Christopher Hedley, Director of IPD Occupiers, welcomes you to this special occupiers’ edition of Real Return.

This edition of IPD’s online newsletter Real Return focuses on the areas of the company’s business covered by IPD Occupiers.  The edition aims to raise awareness of our product developments and the issues facing occupiers and their service providers, but also aims to be of interest to our property investors around the world who now more then ever need to have an understanding of their occupiers for their future performance.

The newsletter highlights the IPD Occupiers Property in Business Conference which takes place in London on 29th June and is entitled “Ambitious Realism”.  There is no better place to discover how UK occupiers are re-engineering their use of property in the challenging economic environment confronting them – and in particular how evolving information sources, like those produced by IPD, are helping them to understand their situations and plan for the future. Real Return features an overview of the event as a whole and two articles from key speakers: Accommodating the future workforce by BBC’s Head of Workplace, Chris Kane, and a taster of the talk on ‘Spotting Opportunities’ to be given by Glenn Corney of IPD Occupiers.

IPD Occupiers, like IPD’s investment services, is a multi-national business.  This is shown in the article updating you on IPD Occupiers innovations in France, Germany and South Africa, which also gives a brief introduction to IPD GEMS – the Global Estate Measurement Standards. GEMS are a suite of measurement structures that can be used for analysing the occupational performance of buildings across the globe, and one – IPD's Space Code – is covered in more detail in another piece, written by Hermen van Ree, Head of Research and Development at IPD Occupiers.

As a standard framework for measuring spatial areas within buildings across borders, the Space Code may well have uses for investors as well as occupiers, whether for comparing building operating costs per unit of floor area between countries or for understanding different valuation methodologies.  Furthermore, IPD Occupiers has noted interest in a number of national markets from investment managers wishing to analyse potential occupier demand. IPD Occupiers are now looking for contributors to support a study of future occupier requirements for property. The research is likely to look at issues of global mobility, building preferences, and value. Findings should provide critical insights for occupiers, landlords and suppliers alike.

In a similar vein IPD Occupiers have recently been part-responsible for production of the Property Industry Alliance/CoreNet Global UK Occupier Satisfaction Index 2009.  This survey of more than 200 occupier organisations shows their level of satisfaction with the property they use is still below what might be expected of most business-to-business client relationships.  However, the Index remains stable despite the deterioration in economic conditions in the last year.  In particular occupiers are recognising that landlords now offer greater lease flexibility, a trend that has been accelerated by market forces.  The main focus of occupiers is now on value for money and costs.  Exactly half of the respondents are dissatisfied with the value for money from service charges. This report can be downloaded from www.occupier-satisfaction.co.uk

With IPD numbers showing that UK rental values are now declining to compound the 40% fall in capital values, the importance of the occupier to the investor is clear as the latest IPD figures show:
• Void rates on many investment funds are above 10%. (Q1 2009)
• New leases on average are only 6.2 years long (2007/8).
• Over a third of break clauses are now exercised (2007).
• Only 17% of rental value is renewed on expiry (2007).

IPD is also recognising the importance of occupiers in its 2009 RealWorld international property researchers’ conference, which takes as its theme the role of occupational markets in determining investment performance.  Scheduled for 10th September, the conference asks what researchers know about occupiers, and how to make them happy – and whether having happy occupiers pays back in investment performance.

I hope that you find this first IPD Occupiers edition of Real Return both interesting and useful, whichever side of the fence you sit on yourself.

Christopher Hedley
Director, IPD Occupiers