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28. Febru­ar 2019

«We offer Fac­tor Four!»

Peter Lehmann, CEO Swiss Prime Site Immobilien AG

Peter Leh­mann, CEO Swiss Prime Site Immo­bi­li­en

Swiss Prime Site Immo­bi­li­en achie­ved very good results in 2018, opti­mi­sing its port­fo­lio through acqui­si­ti­ons and divest­ments, and fur­ther expan­ding the pro­ject pipe­line. Peter Leh­mann, CEO of Swiss Prime Site Immo­bi­li­en, is satis­fied with what has been achie­ved, but still has fur­ther key goals for the future.

Mr Leh­mann, Swiss Prime Site Immo­bi­li­en once again achie­ved impres­si­ve results in the past year. What were the main dri­vers behind that per­for­mance?
We con­ti­nued to con­cen­tra­te on our strengths in 2018, and to actively mana­ge our port­fo­lio of 190 exi­sting pro­per­ties. This means that we bought attrac­tive pro­per­ties and sold pro­per­ties that were less sought-after. In addi­ti­on, we have let or re-let almost 200 000 m2 of floor space in the past 12 mon­ths alo­ne, which rep­res­ents around one-eighth of our stock. This kind of result is only pos­si­ble if your employees know their custo­mers and under­stand their wis­hes.

Your custo­mer seg­ment is very dis­pa­ra­te, so their requi­re­ments for office floor space also vary wide­ly. How do you still mana­ge to meet their requi­re­ments?
Our custo­mers have very high expec­ta­ti­ons for their future offices. We are able to satis­fy tho­se expec­ta­ti­ons very suc­cess­ful­ly with our stock. The majo­ri­ty of our custo­mers main­ly want two things: good acces­si­bi­li­ty and effi­ci­ent floor spaces.

Could you exp­lain that a litt­le more?
In order to eit­her ope­ra­te their busi­ness model suc­cess­ful­ly or to gain access to good, skil­led employees, com­pa­nies want their future offices and sites to be ide­al­ly situa­ted. This also inclu­des good trans­port links in terms of both public and pri­va­te trans­port. In addi­ti­on, our custo­mers want the­re to be living spaces or urban cen­tres very clo­se to or wit­hin easy reach of their office. They are pla­cing ever-grea­ter import­an­ce on the fle­xi­bi­li­ty of floor spaces.

«YOND» deve­lop­ment pro­ject, Zurich.

How are you dealing with increa­sed tech­no­lo­gi­cal requi­re­ments in today’s real estate mar­ket?
Finan­ci­al ser­vices busi­nes­ses in par­ti­cu­lar have this requi­re­ment. The majo­ri­ty of our custo­mers are loo­king for high­ly effi­ci­ent and extre­me­ly fle­xi­ble floor space at an opti­mal pri­ce. Peop­le – that is to say busi­nes­ses and their needs – chan­ge. We respond to that.

What do you mean by that?
Well, today the­re are more and more «mill­en­ni­als» among our custo­mers. The way this genera­ti­on sees their work­place and ope­ra­tes wit­hin it is dif­fe­rent from what we have been used to. The­se custo­mers want to have living spaces all around their place of work, whe­re they can shop, access ser­vices, enjoy cul­tu­re and even live right next door. We also deal with busi­nes­ses that need a lot of free­dom to evol­ve. That inclu­des fle­xi­bi­li­ty when it comes to floor space and the terms of lea­ses. Not to men­ti­on the fact that ser­vices you can access almost at the press of a but­ton are beco­m­ing more and more important.

