The commercial property market has changed like many others due to the impact of the Covid-19 pandemic. Lockdowns and other restrictions certainly took their toll on the businesses that usually own or tenant commercial spaces of all sizes and uses.
Despite the UK embracing its ‘new normal’ post pandemic and Covid-19 restrictions now pretty much non-existent, the commercial property market that our commercial estate agency and property management service serves has changed for good.
Whilst the sector isn’t experiencing the slump that was predicted throughout the pandemic, it underwent major structural change. This effect means that many of the landlords and investors our commercial estate agency supports have to take a fresh approach that embraces change rather than rely on past strategies.
A resilient market that’s forever changed
The commercial property market performed much better than anyone expected in regards to capital value and rental performance in the face of Covid-19 challenges, even at the height of the pandemic. Capital values received an unforeseen boost whilst rental performance also prospered despite the changing needs of business tenants. As a result, investment trusts continued to advance into the sector, and commercial real estate remained hot property.
With investment in some commercial property types continuing, the badly affected commercial real estate that wasn’t performing so well was masked. High street retail stores and ill-equipped office spaces became no-go areas for the clients our commercial estate agency and property management service represents for instance.
The structure of the sector shifted and has remained changed ever since, and this is leaving landlords and investors having to embrace a more dynamic methodology when investing in and managing commercial property in the present day.
Selling up: not your only option in the changing landscape
One of the tactics used by some investors in the face of market changes is selling commercial properties in their portfolios. Whilst in the current, buoyant property market, selling would provide a healthy return, property management will ensure you hold onto your investment and continue to profit from the commercial sector even as it enters the forecasted dip in the wider property market.
With the right property management, the changing landscape (and its many challenges and rewards) can be embraced.Â
Managing your tenants’ new expectations and aspirations
Many businesses had to change the way they operated during the pandemic. The switch to remote working and the need for less physical commercial space has seen the expectations and aspirations of tenants evolve. In a society that is increasingly putting digital first, this outlook is not expected to change for the vast majority of the commercial tenants our commercial estate agency serves via our property management service.
As well as wanting and needing less or more flexible commercial space, the commercial properties used by modern day workforces have to be able to accommodate a wider range of environment, social and governance (ESG) considerations to deliver to their progressive tenants. Without this malleability, commercial properties will quickly become ‘stranded assets’ with no use, no resale value and no discernible tenant base.
Making new investments with new tenant needs in mind
In addition to improving the commercial properties that already form part of your portfolio using a different standard of property management, those looking to make new investments with the help of our commercial estate agency should have a new list of criteria in mind when searching for their next property.
Properties will lower carbon footprints and better flexibility are considered ‘future fit’ thanks to their ability to serve tenant bases properly both now and long into the future. Out of town assets, rather than centrally based properties, are also worthy investments capable of bearing the brunt of the changing landscape, and more specifically the changing demands of commercial property tenants.Â
This doesn’t mean that the retail investments our commercial estate agency proudly represents are write-offs however. With interventions like refurbishment, upgrades and development, these commercial property types can be transformed to unlock opportunities and meet future tenant requirements. The process of weighing up the cost of intervention and the cost of investment however should be undertaken with caution.
Remember, when investing in new commercial assets, past performance can no longer be used as a benchmark to predict future results.Â
Ready to make your next move in the changing commercial property sector? Whether you’re looking to manage your existing portfolio or add to it with a new investment, our experienced commercial estate agency and property management service is here for you. Contact us today to discuss your requirements.
