Transformation is a core part of our strategy to drive long-term growth and enhance the performance of our assets. By identifying underutilised sites and unlocking their full potential through hands-on management and targeted investment, we’re able to create high-performing, sustainable out-of-town business parks – delivering consistent and attractive returns for shareholders, and tailored solutions for our tenants across the UK and Germany.

Continuing our ViewPoint series exploring the Sirius platform, this month we turn our focus to the next stage of the value creation journey: asset transformation. I sat down with Sirius’ Chief Operating Officer, Rüdiger Swoboda, to explore how we move from acquisition to activation, and choosing the right point for strategic divestment.

Identifying the right opportunities

Andrew Coombs: What are Sirius’ main goals when transforming sites?

Rüdiger Swoboda: The primary goal of any Sirius site transformation is to maximise the value of the asset. This is achieved by increasing rental income, improving occupancy rates and reducing operational costs.

We also focus on optimising space by reconfiguring layouts to enhance efficiency and functionality for a diverse mix of tenants. Sustainability is another key objective, as we aim for our upgrades to meet modern environmental standards.

Lastly, we ensure that the transformed site reflects the Sirius brand through enhanced aesthetics and visibility, reinforcing our identity as a provider of high-quality, professionally managed business parks.

Andrew: How does Sirius decide if a property is right for transformation?

Rüdiger: We look at a combination of physical, financial and strategic criteria. We search for assets that are around major cities or economically active hubs, where strong demand from SMEs could provide an opportunity for growth.

Ideal properties are those where we can add tangible value through refurbishment, renovation and operational management, and where we can purchase them at below-market value so we can maximise on the potential long-term returns.

By targeting underperforming assets and enhancing them both physically and operationally, we’re able to drive occupancy and increase rental income, ultimately boosting asset values across the portfolio. This process is supported by a scalable and repeatable approach that allows us to implement Sirius-branded products such as MyLager, SmartSpace.

Andrew: How does Sirius identify potential development opportunities, and how far in advance?

Rüdiger: Detailed local market research and site analysis are core to our approach. Typically, we’ll target certain geographies around advanced cities. We have an additional preference for areas where Sirius may already have a presence, as this allows us to maximise our existing local knowledge and operational synergies between our sites. Once a potential target site is identified, we then undertake thorough market research and technical and legal due diligence.

By front-loading this evaluation, we ensure that we are well positioned to unlock maximum value from each site post-acquisition.

We also review our strategic investment considerations annually to ensure they align with both our broader portfolio goals and market dynamics.

Andrew: Can you give an example of a particularly successful transformation Sirius has completed, and what factors made it a success?

Rüdiger: Our B1 Business Park on the outskirts of Berlin is a strong example. Initially faced with high vacancy rates and ‘unlettable’ space – configured mainly for large office tenants – Sirius invested in reconfiguring the site to better suit market demand. Vacant areas were transformed into smaller offices and storage units., tailored to the needs of small businesses seeking flexible, short-term leases.

The transformation led to full occupancy of previously unlettable space, generating far higher returns per square metre than the rest of the business park. With efficient capex, a relatively modest investment turned a distressed asset into a high-performance property.

For tenants, the redevelopment delivered appropriately sized, flexible spaces that met their operational needs – while upgraded facilities and services enhanced their overall experience. 

Embedding innovation and sustainability

Andrew: How does Sirius integrate innovation and sustainability into its transformation approach?

Rüdiger: A great innovation example is our rollout of The CAMF System – a Computer Aided Facility Management system. It’s part of our broader digitalisation initiative, enabling site managers to operate more efficiently across a range of tasks such as:

·      Inventory and resource management

·      Maintenance scheduling

·      Repair tracking

·      Cost control

·      Helpdesk support

This kind of digital backbone lets us scale our model without compromising service, both in our day-to-day operations and the longer-term.

At every stage of redevelopment, we prioritise energy efficiency through practical and high impact measures – such as LED lighting, photovoltaic (PV) solar power systems and improved insulation. Water conservation is also key, with low-flow fixtures installed to reduce usage. Increasingly, we’re integrating smart building technologies like real-time energy monitoring via smart meters to optimise performance.

Where possible, we source sustainably, locally produced materials to minimise the environmental footprint of our construction activities. We also design with biodiversity and occupant wellbeing in mind, incorporating green spaces that promote both ecological value and healthier working environments.

Overcoming transformation challenges

Andrew: What challenges do you typically face throughout the transformation process?

Rüdiger: Transforming underperforming assets comes with its share of challenges. Many of the assets we acquire have high initial vacancy rates, or a poor tenant mix, with leases that are financially unviable. This can make early-stage leasing and income generation particularly challenging.

Additionally, we occasionally deal with ageing infrastructure that requires substantial modernisation to meet current operational, safety and environmental standards. Regulatory complexities, such as obtaining planning permissions, can also delay timelines.

Maintaining budget control is also critical. Each transformation project is tightly managed on a daily basis to balance cost-efficiency with our high-quality delivery standards. Finally, shifting market dynamics – such as changes in the demand for office space versus self-storage – mean we need to stay agile and responsive, adjusting our product mix and leasing strategies to match local tenant needs.

Andrew: How has Sirius adapted to challenges such as rising costs in its recent transformation projects?

Rüdiger: Rising construction and labour costs remain a significant industry-wide challenge. Sirius has responded with a proactive and disciplined approach to protect our margins and maintain our standards.

Robust cost control frameworks are embedded across our operations, allowing us to track, manage and optimise expenditure at every stage. This includes renegotiating vendor contracts to secure better terms and leveraging our scale for cost efficiencies. Occasionally, and where appropriate, we’re also able to negotiate contributions from tenants towards capital expenditure, to help share the financial load.

Knowing when to divest

Andrew: How do you know when a site is fully optimised and ready for disposal?

Rüdiger: A site is considered fully optimised when it reaches its maximum rental potential – typically evidenced by high occupancy and a strong rental income.

From the outset, we identify clear value-add opportunities, and implement targeted capex programmes to unlock that value. Once these improvements are delivered, and the asset performs as intended, we classify it as mature.

At that point, we continuously monitor market conditions, and if a disposal opportunity arises at a premium to book value, we’ll actively consider it as part of our broader capital recycling strategy.

Stay tuned for future insights in our Viewpoint series.