Future Proofing London by fishergermanllp

Future Proofing London

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Welcome

to our Future Proofing London series For centuries, London has been at the heart of international commerce and global finance. More recently, the UK was the first major economy to pass a net zero emissions law. However, being at the forefront is never enough. London must continue to evolve if we are to remain leaders in global business, international finance and environmental strategy. As a firm, we care very deeply about London and the City. This is why we want to start a dialogue with you about what we believe are three of the biggest challenges we face, both as a city and as a nation. Our London office plays a crucial role in our ongoing growth and expansion in London and the South East. We provide a wide array of urban-orientated services to a diverse client base, including UK and international companies together with investors, occupiers, developers, infrastructure operators and landowners. We advise and transact on a range of topics, from office developments to food production and natural capital delivery, as well as major infrastructure projects, planning and property management. This broad expertise gives us a unique perspective on some of the most significant strategic challenges we face as a global trading centre and as a nation. These challenges include: The Working City: What are the prospects for our capital markets capability; what is the future of the office sector and workplace strategies; what are the factors which impact our ability to conduct business? The Green City: Can urban sustainability keep pace; how will the energy efficiency of our workplaces evolve; what are the explicit ‘green agreements’ between owners and occupiers? The Smart City: What are the profound threats to progress connectivity-as-a-service; how AI could accelerate the nation’s planning capability, as well as protect the utility networks which are critical to keeping the city running? What follows are our insights into these topics from our industry-leading experts and a few of our clients have kindly offered comment. We hope this report will spark a meaningful debate and that we can continue this conversation through our podcasts, events and discussions. While our subject matter experts have shared their perspectives, we are eager to hear your thoughts. Does our direction resonate with you, or do you see it differently? I hope you find this report engaging and thought-provoking. We look forward to working with you and continuing the important debates.

Stuart Flint Partner 07501 720422 stuart.flint@fishergerman.co.uk 3

The Working City The first part of our Future Proofing London report, The Working City, explores the future of capital markets, office spaces, and workplace strategies.

1 Adding value to a world class capital market 2 Navigating the multi-generational workspace 3 Protecting an engine of economic growth 4 Business Rates: will new reform finally deliver fairness? 5

Adding value to a world class capital market Simon Eddy - Investment Agency

According to The City of London Corporation, London is a ‘top global financial centre’ with a well-established reputation for being one of the most international and connected financial centres in the world. Nearly 40-years ago, the ‘Big Bang’ deregulation of the City and introduction of electronic trading established London as a leading financial centre, second only to New York. This pivotal moment was a catalyst for financial innovation, improved market efficiency and enhanced competition. Today we face a similar challenge. The City must adapt and innovate because it cannot afford to rest on its laurels. London maintains its position as second in the Global Financial Centre league table for human capital and reputation, second to New York. It attracts a diverse range of investors, from international ultra-high net worth individuals

US administration also underpins the attractiveness of the City and the UK. Additionally, the US’s move away from sustainability and ESG, which contrasts with the global focus on tackling climate change, may also play to our advantage.

to national and global pension funds, institutions and corporations.

Why the City? As the jewel in the UK’s economic crown, generating 25% of the nation’s GDP, the future of the capital is critical to both national and international markets and economies. However, if London is to continue to hold its position at the top of the global financial centre’s league, we must curate and futureproof the City’s offer. London maintains its top position due to a mature, transparent market; easy access to capital; low entry and trading costs, including lower stamp duty than competitors; stable political, regulatory, and economic systems; global significance; use of English; and a relatively weak pound that draws offshore investment. The prognosis for the future of London and the City is positive, especially when compared to other financial centres and countries under pressure from global trade tensions. Many have suggested that the UK could become a refuge for capital seeking to weather the current global trade wars and to take advantage of the Government’s commitment to economic growth. Our strong relationship with the current 6

Notably, London appears almost immune to the economic strategies of the current US administration. This is because only 3.2% of its exports are goods, while over 75% of its almost $1 trillion economy comprises services such as banking, insurance, technology and tourism, none of which are currently affected by tariffs.

competitiveness in the light of the Trump administration’s views on net zero and climate change. The financial advantages of marketing energy efficient buildings in prime Central Business Districts (CBD) locations are clear. This is benefiting landlords because sustainabilityliterate tenants are willing to pay a premium to occupy these premises. Current and prospective tenants understand the benefits of green buildings; the cost savings associated with them and the perceived value of a demonstrable green philosophy to all their stakeholders (including employees). Demand for such space exceeds supply resulting in the emergence of a two-tier market where rents are already differentiating prime stock from secondary stock. The increasing focus on ESG from both landlord and tenants will accelerate this differential as costs become prohibitive.

Future Proofing London To ensure London, and consequently the UK, retains its leading position at the top of the capital market league table, the City must adapt, accept and adopt new technology, processes and requirements from occupiers and, of increasing importance, workers’ needs. It is essential to focus on three key areas: •

boasts Europe’s largest technology ecosystem and

In this context, London continues to present an attractive

ranks second globally to the US, it must continue to lead

investment prospect. The principal property asset classes

in fintech and AI/cloud computing development and

currently exciting City investors include: •

•

The living sector - particularly hotels, in light of the recent relaxation in the City’s approach to planning together with the emerging sectors such as student

•

Secondly, talent and skills are vital. The Government predicts that 20% of the UK workforce will be underskilled for their jobs by 2030. Therefore, companies in the City and across the capital must have a clear skills

housing and Build to Rent (BTR)

strategy to ensure their employees can capitalise on the

Industrial & logistics sector - especially urban logistics

services. Competitor markets such as Singapore, India,

where speed of delivery of goods and food is a critical requirement •

adoption

The office sector - with a new focus on ESG, amenities and accessibility

Firstly, technology adoption is crucial. While the UK

rapid evolution in technology and digitalised business and the US pose significant threats to the City’s capital market offer

The retail sector - London’s underlying attraction to tourists will continue to be a catalyst for this market. The structural changes the sector experienced in recent years have led to amenity-rich assets, which are increasingly in demand by young consumers who are drawn to experience-led activities

Sustainability Climate change related legislation is a major catalyst for all sectors, especially in light of forthcoming legal obligations to comply with Minimum Energy Efficiency Standards (MEES) / Energy Performance Certificate (EPC)* regulations, and ESG requirements. As the focus on sustainability is embedded into the UK property sector, this bodes well for our global 7

•

Lastly, AI and data infrastructure are imperative. The UK is at the forefront of AI adoption, with the third-highest number of data centres globally. However, investment in this sector will be influenced by access to uninterrupted power and watercooling, high-speed networks, and robust physical and cyber security protocols

We must not be complacent. London’s position at the forefront of commercial and capital markets is under threat from both established markets, such as the US, and emerging markets namely China, Japan, India and Dubai, which all have the desire and the political will to displace us. London and the UK must continue to attract new entrants and be development-friendly, with few barriers to entry such as high employment costs and taxation rates and a government that supports growth and innovation. While the UK is currently considered a safe haven, we face continual political and economic risks which affect the attractiveness of the City when compared to the competition across the world. While global market volatility could prove to be our friend, the City cannot rest and must continue to evolve, adopt and adapt. *2028 minimum EPC rating for let commercial property tenancies will be C. 2030 minimum EPC rating for let commercial property tenancies will be B (under consultation).

Simon Eddy Partner - Investment Agency 07768 005813 simon.eddy@fishergerman.co.uk

“

London’s position as a global financial centre is closely tied to how effectively capital is mobilised

into its real economy. While the Square Mile remains the hub of international markets, London’s long-term competitiveness also depends on sustained investment across its boroughs. Outer London, in particular, offers untapped potential - from industrial corridors and emerging town centres, to areas primed for transport and energy upgrades. With the right frameworks, these could deliver strong returns and wider economic resilience. One urgent challenge is upgrading London’s commercial property. As MEES deadlines approach, a two-tier market is emerging – compliant assets command a premium and secondary stock risks being left behind. SMEs make up 99% of London’s business community and are critical enablers to move the dial on retrofit delivery but face significant barriers in accessing finance. Without targeted, risk-mitigated tools, this gap could stall progress and weaken London’s global investment appeal. Focused, risk-reduced financial products would enable smaller firms to access capital and speed up compliance. Planning reform is equally critical. The Planning and Infrastructure Bill offers a rare opportunity to modernise approvals and integrate ESG into development. In the Chamber’s consultation response, we emphasised that predictability and speed are equally important. Investors require rules that are clear, consistent and transparent across all London boroughs. Without this alignment and a focus on net zero targets reform risks perpetuating fragmentation that deters capital. Designed well, it can instead rebalance London’s growth map and unlock investment across underdeveloped areas. To futureproof London’s financial offer there must be three core principles: maintain innovation leadership, align capital with urban transition, and empower SMEs as full partners in delivery. Large corporates and institutions anchor London’s global brand, but SMEs sustain its dynamism. Both must be part of a joined-up strategy.