You have two major pro­jects, in Zurich-Albis­rie­den and Schlie­ren, that focus on this. What can you tell us about them?
We are cur­r­ent­ly con­struc­ting the YOND pro­ject on the for­mer Sie­mens site in Zurich. This is a uni­que pro­per­ty that takes pre­cise­ly this need for fle­xi­bi­li­ty into account. It is being crea­ted in an up-and-com­ing district, and it will be pos­si­ble to cus­to­mi­se the floor spaces at short noti­ce to suit indi­vi­du­al needs. A real eco­sy­stem for ser­vice pro­vi­ders, start-ups and the know­ledge indu­stry is being crea­ted in the form of the JED in Schlie­ren. This pro­per­ty comes very clo­se to the idea of the «com­mu­ni­ty buil­ding». We are very much awa­re of the need for such are­as.

You have con­ti­nued to opti­mi­se the port­fo­lio and adju­sted the stock by means of acqui­si­ti­ons and divest­ments. What were the rea­sons for this?
We sei­ze oppor­tu­nities as they come onto the mar­ket. As the lar­gest listed real estate com­pa­ny in Switz­er­land, we are in a posi­ti­on to do so. This year, we bought a pro­per­ty on Beet­ho­ven­stras­se in Zurich, a stone’s throw from Para­de­platz and the lake, which is a per­fect match for our port­fo­lio. Not only is it in a uni­que loca­ti­on, but it is also ful­ly lea­sed on a long-term basis. What’s more, it is very fle­xi­ble in its lay­out. This loca­ti­on is a one-off, and the pro­per­ty is not only valu­able, but should con­ti­nue to beco­me even more so. The second important tran­sac­tion invol­ved Sihl­ci­ty in Zurich. For histo­ri­cal rea­sons, we were only a co-owner the­re, hol­ding around 24%. Howe­ver, our goal is to hold at least a majo­ri­ty sta­ke in a pro­per­ty. The asset swap with Credit Suis­se was a uni­que oppor­tu­ni­ty to obtain three buil­dings – three very good ones in fact – in return for that mino­ri­ty sha­re. Of cour­se we sei­zed the oppor­tu­ni­ty.

You have also bought and sold pro­jects. What were the rea­sons in tho­se cases?
The­re are around 20 major pro­jects in our deve­lop­ment pipe­line with a volu­me of over CHF 2 bil­li­on. Our «Welt­post Park» pro­ject in Ber­ne was the only one whe­re we would have crea­ted resi­den­ti­al space rather than office space. But the resi­den­ti­al mar­ket is not part of our focus. While we deve­lo­ped the pro­ject, it was always with the ulti­ma­te objec­tive of sel­ling it to a sui­ta­ble owner when a good oppor­tu­ni­ty pre­sen­ted its­elf. And then we found a sui­ta­ble owner in the form of Alli­anz Ver­si­che­rung. At the same time, we are using resour­ces freed up in this way to invest in new pro­jects. Last year we sold a part of the «Espace Tour­bil­lon» pro­ject, and reinve­sted in the major con­struc­tion pro­ject «Alto Pont-Rouge», also in Gene­va. This year, we used that momen­tum to buy the pionee­ring «West-Log» pro­ject with the pro­ce­eds.

«The fac­tor of dou­ble the use of floor space
mul­ti­plied by the fac­tor of half the rent – that is Fac­tor Four.»

You men­tio­ned Gene­va. How important is French-speaking Switz­er­land for Swiss Prime Site Immo­bi­li­en?
We have been active in Gene­va sin­ce our listing on the stock exchan­ge in April 2000, so we know the mar­ket very well and see a lot of oppor­tu­nities the­re. In addi­ti­on, com­pres­si­on of returns is less pro­noun­ced in Gene­va than in cer­tain cities in Ger­man­speaking Switz­er­land.

The­re are cri­ti­cal voices who see a risk of high vacan­cy rates in Gene­va. What approach is Swiss Prime Site Immo­bi­li­en taking?
To assess the long-term oppor­tu­nities and risks of a mar­ket, it is not enough just to count the squa­re metres of office floor space that cur­r­ent­ly exist and add the new pro­jects on top of that. You need to ana­ly­se the qua­li­ty of the exi­sting office pro­per­ties and ask yours­elf which ones still meet the needs of users. In the Gene­va cen­tral busi­ness district (CBD), the­re are many that do not.

