‘Recession is a change agent’: Why Gensler is launching itself into the UK housing market

“We don’t really talk about targets,” claims Duncan Swinhoe. “We have aspirations.”

Building Design is speaking to Gensler’s co-managing principal for Europe and its new global co-chief executive Julia Simet. The practice is the biggest in the world, with a turnover last year of $1.84bn (£1.46bn). It is the first to employ more than 3,000 people and has topped this publication’s WA100 list of the globe’s biggest architecture firms for the last eight years.

Its resilience and growth since its founding in 1965 has been an extraordinary success story. So, hearing that it does not set targets is a surprise. Is this just a carefully managed line given to a journalist?

“Don’t get us wrong on this, we run our business very, very carefully,” Swinhoe clarifies. But targets sound “weirdly super-commercial and corporate, which is just not how we’re wired”.

Gensler, according to Simet and Swinhoe, owes its success not to a hard-nosed focus on growth, but on its culture. It talks about it “all the time,” the pair readily admit. The firm’s leaders seem at their happiest when talking about this culture, often with genuine passion.

> Also read: Interview: Gensler’s Diane Hoskins on how to keep growing in a time of crises

It was the same with Diane Hoskins, former co-chief executive and now chair of the practice, who was also the subject of a Building Design interview. Simet replaced Hoskins as co-chief executive at the start of this year in a planned succession but, unlike Hoskins, who was based in Washington DC, Simet is based in the firm’s European headquarters in London. Does this represent a gear shift towards the EMEA market? 

“It’s not not the case,” Simet says. But Gensler does not think about “specific locations” – that’s not their culture. It’s a “polycentric” practice, Swinhoe says, with a philosophy of “borderless design” which encourages global connectivity between its 53 offices across North and South America, Europe, Asia and the Middle East.

> Also read: News: Gensler appoints four new principals to UK and European leadership team

“It’s funny, we were founded in San Francisco, but we don’t say that’s our headquarters,” says Simet. “We don’t use that kind of language; we don’t have that kind of platform. We really are, unlike I think most other firms, so closely networked and connected and it’s not about any office really having a hierarchy over any others.”

Instead, Gensler has a laser focus on its clients, what their needs are and where they are going. It is why it opened an office in Paris in 2019 as it became clear that efforts in the UK to stop Brexit were going to fail – lots of companies were moving to the French capital from London and Gensler wanted to make sure it was on the ground, ready to take advantage of the opportunities. 

With its co-leadership model, its lack of an official global headquarters and its relentless focus on adapting to changing markets, Gensler is almost like an ecosystem within a company, Building Design suggests, constantly evolving to meet the needs of clients. This analysis gets top marks from Simet: “You’re getting it exactly right and I think you should consider coming to work here.”

Reading between the lines, the evolving needs of clients could be one of the reasons why Simet is based in London. Across Europe there are growing vacancy rates in offices – not at the top end of the market, where occupiers with deep pockets are happy to splash out for space to impress clients, but in the middle and lower-end buildings traditionally occupied by smaller businesses which have found that they can operate perfectly well with staff working from home since the pandemic. 

“There’s this sort of wave of potential stranded assets that are coming forward,” says Swinhoe. “And then it’s a huge economic problem for our clients, frankly, which hold these assets.”

Commercial projects have been a core part of Gensler’s business for decades, so it is no surprise the firm talks so much about adapting to changing circumstances. Now, with office landlords facing apparently permanent declines in revenue, it senses an opportunity.

This is set to mark Gensler’s grand arrival as a major player in the residential market, transforming offices across the UK and western Europe into housing. “We’ve never really sort of tackled the living component which is now, we think, such a vital part of what’s going to happen next,” says Swinhoe. 

> Also read: News: Gensler names new residential lead for UK and Europe

The transformation of buildings, many of which are in key urban locations, is a “super-exciting opportunity” to bring about a transformation of cities from business hubs to social and residential areas, Swinhoe says. “With that in mind, yes, absolutely we see opportunities to grow in the UK.”

Clearly, not all office buildings can be converted into housing, and schemes of this kind have courted controversy for providing substandard homes. Gensler believes that between 17 and 20% of offices are suitable, based not just on the buildings themselves but on their locations, amenities, floorplates, access to public transport and, crucially, their number of stair cores.