Igor Bartkiv Policy & Research Manager London Chamber of Commerce and Industry 9

Navigating the multigenerational workspace David Laws and Ben Stanley - Office Agency We are witnessing one of the most dramatic evolutions in the modern workplace, presenting both landlords and occupiers with new and unique challenges from those they faced just five years ago. The most profound catalyst of this change is our evolving expectations of the ‘work contract’, rooted in the global pandemic that saw workers across sectors undertaking their roles remotely. This shift has, in some cases, become irrevocable. Many office employees now demand greater flexibility in terms of where they work and when they work. In this context, where office employees have greater choices, there needs to be a compelling reason for them to choose the office as their default. Office working is no longer a given. This creates an increasing need for employers to clarify and articulate their office space requirements and make an attractive office proposition to employees. This has led employers to rethink their

The multi-generational office The multi-generational offices are becoming increasingly the norm, as retirement age is pushed back and opportunities for young people to enter the workplace through apprenticeships expand. While this brings many positives, it also adds complexity around varying attitudes to work, the workplace, and work culture. Offices are increasingly becoming spaces shared by employees aged 17 to 70. Such a diverse workforce demands a significant shift in our understanding of who offices are designed for, how they are managed, and where they are located.

productivity strategies, their understanding of the social

The challenge for landlords is to invest in office locations

benefits of working from an office, and their approach to

that appeal to employers of this wide demographic, as well

collaboration across teams and generations.

as create environments that encourage greater productivity. High quality in-office leisure and wellness facilities are in demand. However, incorporating them without sacrificing too much income-generating space requires a delicate balance of ambition and judgement, especially in an inflationary environment where construction costs have risen to unprecedented levels. Location will always be a critical driver, as will quality. There is a noticeable migration of firms into CBDs from city fringe locations. For many, a more prestigious address is not only good for attracting and keeping clients and customers, but it also underpins talent attraction and retention strategies, and provides greater opportunities for brand positioning. Occupiers need to ensure the workspace they choose supports the varying needs of their employees. Given the popularity of working from home, employees tend to visit the office for formal meetings, or for collaboration purposes, rather than just coming in to work at a desk from nine-tofive. Utilisation of space, therefore, requires greater flexibility, hence the emergence of a less formal working environment. The physical layout of a workplace has become more critical

than ever: what is the right balance between formal meeting

occupiers and landlords. While some large corporations with

rooms, informal collaboration zones, private offices and hot

big brand reputations are more likely to succeed in drawing

desking?

talent to suburban hubs, most organisations tend to continue to build their businesses and thrive in CBDs.

A start-up, for example, wishing to attract a younger generation who demand greater in-office flexibility, will

Places like London’s financial district in the City offers a

have very different requirements to that of an established

vibrancy and character which non-CBD locations simply

professional services firm hoping to work with experienced

cannot replicate. Proximity to cultural and professional hubs,

talent.

bars, restaurants and gyms will continue to attract and retain every generation, but it does tend to resonate most strongly

Conflicts can arise when the needs of all generations are

with younger employees.

not adequately met. This conflict could significantly impact staff retention and hiring, proving that social dynamics in the

For landlords, investors, and occupiers it is critical to align a

workplace really are business critical.

fit-out, design and location strategy, that meets the evolving needs of a multi-generational workforce with a company’s

Nevertheless, location remains fundamental for both

brand persona, strategy, and budget.

Offices are increasingly becoming spaces shared by employees aged 17 to 70

Workplace influences The core themes which are influencing the evolution of the

to collaborate better. We have all become accustomed to conference call technology, which presents good

workplace include:

opportunities to work together without being in the same

Collaboration and community space

(AR) and virtual reality (VR) will add a new dimension to

Whilst working from home works for some, there is an

this facility. However, there is still a place for in person

increasingly acknowledged loneliness epidemic affecting our country, most acutely felt by those living in cities. When done well, workplaces can have a role in creating a village or community environment where everyone feels welcome and

physical location. The emergence of augmented reality

collaboration, which can be enhanced by well-considered office spaces. This demand for collaboration and community has led to the emergence of ‘club’ style office spaces, featuring coffee shops, pool tables and in house leisure

known.

facilities. Workplaces that can act as a centre for interaction

Workplaces can also support employees and businesses

sectors and locations, not just in high value CBDs.

and community look set to become the norm in all market

Technology The adoption of AI is the hottest topic in town. Conversations revolve around how it can be deployed in every sector to undertake a range of tasks, fill skills gaps, improve the speed and efficiency of certain tasks, and undertake accident prevention and subsequent remedial tasks faster and more accurately than humans can.

buildings, whether new build or retrofitted; the management of buildings to ensure they meet identified and measurable ‘green criteria’; green leases, which are still at a relatively nascent stage; and efficient management of waste and recycling, especially of rain and recycled water.

Amenity rich spaces An office is already more than just a workplace. It is becoming

AI can also be used to optimise space planning by monitoring

a destination, a place where colleagues meet to work

real time occupancy, improve buildings’ performance and

together and a place which creates opportunities to share

enhance our protection from physical and cyber threats,

and collaborate. ‘Amenity rich’ is the term that encapsulates

as well as allowing us to do things faster, better and more

this trend and applies to both the in-building environment

efficiently than ever before. In the context of our workplaces,

and the area immediately around it.

these advances can have a significant impact on the office offer made to employees.

Sustainability Gen Zs care more about the green credentials of the building they will work in and their prospective or existing employer’s green credentials, than they do about access to a pool table in the office*. This has already started to influence occupiers’ priorities and their expectations of the space they want to lease, and by implication, landlords’ workplace offers. In this context, there will be increased focus on issues such as green

With the office offer now more of a consideration for recruitment and retention, employers have to consider the experience they are presenting for those working or visiting their spaces. Rather than an out-of-town business park, where a coffee shop or pub would be a drive away, many prefer to step out of their office and have access to trendy bars, restaurants and leisure facilities. A location that allows employees to pop to the shops at lunchtime or explore local experiences seems increasingly important to employees of all generations.

These trends are already evident and likely to become even more prominent. This will lead to an escalation of their influence on location choice and ultimately a polarisation in the market between those office spaces which tick these boxes and those that are left behind. Future proofing commercial spaces requires a detailed understanding of an organisation’s unique mix of corporate culture, as well as its approach to diversity, inclusivity, wellbeing, and connectivity. The emergence of AI and tech-enabled workplaces creates an additional dynamic for employers looking to offer spaces that attract and retain talent. The winners will be those who can curate office environments which are adaptable, inclusive, technologically advanced and take full advantage of prime, well-connected locations. * The Engage Health Group

Ben Stanley

David Laws

Partner - Office Agency

07974 529675

078117 89932

ben.stanley@fishergerman.co.uk

david.laws@fishergerman.co.uk

“

The modern workplace is undergoing a profound transformation,

shaped by shifting employee expectations and the complexities of a multigenerational workforce. Today’s organisations must strategically address the diverse needs of employees at every career stage, from recent entrants to those nearing retirement, prompting a comprehensive re-evaluation of office design, organisational culture, and operational frameworks. The rapid adoption of remote and hybrid work models has elevated the imperative for employers and property stakeholders to develop office environments that transcend mere functionality. These spaces must serve as vibrant hubs for collaboration and community, integrating amenities, sustainability, and advanced technology as core elements. Such investments are now critical for attracting and retaining top talent. A strong focus on flexibility, inclusivity, and authentic alignment with corporate brand identity highlights the intricate challenge of future-proofing commercial real estate. Organisations that proactively embrace these evolving dynamics will be optimally positioned to enhance employee engagement, drive productivity, and sustain a competitive advantage within an increasingly diverse and dynamic business environment.

Karen Pattie Corporate Development and Property Director FRP Advisory

Protecting an engine of economic growth Laura Sutton - Industrial & Logistics

Logistics has always been a cornerstone of urban wealth, playing a role as crucial as ports, light industry and retail in driving economic growth and job creation. According to the British Property Federation (BPF), the logistics sector contributes around £232bn of GVA a year to the UK economy and supports 2.7m high quality jobs. In a bustling city like London, with nearly nine million residents, logistics is vital. It ensures the daily delivery of food and goods to consumers and businesses, meeting the demands of Just-in-Time orders, online shopping, and nextday and same-day deliveries for both raw materials, parts and finished goods, delivered to customers at home and abroad. However, the sector faces significant challenges due to the diminishing supply of land, rising values and competition from residential and other land uses. To continue enhancing its service offerings, meeting sustainability ambitions, and remain profitable, the logistics sector must innovate.

