The work from home trend has impacted real estate around the world, and in some places, up to 50% of office space is lying dormant. Central London, for example, has 31 million square feet of empty work space, the equivalent of 60 Gherkin skyscrapers. Last year, the vacancy rate for office real estate in Munich, Germany, rose for the fourth year in a row.

The good news is that investors are seeing a plethora of creative opportunities for preventing downtowns from becoming ghost towns.

The purpose is to repurpose

“Using obsolete office space for other functions such as apartments or small-scale commercial purposes eliminates the need to use raw materials to build a new building,” said Nikolaus Schmidt, global head of technology and innovation at Commerz Real, a global leader in investment and asset management services in the real estate, infrastructure, and renewable energy sectors.

Speaking at the recent SAP and SAP Fioneer Financial Services Forum Europe in Frankfurt, Germany, Schmidt went on to explain that retrofitting an empty space into a useful area aligns with the principles of the circular economy, a concept often symbolized by the infinity symbol to indicate that materials and products should be used again and again to provide continuous value.

“Breaking down a building to build something new is just about the worst thing you can do,” said Schmidt. “Transformation starts with the investment itself. In the past, clients only cared about the return on the investment. That is changing. Now, the investment should also be generating something good in the end.”

Schmidt cited the example of Commerz Real’s project to rebuild the Tucher Park in Munich, one of the company’s assets in its hausInvest open-ended real estate fund, one of the largest in Europe.

The mixed-use property, in the world-famous English Garden, consists of 10 properties in an area of 127,000 square meters. The park, developed mostly in the 60s and 80s, comprises seven office buildings, a 10,800 square meter computer center, a sports facility, a 5-star Hilton Hotel, and 1,500 parking spaces.

The company’s vision is to make Tucher Park a role model for sustainable redevelopment. “This is a place where people can work, live and spend their free time,” said Schmidt. “The idea is to create a circular city, incorporating the past into the future while respecting the needs of the inhabitants and nature.”

One third of the space will be transformed into affordable housing for rent, one third will become refurbished energy-efficient office space, and the rest will be converted for commercial purposes and sports and leisure facilities. Existing green spaces and trees will be maintained, and renewable energy will be generated onsite.

“There is a large data center on the property that’s being rebuilt, and the heat it produces will be used to heat the buildings,” Schmidt explained. “ We are also installing a new water treatment plant.”

The Commerz Real team is constantly thinking of ways to get full usage out of every element on a property. There is a huge focus on renewable materials, from wood to metal or concrete. The company is working with the city of Munich to embed circular concepts into new projects. The approach favored by Commerz Real is to tackle urban renovation block by block to shape a diverse mix for housing, work, community use, and green space.

According to Schmidt, from an investment perspective, that’s not a simple endeavor, because you have to look for areas where you can buy the whole quarter. Blocks are not owned by one person, but maybe hundreds of people who may each have their own house or apartment: “That’s why Tucher Park is so interesting for us; we were able to buy the whole place and renovate in one go,” he explained.

Collaborating for circularity

Setting up and keeping such huge projects on track requires a special kind of collaboration. While people are expecting renewable energy sources to power the future, they often are not aware of the enormous effort and cost of making it happen.

Schmidt pointed out that achieving 107 GW, the sum total of all the EU nations’ individual offshore energy targets for 2030, would require enough offshore wind parks to compensate for around 500 nuclear power plants. To say that greater regional collaboration is needed for meeting these targets is putting it mildly.

“We’re not building the necessary infrastructure by ourselves,” he said. Commerz Real is working with several developers across various nations and sourcing the money from a variety of B2C or B2B funds and institutional financing. “From the political and organizational perspective, we need to overcome the ‘not invented here’ syndrome and get better at collaborating, keeping an open mind, and joining forces to meet common goals across regions.”

For Schmidt, the new mindset starts right in his own department which is responsible for digitalizing Commerz Real. The company’s business transformation was achieved with SAP S/4HANA, SAP Business Technology Platform (SAP BTP), and the RISE with SAP offering, which is comprised of tailor-made ERP software, transformation services, business analytics, and partner expertise to help companies transition smoothly to the cloud.

“Our vision is not to be tech-driven, but to be powered by technology,” said Schmidt. “We are not SAP-centric, we are data-centric, running on SAP to best leverage our data and analytical capabilities. For us, technology is the foundation for delivering our wide range of business services, to ultimately make the world a better place.”

Source : Forbes

The post Commerz Real Is Creating A New Urban Reality With Circular Real Estate Projects appeared first on Amora Escapes.