The spa­ti­al effi­ci­en­cy of most of the office pro­per­ties in the city is qui­te low com­pa­red with modern pro­per­ties. In many of the buil­dings in the CBD today, a lot of space goes to waste due to ancil­la­ry and cir­cu­la­ti­on are­as that can­not be used. In fact, in some such pro­per­ties only 40% of the area is avail­ab­le for use as office work­space. What’s more, users have to pay high rents for the­se pro­per­ties. We are addres­sing both the­se pro­blems with modern pro­per­ties that offer Fac­tor Four.

«Espla­na­de de Pont-Rouge» urban deve­lop­ment zone, Lan­cy in Gene­va.

What is Fac­tor Four?
The term «Fac­tor Four» descri­bes the advan­ta­ges of our new con­cept for our ser­vice buil­dings. Up to 80% of the space in the buil­dings is avail­ab­le for office work­space. So they pro­vi­de twice the spa­ti­al effi­ci­en­cy of older buil­dings. At the same time, rents will only be half as high. The fac­tor of dou­ble the use of floor space mul­ti­plied by the fac­tor of half the rent – that’s Fac­tor Four.

You men­tio­ned ear­lier that «West-Log» is a pro­ject that shows enor­mous pro­mi­se. Can you expand on that?
Digi­ta­li­sa­ti­on and thus online tra­ding have a big influ­ence on the flow of goods and dis­tri­bu­ti­on. Cost effi­ci­en­cy and time savings also play a signi­fi­cant role. This increa­ses the demand of the logi­stics indu­stry for cen­tral loca­ti­ons and buil­dings that are spe­ci­fi­cal­ly tailo­red to meet their requi­re­ments. Swiss Prime Site Immo­bi­li­en reco­gnis­ed this cor­re­la­ti­on at an ear­ly sta­ge and has inve­sted in pro­jects in recent years that are sui­ted to the indu­stry. Our stra­te­gy has been, and remains, to ori­en­ta­te our port­fo­lio stron­gly to pre­mi­um loca­ti­ons. Ten years ago, logi­stics cen­tres were still loca­ted far away from cities, but today they can some­ti­mes be found on the out­s­kirts or in urban are­as. After all, it is local dis­tri­bu­ti­on – the last mile – of goods that holds the key to suc­cess for many logi­stics com­pa­nies. We assist them by pro­vi­ding cus­to­mi­sed pro­per­ties and an increa­sing num­ber of cen­tral sites.

What are other pro­jects in which you are alrea­dy anti­ci­pa­ting future soci­al deve­lop­ments?
The­re are many trends, par­ti­cu­lar­ly in the area of tech­no­lo­gy and ener­gy use, that we pay care­ful atten­ti­on to and are gui­ded by. In terms of soci­al deve­lop­ment, we see an ever-increa­sing trend towards smal­ler living spaces and micro-apart­ments. Alt­hough resi­den­ti­al pro­per­ty is not our focus, we see enor­mous poten­ti­al for such a pro­ject, for examp­le on the Maag site. Ano­t­her issue we will be addres­sing in the com­ing years and deca­des is cli­ma­te chan­ge. Sum­mers like the one we had in 2018 will pro­bab­ly beco­me increa­singly com­mon. We will have to scru­ti­ni­se our use of resour­ces even more clo­se­ly in the future. The pro­per­ty sec­tor can make a big con­tri­bu­ti­on here. We have plan­ned a self-suf­fi­ci­ent buil­ding on the JED site in Alt­stet­ten. It is desi­gned to deal much bet­ter with wea­ther extre­mes. Emis­si­ons can be redu­ced to almost zero. Our objec­tive whe­re­ver pos­si­ble is to deve­lop pro­per­ties that will satis­fy needs for deca­des to come, that are envi­ron­ment­al­ly friend­ly and that also offer plea­sant living spaces.