Multi-storey developments For instance, in 2024, Segro, in partnership with St George, completed its first multi-storey industrial and warehouse space in Brent. This five-storey building includes workspace, ground floor shared amenities, loading, lifts, parking facilities, and a communal roof terrace with event space. Multi-level concepts have also been implemented by Bloom in Brixton and other locations, primarily on a two-storey format. These schemes offer goods lift access to upper floors, eaves heights ranging from 4-6 meters and floor loadings from 10-37.5kn per sq m. Multi-storey depots are most likely to succeed in and around

This innovation is crucial in the face of competition not only from other operators but also from the Government’s ambition to build 1.5m homes, which intensifies the competition for development land. This has led to the emergence of innovative solutions such as multi-storey industrial units and ‘beds & sheds’ developments. While these innovations come with operational and financial challenges and may not be a viable for all, they offer intriguing methods for increasing density, and optimising land use. 14

cities, such as within London’s travel zones 1-4, where land values and development space are at a premium. A major challenge is incorporating efficient multi-level commercial vehicle access to enable greater accessibility and less reliance on goods lifts.

Key developers are closely monitoring these opportunities,

space, and three hectares of public open space.

building on the success of similar developments globally, where land is also severely limited. Rental profiling for these

Supporting investment in transport networks and

schemes, which are significantly more expensive to build,

infrastructure is critical, particularly to meet ESG targets. As

will be most attractive to businesses seeking the specific

electric delivery vehicles become commonplace, occupiers

locational and amenity advantages they offer.

require better access to charging and power supply infrastructure. Future proofing plans must also consider

Beds-and-sheds The ‘beds-and-sheds’ fusion also makes theoretical sense,

emerging technologies such as hydrogen (grant available*).

given London’s need for nearly 88,000 new homes and the

Technology adoption

logistics sector’s need for more space.

While drone technology has been discussed for some time, significant hurdles remain before becoming commonly

Recent developments support this view, such as the St

used. Drones are well-suited for surveillance, inventory

Pancras London project, which combines Unite Student

management, and order picking, but their use for last-mile

Accommodation and a Travis Perkins depot. This BREEAM

delivery poses challenges such as licensing, safety and space

excellent-rated development includes a redeveloped builders

issues, especially in densely populated areas.

merchant’s depot on the ground floor and 571 student bedrooms on the upper floors, featuring green landscaped

The ‘Amazon effect’, consumers’ increasing desire for same

roof gardens and a community space. Another example is the

day and instant delivery, plays a significant role in the sector’s

former Nestle Factory in west London, where Barratt London

evolution. Faster supply can consume up to three times the

and SEGRO created a site that retained its heritage while

energy of slower deliveries, but consumers are not always

providing 1,386 new homes, over 230K sq ft of light industrial

aware of this. When informed about the environmental impact of their choices, consumers tend to change their behaviour. A recent MIT study, the ‘Green Button’ project, found that consumers would choose to wait longer for their consignment when presented with information about the environmental impact. A public information campaign could reduce the pressure on operators to focus on faster services and instead create an operational model that optimises land use, delivery economics, and sustainable strategies. AI adoption is another innovative development, enhancing current routing and scheduling software to handle real-life traffic disruptions. AI can improve vehicle tracking and routing, manage urban traffic flow, and introduce smart traffic management systems to optimise traffic flow, reduce congestion and enhance safety for all road users. 15

In London, maximising the use of the River Thames and waterways for moving aggregates and building supplies is starting to happen, reducing pressure on congested streets, and lowering carbon emissions. While last-mile delivery strategies have long preoccupied operators, the focus has shifted to issues such as electric vehicles, driverless vans, drones and micro hubs.

Moving products around the city smartly, sustainably and cost-effectively remains a perennial challenge, but the current generation of operators appears to be addressing it successfully. * https://www.find-government-grants.service.gov.uk/grants/electric-vehicleinfrastructure-grant-for-staff-and-fleets-1

Laura Sutton Partner - Industrial & Logistics 07974 393007 laura.sutton@fishergerman.co.uk

“

Multi-storey developments such as SEGRO V-Park Grand Union are an important example of

how we can make more efficient use of limited land in London, particularly where there is pressure to deliver both new homes and modern industrial spaces. By bringing residential, employment and community uses together, these schemes can create sustainable, mixed-use neighbourhoods that reduce travel distances, create jobs and support local communities. When thoughtfully designed and located, multi-storey projects can make a meaningful contribution to delivering growth, sustainability and urban vitality in the capital.

Ben Gomez-Baldwin Director, London SEGRO

Business Rates: will new reform finally deliver fairness? Jonathan Young - Business Rates

For decades, business rates have been an essential yet heavily criticised pillar of the UK’s tax system, raising nearly £25bn annually for Local Authorities and the Government. As the 2026 revaluation approaches, alongside the most extensive programme of reform in over a decade, it is time to reflect on whether these changes will genuinely deliver a fairer, more efficient system that better reflects modern commercial realities.

expanded package of reliefs and transitional measures: Transitional relief (2026–2029) A new three-year transitional scheme will cap annual increases in bills, preventing sudden overnight jumps. While upward movements are controlled, decreases will pass

From 1 April 2026, all non-domestic properties in England

through to ratepayers immediately, offering welcome relief

and Wales will adopt new rateable values, based on open

for businesses in struggling areas.

market rental evidence from April 2024. This marks the first revaluation under the new three-year cycle introduced by

Supporting Small Business (SSB) Scheme

the Non-Domestic Rating Act 2023, designed to ensure

A key safeguard for smaller occupiers, will be extended and

valuations track market movements more closely, reducing

enhanced. From April 2026, it will limit annual increases for

the lag between economic conditions and business

eligible ratepayers to the higher of £800 or the relevant

rate liabilities.

transitional cap, providing a valuable buffer for small

For many businesses, particularly in London and major

enterprises, including those losing their 40% RHL relief.

distribution hubs, the shift is expected to be significant.

Small Business Rates Relief (SBRR)

Rising rental values in prime locations mean some occupiers

The grace period will be extended from one year to

will see substantial increases. Conversely, businesses in areas

three years for businesses expanding into a second

with weaker markets may benefit from reduced valuations.

property, addressing the “growth penalty” that has historically

Perhaps the most transformative change is the move from

hindered SMEs from scaling up.

the longstanding two multiplier model to a new five multiplier

Crossrail Supplement

system. The five multipliers will be:

Properties in London remain subject to the Crossrail

•

Small Business Multiplier

supplement. From April 2026, the threshold for properties

•

Standard Multiplier

liable for the supplement will rise to £92,000, reflecting the

•

Small Retail, Hospitality & Leisure (RHL) Multiplier

2026 national revaluation. This change means an estimated

•

Standard RHL Multiplier

14% of London properties will now be subject to the

•

High Value Property Multiplier for properties with an RV

supplement.

of £500,000+

Despite these supportive measures, not all sectors will

For the first time, qualifying RHL properties gain permanently

escape pain. Updated valuation evidence shows that

lower multipliers, signalling a structural shift in support

thousands of pubs and hospitality venues, buoyed by

for high street and consumer facing sectors. Meanwhile,

post pandemic recovery, face steep rises in rateable values.

the introduction of a higher multiplier for large properties

Central London offices and retail units, already the most

reflects the Government’s ambition to rebalance burdens

expensive premises globally, will be affected by higher

away from SMEs and traditional retail and towards high value

valuations and the new high value multiplier.

commercial spaces, including major logistics operators and

Landlords and occupiers in high demand hubs such as the

corporate headquarters. Recognising the disruption that

City and Westminster, liabilities are set to rise sharply. The

revaluations can create, the Government has confirmed an

challenge will be ensuring these changes do not undermine

London’s competitiveness, especially hybrid working and

multiple operators, who were previously capped on

global economic headwinds reshape commercial demand.

relief, many smaller operators are now worse off due

The Duty to Notify provisions, effective from 2029, require businesses to report key changes, such as new

to reduced relief and higher assessments following the revaluation.

leases, building alterations, and site adjustments, to

To partially address this, the Government has

the Valuation Office Agency (VOA) within strict

announced additional support for ‘pubs’ but not the wider

time limits. Failure to comply may result in escalating

sector. For 2026/27, pubs will receive an additional 15%

penalties. This will improve transparency but increase

relief on their bills, and for the following two years, bills

the administrative burden on businesses. requiring

will increase by the rate of inflation only. There will also

better internal processes and closer collaboration with

be a review of the methodology used by the VOA for

property advisors. Ratepayers will also gain the right to

revaluation, particularly in light of the increased operating

view more detail on how their valuations are calculated,

costs since Covid-19.

addressing long running frustrations around VOA opacity.

The High Value Property Multiplier primarily targets

Many longstanding issues stem from slow processing

large warehouse- based online retailers, but many non-

times, limited, inefficient VOA resources, and cumbersome

corporate, standard logistic and online operators will also be

appeals workflows. Though the Government has committed

affected, including those in the struggling manufacturing

to reviewing the valuation methodology and improving

sector, which is a significant concern.

technological efficiency, businesses may still face uncertainty, particularly where leases are short or market conditions volatile. Addressing these resource and system challenges will be critical if the reforms are to deliver fairness.

