With the coronavirus pandemic as the chief protagonist, 2020 was an exceptional year that challenged our capacity for flexibility, innovation, sustainability and creative business value for existing and future tenants – all with a retained focus on increased shareholder value.
Even before the coronavirus pandemic, digitalisation was a megatrend that drove development in the property industry and was changing people’s behaviours. In conjunction with the fight against the coronavirus, our digital work methods and consumption patterns developed at a pace that corresponded to several years of normal development. The pandemic meant the future arrived sooner than expected.
Flexible work life
In 2020, most office workers learned to work remotely and go completely digital. Many prejudices regarding working from home have come to naught, and it has turned out that efficiency increases and the tasks of daily life mesh together better when commute times disappear. The disadvantages of digital working remotely include the lack of physical meetings. When in October, Castellum conducted a survey and asked Swedish office workers how important the office would be in the future and what they missed most about the office, 87% responded that the office would be important or very important going forward, even if flexibility in working life is here to stay. Most of all, Swedish office workers missed their colleagues and social relations. Young people are the ones who miss the office most.
As a consequence of increased demand for a flexible working life, interest in co-working is greater than ever. Even in this area, the coronavirus pandemic has reinforced and accelerated development that was already under way. Co-working entails work spaces with full service and shared areas, meetings and networks while contracts are short-term and thus provide possibilities for scaling office space up or down on short notice as needed. Through its subsidiary United Space, Castellum continued to expand its offering in co-working throughout the year in Gothenburg, Uppsala and Stockholm, as well as initiating a new facility in Helsingborg.
A major consequence of the more rapid digital transformation is our shopping behaviour on the Internet. E-commerce increased 33% during the year and is expected to continue to grow over the next several years. Growth and development in e-commerce entails increased focus on efficient logistics chains that can meet the demands for rapid delivery times. This development is impacting our cities, creating a need for semi-central properties and flexible warehouses at strategic locations.
In December, Castellum realised the increase in value that the company’s logistics properties created by signing agreements for the sale of an asset portfolio consisting primarily of warehouse and logistics properties, to Blackstone.
Castellum, which has long been Sweden’s largest player in logistics properties, continues to invest heavily in the logistics segment by developing ultramodern “last mile” solutions with a high degree of flexibility and automation at strategic locations such as Brunna, 30 minutes from the Stockholm City rail terminal, and Säve, just outside Gothenburg. During the year, several logistics properties were constructed in Brunna, and were fully let from the start. Access to land in the area facilitated major construction of logistics solutions in one of Sweden’s best locations in close proximity to Stockholm.
Castellum’s acquisition of Säve Airport provides unique opportunities to create a modern logistics hub and a business cluster for innovation and development of sustainable transportation and mobility.
Values and health
Questions of values are impacting our behaviour to a much greater extent, and in pace with the increase of the younger generation – millennials – in the labour market, the demands imposed on employers and thereby on work spaces are also expected to increase radically. The driving force for better health, both physically and mentally, has long existed as a growing trend in the Western world.
Health in workplaces
Health has been a growing trend for many years in the Nordic countries, and is taking up more space at workplaces. Castellum’s report, Framtidens arbetsliv (Work Life of the Future) states that health is the strongest driver for young people in their choice of careers. The report shows that the younger generation would rather cut back on their working hours and salaries than risk their mental health, and the workplace service with the greatest demand from all ages is a gymnasium with changing rooms.
During the year, Castellum was the first in the Nordic region to certify an office property under WELL, an international construction standard that puts people’s health and well-being first. WELL is based on ten concepts that impact human health: air, water, diet, movement, comfort, sound, material, wellness, a sense of belonging and innovation. The first WELL-certified property is called Eminent, and is located in southern Malmö. WELL certification is planned for more ongoing projects in the Group over the coming years. The knowledge gained from certification has promoted integration of health aspects into all the company’s properties in order to create the best possible health conditions for our tenants and their employees.
What happens when the proportion of younger people at our workplaces increases? In the future, will we fly between Stockholm and Gothenburg, and will it be okay to offer someone meat? The coronavirus pandemic has pressed “pause” on air travel, but is this a behavioural pattern that will last? It is impossible to answer these questions now, but the attitudes concerning more sustainable methods of travel and consumption have indubitably changed over the year.
In Castellum’s report, Framtidens arbetsliv (Work Life of the Future) the majority of responses say that values are crucial in the choice of employer and that values concerning the climate, health and social responsibility are the strongest. Greater expectations on the actions of companies on issues of values will impact the development of both service and products going forward. With ambitious objectives in sustainability, Castellum sees value-driven tenants as their dream customers. In these areas, Castellum has unique offerings and take the lead in offering both healthy and climate-smart workplaces and services. For example, the company already offers yoga, green dry-cleaning and child-minding services in its co-working spaces.
For many years, climate research has shown the gravity and the risks in not coming to grips with the shared challenge of increased greenhouse gas emissions and the impact on the planet and its people. The World Economic Forum 2020 highlighted climate risks as the most serious for the economy and humanity. Over the last several years, the climate issue has come increasingly into focus among companies and individuals. Increased demands are seen especially among the younger generation, who are beginning to occupy a larger share of the labour market.
Tough climate goals
The construction and property industry represents one fifth of Sweden’s emissions and generates one third of all waste in Sweden. The industry’s linear use of resources will need to fundamentally change in order to achieve climate neutrality, to deliver on Fossil Free Sweden’s road map and for Sweden to be climate neutral by 2045.
Castellum is an industry leader in sustainability, according to external sustainability evaluations such as GRESB, the Dow Jones Sustainability Index and CDP, and some time ago set itself the tough goal of being climate neutral by 2030 at the latest. The company’s carbon emissions come primarily from the manufacture of materials that are purchased in conjunction with new construction and reconstruction. That is why it is extremely gratifying to have begun one of Sweden’s first NollCO2 buildings in Örebro, with the Swedish Police as the customer. Read more on Ongoing projects.