The ground floor lets the building

Speculative office development runs on a formula, and the formula is not stupid. It encodes what tenants have historically paid for: floor plate efficiency, clear span, raised floors, a good net-to-gross ratio.

What the formula consistently undervalues is the ground floor, which appears in the appraisal as a cost centre. It is a lobby, a security position, a lift core, and whatever active frontage the planning authority insisted on. Every square metre of it is a square metre not let.

What we proposed

At Northgate Exchange we asked the developer to give away roughly six hundred square metres of it.

The ground floor is a double-height hall running the full depth of the building, open to the street at both ends, containing a café, the main stair, and a substantial amount of seating that requires no purchase.

On the appraisal that is a loss of lettable area with no direct income against it. The developer's own agent advised against it in writing.

The argument

Our argument was about letting velocity rather than area.

A prospective tenant's first experience of a building is arriving at it. A building whose ground floor is a marble desk and a turnstile communicates that the interesting part is elsewhere and that you are not yet in it. A building whose ground floor is busy communicates that it is already working.

We could not prove this. We could point at the developer's own portfolio, where the two buildings that had let fastest were the two with the most public ground floors, and note that this had never been offered as the explanation.

What happened

The building let fully in fourteen months. The submarket average at the time was around twenty-six. Achieved rents came in roughly eight per cent above the comparables used in the appraisal.

We are genuinely wary of claiming the hall caused all of that. The market moved favourably during the letting period, the building has a good frontage, and the specification above ground is strong.

But two of the four tenants cited the ground floor unprompted in negotiation, and the developer has since built two more buildings and put a hall in both. Revealed preference is a better argument than ours was.

Making the rest boring

The part of this that gets less attention is that the hall was paid for by making everything above it disciplined to the point of dullness.

A regular structural grid with no clever spans. A facade with a high solid-to-glazed ratio, which keeps the cooling load and the tenants' service charge down and which nobody has ever commented on. Cores in the same place on every floor. A raised floor at a standard depth with no local build-ups.

Every one of those decisions saved money that went into the plinth. An architect looking for interest on every floor would not have been able to afford the one floor where interest actually converts.

What we ask clients now

The question we now put at the start of a speculative project is not how much lettable area the scheme achieves. It is what the building is like to arrive at.

Nobody has ever signed a lease because of a net-to-gross ratio. They sign because the building felt like somewhere their staff would be willing to come, and that judgment is formed in the first thirty seconds, on the ground floor, before anyone has seen a floor plate at all.