Jonathan Young

Whilst new measures such as three yearly Revaluations and

Partner - Business Rates

Improvement Relief have been widely welcomed, there is concern over the new five-multiplier system. Whilst the new permanent lower RHL multiplier benefits the

“

07711 173114 jonathan.young@fishergerman.co.uk

Business rates reform is long overdue. Our members consistently tell us the current system is too complex,

unpredictable, and a barrier to investment. The Government’s decision to introduce additional tax rates for properties with a rateable value of £500,000 and above from 2026 does not address these underlying issues. There are, however, reasons for optimism. HM Treasury’s recently published Transforming Business Rates: Interim Report marks an important milestone in the reform journey. Crucially, it commits the Government to exploring a fundamental shift from a ‘slab’ to a ‘slice’ system – an approach first recommended by the CBI in our From Slabs to Slices: The path to business rates reform report last year. We also welcome commitments to explore stronger investment incentives – including an enhanced improvement relief once the data is available – and to improve administration, building on the VOA’s integration into HMRC. For these changes to deliver real benefits, the Government must not lose sight of proportionality. The administrative burden on taxpayers (such as that arising from the new ‘Duty to Notify’ provision) should be limited to what is strictly necessary to achieve policy aims. Business rates policy design must account for compliance costs, which affect the UK’s competitiveness as a place to build and grow businesses. Reform will be a multi-year process, but now is the time for stakeholders to engage to secure a better system. The CBI will continue working closely with HM Treasury to ensure our members’ views are fully reflected in the next phase of policy development, shaping solutions that genuinely reduce the barriers to growth and investment created by the current system.

Rahim Mohammed

If the government is serious about unlocking growth, it

Principal Tax Advisor Economic Policy

must prioritise delivering a simpler, proportionate and more

CBI

investment-friendly business rates system. 19

The Green City The Green City, the second part of our Future Proofing London report, explores how sustainability is reshaping the built environment.

1 Sustainability and the built environment 2 The future of commercial buildings: smarter, greener, more efficient 3 Light, medium, or dark - your choice of green lease 4 ESG and Valuation - can property valuations be future proofed? 20

Sustainability and the built environment Rachel Bridge - ESG

If you work in the property sector, you will be cognisant of the fact that the built environment is responsible for almost 40% of the nation’s CO2 emissions and 33% of its water consumption*. Approximately 80% of the buildings, which will be in use in 2050, have already been built. The built environment and sustainability are inextricably

systems. Energy Performance Certificates (EPCs) and Display

linked, and sustainability has become embedded in our

Energy Certificates (DECs) are a measure of the Energy

culture. A range of policies and strategies have helped

Efficiency Standard of the building. Consultations have also

ensure this link is acknowledged and addressed. For example,

been launched to gather industry feedback on how best to

requirements to deliver Biodiversity Net Gain (BNG) in

implement more ambitious targets. While the government

developments has promoted development practices

has not yet legislated for further changes, ministers have

that leave natural habitats in a measurably better state

signalled an intention to raise minimum EPC requirements,

than before, encouraging more sustainable land use and

reflecting both climate objectives and the growing

conservation efforts.

importance of sustainability in the built environment.

There have been moves towards retrofitting existing buildings

Some companies are also pursuing opportunities to offset

rather than demolishing and rebuilding. This enables new

their carbon emissions and explore the use of green leases

buildings to be preserved while improving their sustainability

to put sustainability at the forefront of their building

credentials by adopting energy saving and carbon emission

considerations.

reduction strategies. Examples include installing renewable energy sources, such as solar panels and heat pumps in

A more holistic approach to sustainability in the property

Heating, Ventilation and Air Conditioning (HVAC) systems

sector now centres on ESG (Environmental, Social, and

to reduce reliance on fossil fuels. Where retrofitting is not

Governance) baselining and data-driven impact assessment.

possible and building must be rebuilt, across the sector there

ESG baselining involves systematically measuring

is an increase in the reuse and recycling of materials from

and benchmarking a property’s performance across

demolished buildings.

environmental, social, and governance criteria. This process not only supports regulatory compliance but also provides

Other innovations include the implementation of smart

investors, landlords, and tenants with transparent data to

building management technology to minimise operational

inform strategic decisions. As ESG data collection and

emissions generated by heating, cooling and lighting

benchmarking mature, the property sector is moving toward

greater transparency, consistency, and accuracy . This shift

the ‘Social’ in ESG: positive environmental action leads

not only aligns with evolving regulatory expectations but also

to meaningful social benefits, underscoring the need to

enhances long-term asset value and resilience in a rapidly

integrate all three ESG pillars into business strategies.

changing market. Sustainability is an integral part of owning, occupying, and

Beyond buildings, cities like London face major environmental challenges, including climate change, pollution, and biodiversity loss.

managing a property. It is not a ‘green washing’ exercise, designed to pay lip service to saving the planet. It is an important part of the property sector’s commercial culture, as well as a creating valuable return on investment. * World Green Building Council

Rachel Bridge This is largely due to a lack of green infrastructure, which

Partner - ESG

plays a vital role in cooling urban areas, managing excess

07733 887108

rainwater, supporting biodiversity, and improving public

rachel.bridge@fishergerman.co.uk

health. This is where the ‘Environment’ connects with

“

London’s future as a sustainable, inclusive, and liveable city will depend on the buildings we design, and the decisions we make now.

Both new and retrofitted buildings, along with the spaces between them, will shape who chooses to live and work in the city. There is growing demand for buildings with better energy performance, greater flexibility, healthier environments, and lower carbon footprints. Owners are responding, but the approach is crucial. Ideally, designing from scratch with net zero in mind allows every material and every system to be optimised, with biodiversity at the forefront. However, in a dense city like London, this is not always possible. Advancing retrofit knowledge is essential, as the challenge lies in balancing the environmental and economic costs of retrofitting versus new builds, a debate that is both political and practical. The ongoing M&S Oxford Street case highlights how conflicting agendas can delay progress. As climate change brings higher temperatures and extreme weather, architects are adopting smart, site-specific solutions: reducing facade glazing to prevent overheating, using permeable surfaces to manage rainfall, enhancing natural features and even exploring floating buildings in flood-prone areas. Biodiversity is increasingly recognised as vital for urban resilience. New standards like the UK Net Zero Carbon Buildings Standard* and the Australian-imported NABERS rating system ** are setting benchmarks for building performance and carbon footprint, while some London Boroughs are retrofit-first policies. These tools help designers and developers make better decisions and give occupiers clarity. Mandatory requirements such as BNG will further support healthier environments. However, collaboration between local authorities and central government is critical, without it, even the most ambitious projects can stall. With smart, design, clear policy and shared ambition, London is well positioned to lead the way and show how cities can truly ‘go green.’

Will Poole

*The UK Net Zero Carbon Buildings Standard (UKNZCBS) is a new framework that

Partner

provides a technical standard for the UK construction industry to define and achieve net

Howells

zero carbon in buildings across their entire lifecycle. ** The NABERS rating system is a performance-based system for rating the environmental impact of buildings, primarily in Australia and the UK. 23

The future of commercial buildings: smarter, greener, more efficient Jeremy Dowding - Commercial Property Management The growing demand for sustainable practices and environmental responsibility in the built environment has led to a concerted focus on designing buildings which meet current and anticipated environmental, energy management, and operational goals. However, as we have highlighted, 80% of the buildings

This typically occurs during a building sale or new lease

which will be in use in 2050 have already been built. So,

negotiation. As a result, it is only a snapshot in time.

the future of our commercial buildings starts with those already in existence, bringing the challenge of preserving our

How a building is operated and occupied dramatically

architectural heritage while meeting sustainability goals.

affects its environmental performance. Given escalating energy costs, occupiers are now keen to monitor and analyse

As big a challenge lies in the efficient operation of

real-time data related to the energy consumption of their

commercial buildings, most importantly, balancing the often-

workspace.

conflicting demands of its occupants, with a financial and ethical ambition to minimise energy consumption and waste.

