Henderson Park, the pan-European private equity real estate firm, and Hines, the international real estate company, have commenced construction of their first-ever all timber office project.
The T3 Diagonal Mar building, located in 22@ North in Barcelona, will offer 3,610 m2 of space. While this is the first all-wood scheme that the two companies have ever collaborated on, the project marks the latest in Hines’ ‘T3’ family of buildings, of which around 10 have already been delivered in the US.
The T3 properties combine ‘the warmth and sustainability of wood, cutting-edge technology, and superior connectivity’, according to Hines. Work on the project began at the end of May and is seeking scheduled completion in 2022.
‘As the building’s elements are prefabricated off-site from cross-laminated timber, the total build time is less than half that of a traditional steel or concrete construction,’ notes Luke Treasure, project manager of T3 Diagonal Mar for Hines.
‘On a purely like-for-like basis, it is more expensive to build entirely from wood, but there are additional savings in terms of painting and plaster as exposed wood is simply varnished. There is also no need to put in suspended ceilings to hide the structure. These savings, and of course, the significant time saving, offset the superior costs.’
Tenant benefits
Peter Epping, global head of ESG at Hines, notes that occupiers of Hines’ T3 buildings in the US have to date shown considerable enthusiasm for the timber office experience. ‘It’s a trend that has developed very swiftly,’ he notes. ‘Our first T3 project was completed five years ago in Minneapolis. From planning or completing some 12 projects globally, we have seen the real-life benefits and how positively the tenants respond to it.’
Epping adds: ‘Another top priority for occupiers and investors is also the carbon-offsetting issue, and timber plays an absolutely critical role in making a difference when it comes to embodied carbon.’
Gijs Molenaar, managing director at Henderson Park, says that given the office sector’s rapid evolution over the last year-and-a-half, 'it is now more important than ever that modern workplaces meet the increasing demands of occupiers for buildings that deliver high quality, technology-driven interior space inside buildings with best-in-class ESG credentials.
‘T3 Diagonal Mar encapsulates this shift, with a unique design that promotes wellbeing, as evidenced by WELL certification, as well as environmental responsibility, through opting for cross-laminated timber as material for the main frame, which targets much better CO2 credentials in the construction of this LEED Gold building. This aligns perfectly with the wider 22@ district, which is quickly becoming one of the most exciting innovation hubs in Europe.'
The Barcelona scheme will be marketed to potential tenants from September, with CBRE in charge of the commercialisation. However, Treasure notes that a number of firms have already got in touch to request more details. ‘The focus on the whole occupier experience has moved significantly up the scale in the last 18 months,’ he notes, ‘and we are well placed to capitalise on that.’
Barcelona business
The Barcelona office is one half of a bigger development also comprising a purpose-built student accommodation (PBSA) asset. Both elements are owned by Henderson Park and Hines.
The 350-bed student accommodation scheme is not made of wood, but has already secured €27.5 mln of development financing from French corporate and investment bank Natixis. Once completed, the student residence will be managed by aparto, the dedicated student accommodation brand and platform at Hines.
Both projects are aiming to secure LEED Gold and WELL ratings, with the office building also in the process of obtaining WiredScore certification.
With its on-trend appeal, are occupiers likely to allocate a bigger rental budget to occupy the office? Says Treasure: ‘We haven’t assumed a premium on rents in our business plan, but we may be able to get to a premium based on the initial interest we are seeing. Overall, I think we will outperform,’ he concludes.
And with the Barcelona project tipped for success, Hines are unlikely to pause there. Says Epping: ‘We are considering timber for all of the markets where we are active in Europe, from Ireland to Italy. We are also considering deploying this approach for another scheme in Barcelona, and would like to incorporate timber on a major refurbishment we are about to undertake of one of our assets in Munich.’
