not as a “flight to quality” but a “fight for quality” – and that fight, he said, is over flexibility, sustainability and amenity.
Perhaps, though, the sector still needs to move beyond the mindset of “amenities for amenities’ sake” – beer fridges, ping pong tables, the kind of features that have taken up disproportionate space in the national press. In a separate ‘Rethinking Real Estate’ session, Imogen Thompson, executive director at the Urban Land Institute, reminded the audience that people now need a very good reason to come into the office. “Can we do our laundry at work? You laugh,” she said, “but we have spoken to providers offering laundry services and dog valets.”
Nonetheless, there was wide agreement that landlords and managing agents need to get more serious about amenities and the overall occupier experience – working harder to offer meaningful benefits that meet actual needs. In his session, Porter said this means prioritising functional amenities rather than flashy ones, such as education-focused spaces including auditoriums and event spaces with learning programmes.
Susan Jayne Thams Carruth, partner – operations at GXN, agreed, pointing to the Open Learning Hub at 2 Finsbury Avenue. Designed as a public function on the lower levels of the building, it is visible and accessible from the street. The aim, Carruth said, is to provide upskilling opportunities for both tenants and surrounding communities, especially young people. It is envisioned, she added, as a space for “communities of practice, communities of interest, and usable outside office hours”.
The merging of conventional boundaries and user groups was a recurring theme. Thompson described it as “looking beyond the red line boundary” – a call to understand and connect with the vibrancy of local communities.
Michael Wiseman, head of campuses for British Land, said this same thinking had informed their shift to a campus model, investing “in collections of buildings rather than individual assets”. It allows British Land to deliver more cohesive experiences for occupiers. He cited the new Canada Water campus as an example of how mixed-use development can foster stronger links with the neighbourhood.
However, Porter called for more of this mindset across the industry. “Occupiers talk a great game about giving back to the community. Are we seeing that? I’m not sure.”
AI is taking our jobs
Maybe. Maybe not. Sessions on technology revealed an industry that’s optimistic about AI but still figuring things out – the scale of its future impact still somewhat ambiguous.
David Peters, director at Jeeran UK, described AI as an “infinite-information sidekick” that can unlock time for strategic thinking. His company’s UK operation, he said, is lean enough that it could potentially be built entirely around AI – freeing up time for deeper thinking and more valuable work.
At Gensler, residential practice leader John Badman said the firm’s focus is on using AI to “enhance and supercharge” design talent, not replace it. Gensler has built a proprietary AI imaging tool which uses AI to enhance initial sketches and ideas, feeding information and descriptive words into the system to generate a large volume of visual options rapidly that the design team can then review and discard. This application, he said, speeds up visual communication with clients and local authorities, ultimately informing the creation of physical spaces.
Like Peters, Sarah Allaoui, senior associate at Hoare Lea, a Tetra Tech company, urged everyone not to shy away from the fact that AI will replace many roles – the key lies in automating low-value work to focus on high-value outputs. In geospatial work, for example, “location unlocks intent, but AI unlocks scale”, she said.
Survival of the fittest
The real estate sector is clearly facing multiple, converging existential threats. People are asking the right questions, and many companies are doing exciting things. But the truth is: if you don’t already know that ESG needs to go beyond box-ticking, that a great occupier experience delivers real value, and that AI has massive potential to support – not just replace – human work, then you’re already well behind.
What UKREiiF made clear is that the only way to turn these threats into opportunities is through real, meaningful action.
Read More
Contributor