No doubt, 2020 was a terrible year for most industries sans Ecommerce and its highly likely 2021 will see some big trends that will expand on the ones seen the previous year. Most capable companies will have switched to remote working first, with some even making the permanent shift. A greater reliance on digital technology has also put pressure on the connectivity and power capabilities of office spaces.
While it looks as though the end is in sight for the pandemic, Covid-19 has made many businesses permanently re-evaluate what they really need from their offices. Here’s a list of the main trends dominating commercial property;
A huge trend that is highly likely to dominate 2021 is the shift to virtual solutions in almost every area of our lives. Many businesses have had to undergo a significant digital transformation this year, due to challenges like accessing central servers remotely, shifting digital working practices and staying connected.
Research by Deloitte revealed that 56% of companies believe Covid-19 “exposed shortcomings in digital capabilities” and had a significant impact on their planned transformations. But, after overcoming the initial stress of such a big change, lots of companies are keen to keep these digital ways of working in place in the long-term.
Even as staff return to the office in 2021, many will continue to connect with clients and suppliers in digital ways, avoiding the time, financial and environmental pressures of in-person meetings. The challenge for commercial property landlords will be making sure their properties can cope with increased pressure on key utilities like electricity and internet bandwidth.
Inflexible long leases have been cited as contributing factors in the demise of British high street giants Debenhams and Arcadia Group. And across the sector, it seems greater flexibility in lease terms is going to be a key area for adaptation for commercial real estate agents and landlords in the future.
Not every sector has been decimated by Covid-19. In fact, in the tech-focused offshoots of traditional industry, such as FinTech, HealthTech and home fitness, some businesses have seen their workload and customer numbers go through the roof. As a result, these new, highly profitable companies are looking for a permanent yet flexible base.
On the other hand, companies in hard-hit sectors, such as travel and leisure, have been struggling to cover the costs of their leases. Many larger companies also are simply not using their offices right now, or plan to use them only two or three days per week going forwards, presenting new and exciting opportunities for them to sublet their space.
Even companies that have fared relatively well during the crisis are looking into more flexible lease terms for their commercial space. A permanent home that a company uses five days a week is no longer as appealing to a new generation of flexible workers. If commercial property landlords want to make sure their properties remain occupied, it’s clear they’ll need to consider flexible or part-time lease agreements in the future.
In years gone by, much of a town or city’s office-based workers were clustered into one, often central, area. Even in a sprawling metropolis like London, much of the working week’s activity was focused around several key areas. As a result, retail, food and drink, and leisure businesses were able to set up in these areas, confident they would enjoy a steady stream of customers from the offices all around.
Now, with office workers scattered to the four winds, these central businesses have experienced a significant drop in customer numbers. While it’s undoubtedly an unfortunate consequence of the pandemic, it has presented new opportunities for the commercial property world.
A poll by TLT solicitors found that 69% of business owners believe the creation of local retail and office hubs could be a great way to accommodate long-term flexible working. Out-of-town CRE property owners may be able to charge premium rents for their previously less desirable properties, offsetting potentially reduced rents from central premises.
And, with greater numbers of people within suburban communities, there could be exciting new opportunities for restaurants, cafés, and retail stores to set up profitable locations outside of exclusive central hubs.
Adapting for the future
Should property owners and agents wish to ensure their future is bright, they’ll need to get on board with changing customer demands. Failing to adjust their offering could mean they’re stuck with empty properties and struggling investments that sour from an asset to a burden. If you are concerned about your commercial property and wish to discuss an exit plan then feel free to contact us for a free valuation.