There is already a system which records the actual, rather than not theoretical, energy performance of public

At present we measure the theoretical energy efficiency

buildings, such as schools, hospitals, and government

of a commercial property at irregular intervals, using EPCs.

offices. Used primarily when monitoring buildings whose floor space exceeds 250 sq. m, ‘real’ energy consumption is calculated by analysing meter readings and energy bills. The annual assessment, which leads to the issuing of a DEC, provides an assessment of the actual energy performance of as building. However, DECs are not currently considered to be a viable alternative to EPCs because they do not assess the fabric of the building, heating systems, insulation levels and renewable energy potential, vital metrics if we are to establish “a sustainable future for our built environment” (Baroness Taylor of Stevenage, Parliamentary Under-Secretary of State for Housing and Local Government in the foreword of the EPC consultation document*). While DECs concentrate on measuring actual energy use, they differ from EPCs in that they do not provide suggestions for

structural improvements or upgrades that could lead to

interventions, optimise energy use, ensure consistent

long-term reductions in energy consumption. Instead, DECS

comfort levels for occupiers, and significantly reduce

offer a snapshot of a building’s present efficiency, typically

operational costs.

reflecting how the building is operated, without identifying potential recommendations to address underlying structural

This shift is being driven by legislation, occupier demands

inefficiencies.

and consumer attitudes to the need for adaptation to address climate change issues. The latter is probably one of the most compelling reasons why almost every major

The government has recently completed a consultation

UK company and organisation is making public net zero

aimed at determining the most effective approach to

commitments.

reforming the Energy Performance of Buildings (EPB) framework. The consultation considered a range of potential metrics including: •

•

properties which reflect their commitment to environment related best practices, in terms of their operational

Energy cost: This metric could resemble the current

performance, as well as their commitment to social

EER (Energy Efficiency Ratio), which evaluates the

responsibility. In addition, the rising cost of utilities is also

efficiency of HVAC cooling devices, by comparing

proving influential when it comes to businesses and their

the amount of cooling output to the electrical energy

‘energy conscious’ agenda.

consumed •

Businesses are now actively discriminating in favour of

Larger corporate tenants are leading this change, using their

Fabric performance: This would likely assess a

market influence to push for more sustainable and more

building’s insulation levels and promote increased fabric

technologically enabled ’smart’ buildings. Smaller occupiers

performance by monitoring, rather than predicting

may not have enough influence to initiate change alone, but

performance

they gain from larger players’ broader investments.

Heating system: This metric may involve ranking various

Despite positive innovations and behaviour changes, the

heating systems according to their efficiency and

question still remains: what do we do with our heritage

associated carbon emissions

buildings?

Energy use: This is expected to focus on the energy

Most people associate smart buildings with new builds,

consumed for heating and lighting, potentially including

but the Pirelli 35 building in Milan, a 65-year-old, 45,000

‘plug in’ devices and appliances

sq. m, 11-storey property, proves that heritage architecture can be successfully fused with cutting edge technology

The results of the consultation are due to be published

to create a smart, energy-efficient asset which benefits

this year, with final policy decisions and revised regulations

the environment, occupiers and its investors. Heritage and

scheduled to be finalised in 2026.

sustainability do not need to be mutually exclusive. The new integrated management system there brings

In many buildings, the occupiers manage functions such as

together HVAC, lighting, fire safety, and electrical

heating, cooling, and lighting. Relying on human judgement

distribution, using advanced environmental sensors to

inevitably leads to inefficiencies. For example, temperature

enhance both energy efficiency and tenant comfort. Facility

fluctuations are often the result of manual interventions

managers can monitor and optimise every system through

in response to an immediate need or even well intended

a single, cyber-secure interface that provides access to a

actions, like turning off the heating at night. This can result

network of smart sensors.

in fundamental changes to the core temperate, which takes significantly more energy to correct.

The result is enhanced energy performance, with energy consumption reduced by 60% and CO2 emissions reduced

To meet both the environmental and commercial demands

by 2000 tonnes a year, as well as enhanced occupiers’

of occupiers and owners, we are becoming more reliant on

comfort.

self-regulating intelligent buildings. Automation and smart systems, leveraging smart technology and Internet of Things

Given the fact that there are almost 20,000 heritage

(IoT), already play a greater role in how we optimise energy

buildings in the City and Greater London, the opportunity

consumption in commercial buildings, as new stock comes

to transform most of them into energy efficient assets is

to market and retrofitted buildings adopt smart HVAC

enormous. However, innovation usually comes with a cost.

systems. These technologies limit the need for human

The challenge is to find cost-effective solutions which 25

align both commercial and financial realities, with legislative requirements. It is interesting to note that listed buildings in the UK are not exempt from EPCs, although they can claim exemptions if implementation of energy efficiency measures would alter the buildings fabric or character. Landlords willing to embrace bold, forward-thinking strategies will find exciting opportunities to innovate. Among these, hydrogen stands out as a renewable energy source that is pivotal to industrial decarbonisation. Its ability to be stored efficiently and its resilience to climate variability, unlike wind and solar, make hydrogen a compelling option for commercial buildings. As the sector evolves, hydrogen is poised to play an increasingly significant role in sustainable energy solutions, offering year-round reliability and supporting the transition to a low-carbon future. From an investment perspective, whether making operational improvements or investing in major upgrades, these changes are vital. Buildings which perform well operationally and meet the expectations of modern occupiers will retain stronger rental yields and remain attractive to occupiers. In a market as competitive as London, future proofing commercial property through smart, sustainable solutions is a strategic imperative. * https://www.gov.uk/government/consultations/reforms-to-the-energy-performanceof-buildings-regime/reforms-to-the-energy-performance-of-buildings-regime#foreword

Jeremy Dowding Partner - Commercial Property Management 07958 420636 jeremy.dowding@fishergerman.co.uk

“

The EPC national measurement system has now been in place for

over 17 years. With continuous refinements, it has become accurate, robust and fit-for-purpose. Over 1 million commercial rental buildings have a lodged EPC on the government’s public database. Phase 1 of commercial rental Minimum Energy Efficiency Standard (MEES), introduced in 2018, has been a game-changer. Energy inefficient EPC Grade F & G buildings are now a thing of the past. This initiative has driven significant improvements in the UK’s stock of commercial buildings. Phase 2 of commercial rental MEES is expected to be announced by the Government before the end of 2025. The EPC standard for commercial rental units is forecast to rise to Grade B for both new lettings and existing leases. The excellent news for landlords is that as the nation’s carbon emissions from grid electricity has been falling, thanks to the construction of the world’s largest offshore wind farms in the British North Sea, securing an EPC Grade B for an office or industrial building is much easier, especially if the heating is all-electric. For property investors, now is the perfect time to future proof by removing gasburning boilers from their buildings and replacing them with electric alternatives such as air-con or heat pumps. Not only will this help them achieve an EPC Grade B, but it will set the building on the path to being net zero carbon in operation. This is a badge that an increasing number of tenants are seeking before signing a new lease.

Martin Gibbons MRICS Director Vital vitaldirect.co.uk

Light, medium, or dark your choice of green lease Rupert Collis & Ishfaq Hussain - Lease Advisory

According to the World Green Building Council* “the greenest building is the one that is already built.” This is why a property’s environmental impact and sustainability credentials are so important for businesses of all sizes and why the Government has published a schedule for raising minimum EPC ratings for commercial properties. While it remains true that the design of new builds does help to address a property’s greenhouse gas (GHG) emissions, as most of UK property stock already exists, their energy

to as a sustainability lease, remains loosely defined. However, they can be characterised as one or more clauses in a lease

credentials can only be improved retrospectively.

which commit landlords and tenants to work together to

This is why green leases have a significant role to play in any

proof’ their properties by anticipating potentially stricter

decarbonisation strategy. The incidence of landlords and

environmental laws and policies and save money by reducing

tenants collaborating to reduce the environmental impact

the building’s carbon footprint.

of occupying a property, while enhancing the value of their

improve the environmental credentials of a building, ‘future-

investment in the building, is growing in frequency.

The gradual increasing level of adoption of green lease

There is not yet a legal requirement in the UK to enter a green

owners and occupiers. These might include energy efficiency,

lease, however there are pieces of legislation which impose

waste reduction, water efficiency, recycling and waste

energy efficiency requirements to ‘green’ the ownership

management, data and intel sharing, which is especially

and occupancy of a commercial building, such as the MEES

popular in multi-occupancy buildings used by more than one

regime. The definition of a green lease, sometimes referred

occupier or lessee and/or the use of sustainable materials

clauses has been driven by the mutual benefits they provide

during a refurbishment or retrofit.

For example, a growing number of tenants, especially in the industrial sector, have opted to install solar panels to improve

In an age of escalating energy costs, energy efficient

their net zero credentials. The investment is quickly recouped

buildings represent another incentive for landlords to reduce

from the savings in energy bills, while landlords see their

occupational costs by ensuring that their properties have

buildings enhanced at no cost: a win-win outcome.

as little energy waste as possible. Investing in ‘greening’ buildings, by ensuring they meet and exceed existing and

In recent months, greater clarity has emerged in respect

impending standards, enables landlords to command higher

of green leases, as they grow in popularity. There are three

rents and encourage tenants to stay longer.

broad categories of green leases:

Working together

•

Building provisions into contracts right from the outset

Light green leases require only a limited commitment from both parties and are generally not legally binding

encourages tenants and landlords to work together to invest in sustainable initiatives, which both parties benefit from.

•

Medium green leases feature limited obligations on both parties but stops short of imposing any financial burden

Today, tenants actively discriminate in favour of high-spec offices, with environmental standards high amongst their priorities.