Government proposals to mandate second staircases in buildings above 18m in height, which have already seen scores of major schemes redesigned across the UK, would apply to residential buildings but not to offices. Many older office buildings ripe for conversion will only have one means of escape and will need substantial internal alterations to align with regulations.

But owners of these buildings “need to do something with them. They’re struggling from a valuation point of view and struggling from an investment point of view,” says Swinhoe. “Many office buildings have simply come to the end of their design life way, way earlier than maybe the clients and design teams at the time thought.”

Gensler has hired build-to-rent specialist John Badman to head up its residential arm in the UK and Europe to drive this change of direction. Badman, who was previously head of residential at architect CallisonRTKL’s London office, will bring the “missing piece” of Gensler’s strategy towards cities in the UK.

Swinhoe, a northerner, wants this to include much more focus on regional British centres such as Birmingham, the location of the firm’s only other UK office, which is set to be expanded later this year.

This strategy is also being applied in the US, where office vacancy rates are at the highest level since 1979. This is a much more severe crisis than what is being seen in Europe, so damaging for landlords that some observers, most recently in the Financial Times and the Economist, have warned it could spark the next great recession. 

It’s a time to really apply strategy to the future, because we know the pace of change is going to accelerate

Julia Simet, global co-chief executive, Gensler 

Still, the US economy is generally faring better than in the UK, where growth has gone into reverse, and it may seem counter-intuitive that Gensler is seeing opportunities here. “Recession is a change agent,” Simet explains.

“There are things that our clients have to deal with that they need to navigate, to figure things out… we want to be there with them through all of this to help navigate that change. And we need to leverage these times to invest in advanced new ideas.

“We can really take this moment and invest in ideas to work with our clients on how to improve their situation, how to read the future, how to look at old decisions that maybe their peers or their competitors are making right now and anticipate how that’s going to unfold so that they can leapfrog and play on that. It’s a time to really apply strategy to the future, because we know the pace of change is going to accelerate.”

Simet, who rose through the ranks at Gensler’s New York office for 25 years before moving to London in 2019 as co-regional managing principal for Europe, sees many similarities between the two cities, first and foremost a resilience to headwinds. 

“They’ll imagine and reinvent and come back better,” she says. “And there’s never a doubt in anybody’s mind that that’s going to happen. Sometimes it’s not imminently clear. But it’s going to happen and people get on it right away.”

There are some criticisms of the UK. Swinhoe believes the planning system here is unpredictable, prohibits investment and is very difficult for governments to change.

How we’re living and using and working in our cities, how we even classify what is living and what is work – I think there are constraints which are put around that

Duncan Swinhoe, co-managing principal for Europe, Gensler

“I do think that the current stasis that we have is not benefitting anyone,” he says. International developers and asset owners, looking in from other countries, find it “very opaque and uncertain”, Swinhoe has found, and it has become more inherently uncertain in recent years.

Part of the problem is siloed planning authorities, from councils to regional mayors and central government, which have different agendas and priorities. Swinhoe is in favour of an update to use codes, which categorise different types of development based on how the buildings will be used, to better align with how cities have changed since the pandemic. 

“How we’re living and using and working in our cities, how we even classify what is living and what is work – I think there are constraints which are put around that.”

This is one part of the planning system which Swinhoe thinks could be revised to be more appropriate for how cities are working now and in the future.

> Also read: News: Gensler unveils plans for £80m public realm transformation of Fleet Street

For now, Gensler is working within the constraints of the system as it is. The London office has just completed its strategic planning for the year, looking at where the growth markets are in the UK and Europe, and Simet says the team are optimistic about prospects across the region.

Gensler may not have targets, but it is a firm which has become a globe-straddling giant by adapting to local conditions and changing circumstances while always striving to get in front of new opportunities before its rivals have had a chance to catch up. 

“It’s just so exciting within Gensler in terms of our constant evolution, and that’s why it’s hard to kind of pigeonhole us,” says Swinhoe.

“It really does also come back to our clients,” adds Simet. “What our clients are doing and where they are and where they need to grow and how they’re following talent migration or other kinds of opportunities around the world. That’s such a driving force in what we do and the kind of impact we want to have.”