Speaking from Icade’s offices in Paris, CEO Olivier Wigniolle sets a fine example as a man driven to get his business back to work. Despite the majority of Parisians still working from home, as the country’s lockdown restrictions are gradually eased, Wigniolle is sat suited at his desk, ready for work.
At the time of speaking, Icade was allowing a maximum of 35% of its work-force to come into the office, with a view to having 100% back by July.
For Wigniolle, getting his staff back into the office was about much more than just a return to the status quo. “For me, Icade’s success is a product of its people. It is the culture within the organisation that drives us forward; it is what makes us stand out,” Wigniolle says. “We must work together to propel Icade out of this crisis. I believe we are stronger together, so it is vital that we do this as a team.”
Wigniolle is all about people, and this is not just inside the organisation. He is clear that focusing on people must be a philosophy at the core of how Icade operates as a real estate developer, with the social in Environmental, Social and Governance (ESG) underpinning Icade’s approach.
“Maintaining success in areas such as green initiatives is essential for all real estate developers, however, it is becoming increasingly important to consider ways developers can make a difference to the societies in which they operate,” says Wigniolle.
And it is this focus on social initiatives that, Wigniolle insists, won Icade its bid to build a third of the Olympic village for Paris 2024. “We won this bid because of our commitment to ESG. The development will be carbon neutral and, more importantly, 10% of the jobs will go to local people who are out of work.
“It is obviously pleasing to have won a project with such international significance, but for me, it is the ability to give the project considerable local significance that makes it quite special.” Wigniolle is very clear that Icade’s social commitments are about more than simply winning new business, and are a fundamental part of the business’ future, post-COVID-19. “The coronavirus outbreak will only serve to increase the scrutiny put on companies for what they give back to society. What this means for us is that it must become the foundation of what we do, not simply a box-ticking exercise.”
Wigniolle clearly sees people as an essential part of Icade’s emergence from the crisis; however, he is not ignorant of the considerable challenges the business will face in the coming months and even years.
The majority of Icade’s portfolio is made up of commercial office real estate; a sector hit hard by the move to working from home. It also has a growing healthcare real estate portfolio that was focused on expansion into Europe – something that came to an abrupt halt with lockdowns enforced across the continent.
Wigniolle, however, struck a positive tone when considering the future of commercial property after coronavirus. “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty,” Wigniolle said, quoting Winston Churchill, with whom he finds inspiration in these uncertain times.
This is not empty rhetoric. Wigniolle agrees there are very different challenges to be addressed in both the office and the healthcare sector. He is as clear that the business sees this as two very different opportunities to grasp.
OFFICE AND HEALTHCARE: AN ECONOMY IN FLUX
In 2019, Icade laid out its strategy for its commercial office and healthcare portfolios: to become the market leader in the Paris region and greater France in the commercial office sector and become a leading player in the European healthcare sector.
Wigniolle remains steadfast in his commitment to this strategy; however, he does accept that the approaches could not be more different. “For offices, it will all be about change: how we adapt what we have and evolve our designs to become more convenient. For healthcare, however, it is about more of the same.”
Icade’s commercial office portfolio is the backbone of the business, with more than EUR 9.1 billion of existing assets in greater Paris and other regional cities in France, and another EUR 2.2 billion of office projects in its development pipeline.
Wigniolle is clear that the challenge the sector faces will be making offices more convenient for employees. “We must ask ourselves how we can make employees happy to come to these offices, what we can offer on top of the premises themselves. The last few months have shown people what it is like to not to have to commute to work, to spend more time with their families. We cannot ignore the fact that the office has to start to offer more,” Wigniolle says.
And this is not just a consideration for Icade’s future developments but also how it can change its current spaces to better suit the needs of its occupants. Wigniolle does not shy away from the fact that this could have implications for Icade’s current portfolio, which includes three towers in La Défense, Paris’ major business district.
“La Défense must be prepared to embrace change. It cannot continue in its current form as there will simply not be the required demand,” says Wigniolle. “Instead, we must begin to consider how we can create spaces that offer a mixture of residential, retail, leisure and office. Our offering must become more diverse.”
It is easy to understand why he feels this way. As the appetite for working from home grows, even if this is just a couple of days per week, the need for large corporate headquarters will likely decrease. Instead, companies will have to look to make offices more local, perhaps moving closer to the homes of its occupants or dividing up operations across multiple suburban
centres, for example.
While the commercial office sector’s future will be defined by change, for Icade’s healthcare business, Wigniolle is keen to continue building on the resilience it has shown during the crisis. As it stands, Icade’s healthcare subsidiary currently has 156 healthcare facilities in France, Italy and Germany. With a value of EUR 5.3 billion, the sector makes up 26% of Icade’s portfolio yet represents phenomenal value, accounting for 30% of the entire business cash flow.
Wigniolle is in no doubt that the strategy for Icade Santé must remain focused on growth – not just of French assets but also for opportunities in neighbouring Germany, Italy and Spain for bolstering its healthcare portfolio, which continues to provide investors with attractive returns.
And it is the people at Icade’s disposal that gives Wigniolle such confidence in its approach. “What we provide our clients is a wealth of experience, existing resource and access to the healthcare sector in multiple markets,” explains Wigniolle. “Yes, it’s a competitive market, but I do believe we offer the complete package.”
The appeal of growing Icade’s presence in the healthcare sector is not simply due to its competitive advantage but that it is also an extremely attractive market to have a foothold in. “For investors seeking increased exposure to the stable returns on offer in8 this sector, there are few comparable offerings,” Wigniolle says. “When compared with other sectors, the risk of investment is low, and the returns are high. What’s not to like?”
It would be fair to say that the strategies for Icade’s healthcare and commercial office portfolios couldn’t be more different; however, for Wigniolle it is clear that they are united by one common goal: to continue driving Icade forward.