•

Dark green leases are legally binding and require significant commitment to sustainability

Green clauses continue to develop in response to

Improved green credentials make buildings more efficient to run, more attractive to an increasingly environmentconscious workforce and help demonstrate a business’s commitment to sustainability.

developments in monitoring and building management technology, as well as legislative changes. Green leases can enhance real estate portfolio values through both perceived and tangible benefits. They improve marketability by attracting sustainability-minded tenants and strengthening ESG credentials, which can boost a property’s appeal to investors. In practical terms, they often lead to operational cost savings, ensure compliance with tightening environmental regulations, and can support higher rents and increased asset values. 29

Additionally, they may unlock access to green financing or other incentives. The extent of the value uplift depends on careful drafting, market demand for sustainable buildings, and the measurable environmental performance of the property. It is no wonder then that despite being introduced less than 20-years ago, green leases are growing in popularity in London as an integral part of a wider sustainability mix. * https://worldgbc.org/

Rupert Collis Partner - Lease Advisory 07966 481501 rupert.collis@fishergerman.co.uk

Ishfaq Hussain Partner - Lease Advisory 07890 418693 ishfaq.hussain@fishergerman.co.uk

“

It’s clear that green leases are no longer a niche concept but an important feature of London’s

commercial property landscape. Since 2011, green clauses have been embedded into our leases, but their effectiveness hinges on the relationship and collaboration between landlords and tenants. This partnership ensures asset sustainability plans are considered and realistic decarbonisation timelines are created and regularly reviewed. Achieving net zero is not a one-off milestone, it’s a transition process, an ongoing conversation shaped by intervention opportunities, financial constraints, and practical realities. The tightening of MEES and EPC regulations has highlighted the importance of green leases, to support the need for genuine cooperation. These leases can provide a basis for working together to increase energy efficiency, waste reduction, and sustainable retrofits. This collaboration offers the possibility of delivering benefits to both occupiers and landlords e.g. by reducing operational costs and helping both to achieve sustainability objectives. We also believe that collaboration helps support occupier retention. Excellent sustainability credentials are now regarded as important requirements by many occupiers seeking top grade office space. As the sustainability landscape evolves rapidly, we are developing new programmes to increase collaboration with our occupiers. Our Vizta occupier engagement platform supports the sharing of information including energy use data, while offering advice and services to help our occupiers become more sustainable. Our Integrated Energy Solutions programme provides the opportunity for us to work with our occupiers through the provision of on-site renewable energy systems and electric vehicle charging.

Malcolm Hanna Senior Sustainability Manager Real Assets Legal & General Investment Management (LGIM) 31

ESG and Valuation - can property valuations be future proofed? Phil Winckles & Tom Norfolk - Valuation

The RICS Red Book*, updated in March 2025, made the integration of ESG considerations a mandatory practice when valuing properties. In London, there is a wealth of assets enjoying a ‘green premium’ alongside contrasting buildings with poor ESG credentials which risk being left behind. Partners Tom Norfolk and Phil Winckles in our

If landlords and owners of brown discounted

valuation team, believe that permitted development

assets want to compete in a market populated

could act as a ‘silver bullet’ for the owners of under-

by educated and discriminating occupiers and

performing assets, enabling them to repurpose

purchasers, they risk being left behind with

buildings and transform them from liabilities into

stranded assets or portfolios.

competitive properties, thereby preserving asset value.

A potential ‘silver bullet’ for this scenario could be permitted development or Prior Consent, allowing for changes to the use of a building without

London is a global centre with mature, transparent, and sophisticated real estate stakeholders, so has therefore been at the forefront of the nation’s property ESG journey.

the need for full planning permission in certain circumstances. A good example of this is the change of use from office to residential. This flexibility can play a critical role in addressing ESG challenges as it offers a viable route for owners of underperforming assets to repurpose them in ways that improve environmental performance, social value, and long-term viability. For instance, converting outdated office space into energy efficient residential units not only reduces vacancy and waste, but also aligns with

The City has countless examples of assets enjoying a ‘green premium.’ Buildings with Building Research Establishment Environment Assessment Methodology (BREEAM) certification, low emissions and strong occupier engagement will continue to perform strongly from a transactional perspective. In contrast, buildings with poor ESG credentials, particularly where the viability of retrofitting is questionable and data benchmarking is patchy, will be subject to what is termed a ‘brown discount’. 32

sustainability goals, extends the building’s lifecycle and potentially incorporates modern, low carbon technologies. More specific to the residential letting sector is the fact that new developments, with strong ESG credentials, are already performing better than older stock with poor energy efficiency. By enabling more adaptive reuses of buildings, changing use can bridge the gap between current ESG shortcomings and future proofed, higherperforming assets, transforming liabilities into competitive, compliant, and desirable properties in the marketplace. We do acknowledge the necessity

to balance the availability of business space in core areas and the risk that residential use encroachment has the potential to undermine our global CBD credentials. Fringe stock being repurposed lends to the strengthening of core area though. Putting a value on ESG factors and the impact they will have on the operational and financial aspects of a business will ensure that investors, tenants and landlords are better incentivised to think strategically about their carbon footprint, energy efficiency and social impact, while ultimately enhancing the value of assets and portfolios they own and improving the efficiency of London’s real estate as a whole. * https://www.rics.org/profession-standards/rics-standards-and-guidance/sectorstandards/valuation-standards/red-book

Phil Winckles Partner - Valuation 07903 499937 phil.winckles@fishergerman.co.uk

Tom Norfolk Partner - Valuation 07884 415532 tom.norfolk@fishergerman.co.uk

“

In the last 18 months, the term ESG has become somewhat politically loaded, and we are seeing

certain investors shy away from using the term even if they believe in the underlying principles because evidence suggests that buildings with strong ESG credentials perform better in the marketplace. However, having carried out research in this area, there remains an obvious lack of knowledge and training surrounding the recognition of ESG factors among valuers, with many stating that they are unsure what data and factors should influence their valuations. Various rating frameworks exist, BREEAM, Leadership in Energy and Environmental Design (LEED) and EPCs being well established, but it can be difficult for valuers to translate these ratings into accurate valuations. The latest version of the RICS Red Book contains vastly improved guidance and requires valuers to recognise ESG issues throughout the process, from the terms of engagement stage to the final report. Ten years ago, most valuers wouldn’t have been able to define social or governance factors and how they can affect a building. While the Red Book doesn’t provide a checklist for valuers, it provides a framework which helps them to understand what they should be looking for. Furthermore, there are opportunities for valuers here. We are seeing more and more finance providers and banks willing to offer specialised finance for buildings with strong ESG credentials, and there is a demand from investors wanting to put their money into these high-quality assets, so it is essential their values are measured as accurately as possible.

David Hunt Senior Lecturer The University of Built Environment, Reading 35

The Smart City The final part of our Future Proofing London series, The Smart City examines how innovative technology like 5G and artificial intelligence is reshaping utilities, infrastructure, and urban planning in London.

1 Navigating a new landscape: utilities in transition 2 Connectivity as a service: unlocking the power of 5G 3 Is AI the silver bullet for planners? 4 Unlocking the complexity beneath our streets 37

Navigating a new landscape: utilities in transition George Simpson - Infrastructure Services

The utility sector is undergoing a seismic transformation. Once focused solely on the sale and distribution of electricity, gas, fuel or water, it now must redefine its purpose as well as its operational models. Many outside the sector do not appreciate the profound

that predate privatisation, continues to cause operational

structural market changes it faces. In electricity, for example,

issues, including inefficiency and leak management.

the move is underway from a nationally centralised energy production approach to a decentralised, two-way, multi-

Like the electricity sector, demand for water services is

site generation model, ranging from domestic solar to

escalating. The drivers include commercial and residential

interconnectors with Europe.

development, population growth, and the rapid expansion of the data centre market, a prodigious consumer of

In water, climate change poses the dual threat of droughts

water for cooling and electricity for powering its systems.

and floods. For the first time, these challenges are being

This increased pressure on the resilience of the grid is

addressed on a national rather than regional level, resulting

compounded by the need to meet environmental goals, as

in projects of a scale not seen for over a century. Ageing

well as those associated with societal and technological

infrastructure, resulting from decades of underinvestment

developments. The rise in electric vehicle sales, the emergence of energyintensive industries such as cryptocurrency mining, and the transition to electric heating are all intensifying demand. Gas and hydrocarbon networks remain integral to the nation’s energy security and supply, while also serving as a cornerstone of its decarbonisation transition. Their role now extends beyond traditional delivery to encompass the growth of the hydrogen market and the deployment of carbon capture and storage technologies.

