The Covid-19, or Coronavirus, pandemic has affected billions around the world, with both our professional and personal lives impacted by the virus and the many measures introduced to get it under control.
Like many industry sectors, the commercial property market has suffered widespread shut down for the best part of a year. With the road map out of lockdown now underway however, there seems to be a ‘light at the end of the tunnel’ for all those within the industry, including commercial estate agencies like us and the commercial and industrial clients we serve.
As a leading commercial estate agency serving Staffordshire, Cheshire and Shropshire, we’ve been a vital source of support and advice throughout the pandemic. With the Covid-19 pandemic far from over, we’re still fulfilling this role as we enter and negotiate our ‘new normal’ together.
One year on, we’re taking a closer look at the effects of coronavirus in commercial estate agents, and answering the question on everyone’s lips – what will the commercial property market look like post-lockdown?
They’ll be less bricks and mortar stores
The retail sector constitutes a major part of the wider commercial property market. As a reputable commercial estate agency, we work with a number of retailers, but is the strain put on this particular sector here to stay?
The demise of the high street is no secret. But as the Coronavirus pandemic took hold, one thing became very clear, the decline of bricks and mortar stores is set to speed up. With two lockdowns behind us and a third soon to be lifted, this has been evident, with even the country’s biggest brands (including John Lewis) choosing not to reopen all of their stores. Some brands have even closed their doors for good, with household name Debenhams going into administration and many more choosing to move to online-only operations.
With this, our commercial estate agency has found retail lease lengths changing. Leases are getting shorter, with brands reluctant to sign 5- to 10-year lease agreements due to the uncertainty being faced at this time. The terms of leases have also altered with more frequent break intervals now popular within retail leases.
It’s not all doom and gloom for retail
Essential businesses (such as supermarkets, convenience stores, pharmacies, funeral directors, and DIY stores) that have been permitted to stay open during the Coronavirus pandemic are prospering and embracing longer commercial leases as a result.
The nation’s reliance on delivery services means yet more plus-points for the commercial property sector. Due to increased ecommerce demand, some delivery services are also setting up shop in physical premises to ensure a more robust business and stronger local presence.
More resilient locations are becoming apparent
In addition to the business’ industry sector, its location has been linked to pandemic survival success. Coastal towns and other staycation destinations, and the retail stores, bars, restaurants and clubs they’re home to, have suffered immeasurably during lockdown. As restrictions lift and individuals choose staycations over seemingly riskier overseas holidays, their fortunes are likely to change over the spring and summer months ahead.
Locations with a higher concentration of essential retail and an undersupply of leisure facilities however have prospered even in the face of prolonged lockdown periods.
Our commercial estate agency found that destinations with higher rents for retail, office and other commercial buildings are increasingly likely to bear the burden of the pandemic for the long term. With many brands making a move to remote working to keep operations going, a return to high priced commercial premises remains doubtful. The businesses surrounding these vacant office buildings are also likely to suffer further reduced demand.
Businesses located close to airports and major travel links may feel the effects of diminished commuter activity too.
Redundant retail spaces could be revived
The prospect of having tons of redundant retail spaces in the area is troubling for every commercial estate agency, including ours. The rise of remote working and the decrease in physical demand has already sealed the fate of many retail spaces in the most affected UK locations. But an abundance of redundant retail space may be good news for investors!
Alternative uses for these redundant retail spaces is already being explored, with their conversion into residential premises and delivery hubs set to provide opportunities for investors and businesses alike. With the former, the Permitted Development Rights introduced back in 2013 may pave the way for easier alteration. Under these rules, office space could be converted to residential use providing the housing stock many major and regional cities and towns so desperately need.
The delivery and logistics business boom that the pandemic sparked is another positive for larger retail parks, which are likely to be left redundant as the online shopping scene goes from strength to strength. Their transformation into delivery hubs will provide an alternative use that will benefit all parties.
The industrial property market is set to boom
Even without the rise of delivery businesses, retail parks could be converted to solve the long running shortage of industrial space experienced by our commercial estate agency and many others. Industrial and warehousing properties are still after all in great demand, with ecommerce, delivery and urban logistics just some of the business sectors flourishing during the pandemic.
The wider industry is set to continue this momentum and with that, UK towns and cities will need better access to more leasehold and freehold industrial units.
For further information about the help and assistance our commercial estate agency can provide during the pandemic and beyond, please contact us today.