Commercial Property – Reacting To Change
Due to a change in people’s behaviour post-COVID-19, the Commercial Property market has experienced fundamental change across all sectors.
• Industrial & Logistics – High demand due to accelerated growth in e-commerce, localised supply chains and increased investor demand.
• Retail – New innovations and trends required to bring a brighter future post-COVID-19, e.g. checkout-free outlets and personalised experiences.
• Offices – A risk occupancy has dropped from c.60% to c.20% following COVID-19.
Industrial & Logistics
The industrial & logistics market has outperformed many expectations over recent years, with record values and diminishing supply levels being reported in most commercial centres across the UK. Supply chain issues and a change in consumer demand caused by COVID-19 have led to businesses moving processes in-house and holding higher stock volumes, which turbocharged occupier demand and investor appetite. The fundamental change caused by COVID-19 has meant warehousing can be smaller and de-centralised; closer to end users’ homes, which is a theme we are expecting to see advance into many UK locations with increased development activity.
Retail
The challenges in the retail market had been much reported before the outbreak of COVID-19, but the effects of lockdown have changed the landscape for many towns. There has been an emergence of new technology with Amazon Fresh being launched in the UK, along with checkout-free outlets, smaller store formats and an emphasis on personalising the customer experience. There is no doubt the retail landscape has changed for good, and innovation is required to keep our high streets and shopping centres vibrant and relevant.
Offices
The full impact that working from home has had on the office market remains to be seen but early evidence suggests that overall occupancy may have dropped from c.60% to c.20%. This apparent reduction in occupancy has led to rationalisation, with businesses taking less, better quality accommodation. Uncertainty in the market has led to a reduction in development leading to strong competition for the best space in most commercial locations across the country. Moving forward, it is likely offices will need to offer amenity-rich environments to attract staff back to the office.
These changes have led to landlords and occupiers across the country needing to consider different strategies with regard to their commercial portfolios. It is therefore important that all parties involved in commercial real estate undertake sustainable development to futureproof their investments from changes in market sentiment.
To find out how Berrys’ Commercial Agency team can assist with your project, please contact Cameron Frazer on 01743 295468 or email cameron.frazer@berrys.uk.com.