The adoption of smart meters and smart grids offers huge

To future proof the sector, strategists and managers must

potential benefits in integration, efficiency, and customer

balance a complex interplay of demands. They must meet

management. More accurate and targeted profiling enables

the growing current and future needs for energy and water,

greater service personalisation, but this progress also brings a

while creating a sustainable network for both current and

significant rise in costs for data management and protection.

future generations. They must respond to the increased expectations of sophisticated customers and adopt emerging technologies, from hydrogen innovation to the application of artificial intelligence, to improve operational efficiency and

Sustainability now underpins everything the sector does, which is why utility companies are at the forefront of national and international strategies for net zero transition.

effectiveness. They must adapt and evolve business models in line with national and international regulatory frameworks, as well as with shifting environmental legislation. They must retain

From reducing emissions in energy generation to improving delivery efficiencies and meeting Biodiversity Net Gain (BNG) targets, the sector is central to delivering environmental outcomes. As the economy grows, so too do the pressures on infrastructure. Beyond this snapshot lie many other challenges, such as the need for new reservoirs, overhead lines, substations, and other major projects, all of which require land. Yet this finite resource is also in high demand from competing sectors, including agriculture, commercial and residential developers, and other utility providers.

an equitable relationship with landowners, recognising that both parties share responsibility for fulfilling critical national security strategies around food and energy or water provision. At the same time, they must protect their networks from an increasing threat of digital and politically motivated terrorism, which could threaten the economy, privacy, and the nation’s ability to trade. Underpinning all of this lies a more profound challenge: ensuring that investors remain confident enough to continue funding the sector and that government retains faith in the industry’s ability to fulfil the nation’s environmental and energy generation ambitions. This is why the sector must remain agile, data-driven, operationally smart, environmentally sensitive, and deeply customer-centric.

George Simpson Partner - Infrastructure Services 07810 378185 george.simpson@fishergerman.co.uk

“

Over the next few years, we will see a significant demand for upgrading our existing electricity

infrastructure and installing new infrastructure to support regeneration and development. This will ensure there is sufficient capacity in the network for our customers. During our current investment period, which runs until 2028, in London we plan to replace over 600 transformers and 121km of cables. This will maintain the network, support local growth, and facilitate the transition to electric vehicles and heat pumps. Managing this in London presents unique challenges, as most of our assets are underground. With over 37,000km of underground cables and numerous subterranean substations in the basements of residential and commercial buildings, space for new infrastructure is often difficult. Any work involves complex engineering and legal challenges, adding significant complexity to managing infrastructure upgrades and minimising disruption to businesses and our customers. In addition to the work we must undertake within London, we also need to ensure our assets and property are protected as development occurs around us. Maintaining relationships with our landlords, local communities and customers is critical. This will help us carry out our upgrades, keep the lights on, and ensure that London continues to grow with work taking place safely around our assets.

James Cole Property & Consents Operations Manager UKPN 41

Connectivity as a service: unlocking the power of 5G Chris Hicks - Telecoms

London benefits from a relatively advanced telecoms and mobile network, a foundation of modern life that most of us now take for granted. Yet, despite this, the capital languishes at the bottom of a newly published ‘5G Quality of Experience’ league table. In an age when we can email, message, stream video,

Over the past three decades, mobile technology has

navigate in real time, manage our finances, and listen

progressed from the early days of 2G to today’s 5G networks,

to music or podcasts, often all at once and from almost

transforming how we communicate, do business, learn,

anywhere in the UK, reliable connectivity has become just as

consume entertainment, and deliver the digital infrastructure

essential as water, electricity, and gas. Little wonder then that

that underpins society, commerce, and government. The next

it is increasingly described as the “fourth utility”.

wave of innovation will not just build on this foundation; it will depend on it.

The UK’s digital capability is poised for rapid expansion, driven by the rise of smart streets, intelligent transport systems, and

However, current legislation has not helped landlords, many

a new generation of connected buildings. These advances,

of whom host the infrastructure we all rely on. In fact, it is in

danger of creating perverse incentives which undermine the

a step change in connectivity far beyond what is currently

future of connectivity in urban environments.

available in London or any of our other major cities. At present, there is a cap on the rent landlords can charge operators such as O2, Vodafone, and EE to host their equipment. While in rural areas this approach may have merit, ensuring network coverage reaches underserved regions, in cities like London the economic reality is very different.

Space is scarce, and the value of prime locations is high.

When mobile infrastructure sites must compete with lucrative residential or commercial tenancy offers, the capped rents make them far less attractive to landlords. The result is predictable: many choose to prioritise more profitable uses, leaving operators struggling to secure the sites they need. This is more than an operational inconvenience. It is a structural barrier to rolling out 5G, a technology that is up to 20 times quicker than its predecessor. The benefits extend far beyond faster downloads. For the creative

industries, it means high-definition content can be shared

The public would gain from faster, more reliable connectivity.

and streamed instantly. For financial services, it supports the

Businesses could operate more efficiently and innovate

rapid, secure transactions essential in a global trading hub.

with confidence and the government’s ambitions for

For e-commerce, it enables seamless, real-time customer

smart cities and a digital economy would be far more

engagement. And for emerging technologies such as

achievable. Operators could then deliver on their 5G rollout

augmented reality, telemedicine, and autonomous vehicles, it

commitments without being constrained by avoidable

is the very foundation on which they depend.

bottlenecks in access to sites. In short, there would be few losers.

The challenge is that 5G requires far greater infrastructure density than 4G. More masts, more base stations, and more small cells are needed to deliver consistent high-speed coverage. This, in turn, means more locations and more willing

Chris Hicks

landlords. If hosting mobile infrastructure were a competitive and viable revenue stream, landlords would have a real

Partner - Telecoms

incentive to participate. Removing or substantially increasing

07808 571067

the rent cap would unlock this potential, allowing the market

chris.hicks@fishergerman.co.uk

to work in a way that benefits everyone.

Is AI the silver bullet for planners? Angela Brooks & Scott O’Dell - Planning The Government’s new artificial intelligence tool, Extract, promises to transform the speed and efficiency of the UK’s planning system. Capable of scanning text and reading maps in minutes, it could supercharge the ambition to deliver 1.5 million new homes by 2029, set out in its Plan for Change*. The research supporting Extract suggests that ‘a task that takes a trained officer 1-2 hours of manual work could now be completed by our AI, in under three minutes for about 10p.’** In parallel, the UK government has also launched a £10 million

it available for all councils by Spring 2026. Yet London’s

initiative to develop an AI tool aimed at revolutionising the

economy is overwhelmingly service based, with the sector

planning decision process. This tool, led by the Department

accounting for almost 95% of output, and its commercial

for Science, Innovation and Technology (DSIT) in partnership

property market faces pressing supply constraints,

with the Ministry of Housing, Communities and Local

particularly for Grade A and Central Business District office

Government (MHCLG), will initially focus on straightforward

space. In theory, Extract could also accelerate planning

householder developments, with plans to expand to other

processes for commercial developments, bringing benefits

application types. The ambition is to reduce routine planning

well beyond residential schemes.

application processing times from the current eight weeks, for those minor applications, to around four and eventually

However, behind the headlines lies a more complex and

achieve near-instant determinations for simple cases. The

challenging reality. The Mayor’s office has already expressed

system is said to analyse material considerations, assess

doubts about whether the housing need figures for London,

policy compliance, and generate reasoned recommendations

published in December 2024, are realistic. Despite these

– all while integrating with existing planning systems and

being reduced from the previous target of 98,822 homes,

remaining under the oversight of planning officers.

shortages of land, materials, and labour will still make it difficult to achieve the city’s revised target of 87,992 new

The scale of the housing challenge is stark. According to London Councils, almost 185,000 Londoners, one in fifty residents, are homeless or living in temporary accommodation, while around 320,000 households remain on social housing waiting lists. In this context, the ability to deploy cutting-edge technology that can convert handwritten planning documents and maps into usable data within minutes, is a welcome step forward for London’s communities. The Government claims Extract could slash the 250,000 hours currently spent manually checking documents each year. If realised, this would remove one of the most persistent brakes on the planning system, lengthy administrative delays, helping to accelerate decisions, unlock stalled projects, and bring much-needed homes to market faster. The rollout of Extract has been positioned primarily as a breakthrough for housing delivery, with the aim to make

homes. The existence of 32 boroughs, each with its own

To truly transform the planning process, an AI-enabled system must go beyond the capabilities currently outlined for Extract. planning authority, priorities, and housing targets, creates

The uncomfortable truth is that planning efficiency has been

a fragmented system that is inherently slow and expensive

profoundly impacted by the fact that between 2013 and

to navigate. The Towards a New London Plan consultation

2020, almost 25% of planners left the public sector. More

considers the new concept of ‘grey belt’, with the Mayor

recently, 82% of local authorities have cited difficulties

confirming he has commissioned a London-wide green belt

in hiring planners because of financial restrictions, large

review to understand what land, including the identification

workloads and the pressure of the job. So, whilst Extract will

of grey belt land, could be used to meet London’s housing

help to improve efficiency, its impact on a system already

needs in full.

hampered by structural challenges, squeezed resources, and an expected upturn in appeals is likely to have limitations.

