Covid-19 has catalysed profound change in the way we live our lives and how we use our buildings. Now, the property market is wrestling with the challenge of catering for new and evolving demands. What’s clear, is there are extraordinary opportunities for the most innovative and agile investors and developers. Here are some of the key changes to be aware of:
Residential
Despite facing considerable challenges since the UK went into lockdown, the residential market has proven to be extremely resilient in the face of adversity. Much of this is thanks to the stamp duty holiday, which, combined with low housing stock, the vaccine rollout, restrictions lifting and the new 95% mortgage guarantee scheme, has seen property demand surpassing pre-pandemic levels. Unsurprisingly, with our homes now needing to be places which fulfil domestic, work and social needs, demand has increased for more flexible living spaces, with an increased focus on a home’s nearby amenities and more sustainable construction methods. Additionally, a huge number of people are now looking to escape the city in favour of something more rural and relaxed. These shift changes will have a lasting impact on both developers and investors, who will need to watch closely how these trends play out over the coming months.
Office Space
Contrary to popular opinion, offices are not dead – they are evolving. Granted, there are myriad benefits to working from home: employees benefit from a flexible working style and are not geographically restricted, whilst employers pay less overheads. Yet there is tremendous value to be had from dedicated office spaces. Face to face interaction is invaluable; for collaboration, relationship building and ease of access to support. Contrary to what the headlines may lead us to believe, actually, most people are hoping to be able to adopt a blended approach going forward. With this in mind, companies are now busy planning for new working models – and the need for office space will be affected as a result. Regional and shared office spaces are a good long-term bet as companies seek more flexible space, whilst city centre offices in financial capitals across the globe will continue to see a marked decline in demand.
Retail
There have been problems brewing in retail for a long time given the indefinite shift to online. The past year has proven that rents and rates are simply too high to make retail spaces commercially viable for many occupiers in the long term. The trend of ‘repurposing retail’ had already begun before the pandemic – in 2019, John Lewis even hired a specialist company with expertise in repurposing retail sites to oversee its facilities management. 2021 will see retailers continuing to experiment with how they operate. Significant changes include the establishment of small scale and “inventory-less” stores – shops which do not carry full ranges of stock and operate like showrooms, where purchases are followed by home delivery or collection. The next period will not be easy for retailers – to survive, they must use these ongoing challenges as an opportunity to evolve their assets into more resilient and innovative propositions.
Logistics
Even in a post-pandemic world, companies will need to satisfy consumers’ appetite for online shopping with fast delivery, meaning slick logistics and warehousing operations are a necessary priority. In 2020, the amount of warehouse space taken up by UK businesses was more than two thirds higher than in 2019. With online sales continuing to dominate despite the gradual relaxing of restrictions, it’s clear this trend is going to continue throughout this year and beyond.
Hospitality
Looking to hospitality, after a year of barely trading, many operators lack the funds to pay their rent debts or even the working capital needed to reopen. Soon, the lease moratorium will expire, so there are predictions of an uptick in insolvencies, resulting in more hospitality property stock coming onto the market. With the supply/demand dynamic changing, it’s clear the fixed leasing model must be reviewed in this property asset class particularly if restaurants, bars and event spaces are to survive, as the current model is harder to sustain during times of uncertainty. To rectify this, it’s been argued a variable rent approach should be adopted – this would help give the hospitality sector much needed resilience.
Covid-19 has radically changed what we need from our built environments and the property sector is undergoing rapid change as a result. It’s going to be a challenging time across the board, but there are some fantastic opportunities to be seized too. Strategic PR can help your business to cut through the competitive market and let your potential customers and investors know you are abreast of these shift changes. If you would like to learn how Property PR could benefit your business or brand, please get in touch.