This is likely to trigger a wave of planning applications along the city’s outer edges. Boroughs with green belt land will

The impact of this talent drought is profound, and whilst

face particularly intense pressures, with applications likely to

Extract will help, we know that authorities will require

be contentious and politically sensitive.

additional resources to process the inevitable escalation in planning applications required to meet ambitious housing and development targets. The Government announced plans to support local authorities with 300 additional planning officers, but many consider this a drop in the ocean compared to the vacancies departments currently face. To truly transform the planning process, an AI-enabled system must go beyond the capabilities currently outlined for Extract, therefore the announced AI initiative will hopefully kickstart this. The potential lies in using AI to validate applications instantly, preventing the submission of incomplete or incorrect documents, a problem that currently delays many applications. It should be able to summarise many complex documents, flag missing information, review site histories, and collate consultation feedback in minutes rather than days or weeks. Equally, it could accelerate environmental assessments by analysing the potential impact of proposals on air quality, traffic congestion, biodiversity, and other key indices, 45

providing faster, more consistent, and more transparent

Whilst Extract will process data and an AI enabled planning

evidence for decision-making. AI is already starting to present

system should one day be able to summarise and assess

opportunities for better consultation and tools for those

applications against policy, understanding the sensitivities

submitting representations as part of the planning process.

and nuances of an application and making equitable decisions still requires judgement which can currently only be delivered

Greater Cambridge Shared Planning Partnership, in

by experienced planners. The long-standing mantra that

partnership with the University of Liverpool, is pioneering an

“planning is about people and places, not just buildings and

AI tool, a large language model (LLM), to improve community

infrastructure” still holds true today.

and stakeholder engagement. The tool can review and summarise thousands of comments submitted during the

However, the next generation of technology, Agentic AI,

consultation period.

is already emerging, and with it comes the potential for more fundamental changes to the UK planning system.

The Guardian reported on “AI-powered nimbyism” where the

These systems promise more than data processing, using

use of ‘Objector’ claims to offer policy backed objections

sophisticated algorithms, collaborative filtering, and

in minutes using generative AI to scan applications and rank

contextual embeddings to interpret nuance, intent, and

potential areas of objection, and create committee speeches

community context in real time. In theory, such systems

and videos to influence others. To some this may be seen

could approach the reasoning capabilities of seasoned

as an additional barrier to development, to others it may be

planning professionals, providing assessments that are not

considered empowering.

only faster but also richer in insight.

Yet while AI could potentially align applications to policy

Imagine a world where NextGen AI solves problems

frameworks, the subtle and often contested judgements

autonomously, whilst continuously optimising its

that planning requires still depend on the experience and

performance, adapting to changes and self-improving.

contextual understanding of skilled professionals.

Then, perhaps, there will be no need for planning officers,

Experienced, qualified planning officers are vital because the UK planning process is heavily reliant on professional judgement, which is its trademark.

planning consultants and consultees where the current structural issues the planning system faces will evaporate. Such capability would dramatically shift the planning and development profession. Before panic sets in and we all fear for our jobs, remember

Only experienced professionals have the skills and the experience to assess the merits of competing priorities, make informed decisions and ensure the interests of all stakeholders are optimised.

the science fiction predictions in the 1960s were that flying cars would be a reality by the end of the century. However, we have yet to see these on our streets. It’s also important to factor in that society and the world around us will also be very different as AI will revolutionise so much more than the built environment. Perhaps the reality lies somewhere between the two extremes, and our jobs remain safe, for a while at least. * https://www.gov.uk/missions ** https://mhclgdigital.blog.gov.uk/2025/06/12/extract-using-ai-to-unlock-historicplanning-data/

Angela Brooks

Scott O’Dell

Partner - Planning

Associate Partner - Planning

07918 652897

07785 616659

angela.brooks@fishergerman.co.uk

scott.odell@fishergerman.co.uk

“

The use of AI within urban environments could also enable efficiencies for London

Highway Authorities, as statutory consultees, as part of the checking process, to ensure standards compliance and allowing large amounts of data to be reviewed. It could also allow for recent vehicle counts in the local vicinity to a proposed project to be applied without additional survey works by reviewing up to date guidance and applying an agreed allowance for future growth. There will always be a need for human expertise, interaction and professional review in the case of non-standard approaches, which due to the constrained nature of most London schemes, will remain an important part

David Milligan

of the process in order to overcome site specific challenges, supporting

Design Director

delivery and ensuring growth.

Ardent Consulting Engineers

Unlocking the complexity beneath our streets Richard Broome - Infrastructure Management & Maintenance

The ground beneath our streets is a hidden marvel, a complex web of infrastructure that has evolved over decades. From Victorian networks to cuttingedge services, this underground network is the lifeblood of our modern lives. In a city like London, where professional and social activities are intertwined with this unseen asset, its importance cannot be overstated. London’s status as a hyper-connected global city relies

broadband, can have devastating financial consequences in a

heavily on this network. It supports development, growth,

global business hub like London.

regeneration, and investment. However, to truly turbo-charge our economic growth, we need to manage this network more

To attract global investment and deliver development at pace,

effectively. This means better data collection and analysis,

we need strategies to update this complex network while

particularly regarding the location and sensitivity of key

minimising disruption. One such tool is LSBUD (Linesearch

utilities.

BeforeUdig), a partnership between PelicanCorp and Fisher German. This digital mapping service provides a clear view of

The UK’s utilities have become synonymous with stability and

what lies beneath our feet before any digging begins. With

reliability. Gone are the days of rolling blackouts and patchy

over 300,000 users nationwide and accessed around 15,000

internet connections. This stability has bolstered investor

times a day, it helps protect over two million kilometres of

confidence and shaped high consumer expectations. Yet,

the UK’s utility networks. By minimising disruption, it gives

when disruptions occur, the public’s patience wears thin.

developers and investors confidence that unforeseen delays

Delivery disruptions, whether to water, gas, electricity, or

will be reduced.

Future proofing this service can be supported through

5G, and its eventual successor 6G, we must be more creative.

three areas: reviewing legislation to enforce rigorous data

London currently sits outside the world’s top 30 most digitally

standards for safer and more effective delivery, refining

connected cities. We could address this by installing small

regulation to incentivise top-performing utilities (including

masts and relay units in unconventional locations such as

consideration of the balance of liability for data issues),

streetlights, public buildings, transport infrastructure, and

and advancing the adoption of AI. Achieving this requires

even the Underground network. Digital connectivity is now

appropriate data sharing, skilled technology integration,

as fundamental to economic growth as gas, electricity, and

secure analysis tools, and collaborative contractual

water were to previous generations, and it must be treated

frameworks that foster innovation.

with the same strategic importance.

The UK’s utility networks are a point of pride, underpinning our daily lives in ways we rarely consider. Whether powering devices, carrying communications, or filling the kettle for our tea, these services are the foundation of economic strength and everyday comfort. With a culture of innovation and continuous improvement, the sector will remain the bedrock that attracts investment and delivers world-class performance. To support the rollout of next-generation connectivity like 49

If London is to compete with cities like Paris, Frankfurt, Shanghai, Singapore, Dubai, or New York, landlords must be incentivised to play a greater role in delivering the city’s connectivity aspirations. As the Mayor of London’s London Plan Guidance states: “If London is to be competitive now and in the future, it should have world-class digital connectivity. Fast and reliable digital connectivity is essential in today’s economy and in every aspect of how people live and work and participate in society.” By embracing these opportunities and fostering a forwardthinking approach, we can ensure that London’s underground network continues to support the city’s growth and prosperity for generations to come.

Digital connectivity is now as fundamental to economic growth as gas, electricity, and water were to previous generations

Richard Broome Partner - Infrastructure Management & Maintenance 07918 628986 richard.broome@fishergerman.co.uk

“

Future proofing London means aligning the capital’s growth with the urgent need to decarbonise and

adapt to a changing climate. The choices made today about energy systems, transport, buildings, and planning will determine whether London can remain both liveable and competitive in a net zero world. Policy leadership is crucial. From the Mayor’s 2030 net zero target to the rollout of Local Area Energy Plans, the city’s frameworks are evolving, but delivery must now accelerate. Clearer alignment between national and city-level policy, and stronger collaboration across boroughs, will be essential to unlock private investment and deliver projects at the scale required. In such a densely populated city, where many lack off-street parking, delivering further curbside EV charging infrastructure will be key, and though Londoners have long embraced public transport, currently less than 25% of the city’s buses are electric. It is therefore imperative that more hub-charging infrastructure is developed to support not just buses but also delivery lorries, waste-collection fleets and other HGVs which threaten air quality and climate goals. The benefits of a shared approach to infrastructure extend beyond transport, with heat networks and microgrids increasingly coming forward to efficiently heat and power new domestic and commercial buildings across the capital, utilising waste heat and integrating smart solar and storage technologies which can reduce bills and contribute to a more flexible and responsive grid. London’s story is one of diversity, imagination and integration – and its sustainability story should follow. Housing, transport, energy, and digital infrastructure should be planned together to create resilient, low-carbon neighbourhoods which also retain London’s famous green spaces. With the right policies and partnerships, London can lead the global race and build a city that demonstrates how

Patrick Cousens

opportunity and growth can be achieved not

Head of Energy & Sustainability

just alongside, but through the protection of the

PLMR

natural environment.

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