After a tumultuous 2020, property’s leading figures share their hopes and expectations for 2021 as the year gets off to a rocky start with yet another lockdown.
The pandemic has accelerated certain trends while entirely disrupting others, in some cases permanently. The large volumes of capital that might have chased office or leisure assets are now likely to be redirected to sectors offering near-term secure income and capital growth potential.
While we can all agree that the office has a future in corporate portfolios, our remote working experience has taught us that we may not need as much space as previously imagined.
Corporate travel to view assets and close deals will also be minimised given the efficiency of technological solutions that connect remote workforces. It is likely that workplace strategies will no longer revolve around all our employees being based in a central location and office portfolios will need to be adjusted accordingly.
The industrial sector offers resilient income and increasing ecommerce penetration continues to drive warehouse demand, with the pandemic accelerating the changing consumer behaviour underpinning this trend. The undersupply of prime last-mile facilities and land for additional warehouse development will continue to drive rental growth across the UK.
Deputy chief executive, LandAid
LandAid sits between real estate and the charities we fund, and as Covid hit we began to see the effects on real estate – and on the most vulnerable in our society. LandAid works to end youth homelessness, but unfortunately Covid has only exacerbated this critical issue.
Pre-Covid, it was estimated that around 103,000 young people find themselves homeless each year. Now, with the decimation of hospitality and retail, young people are finding even fewer employment opportunities with thousands more struggling to pay rent, heat their homes and even feed themselves.
Sofa surfing, a dangerous and difficult option even before Covid, has become practically impossible, meaning many more young people are now find themselves on the streets.
In this dangerous climate, LandAid’s focus on providing safe, secure, and affordable homes has become even more vital. Through our Emergency Fund and other virtual campaigns and events, the industry has shown its commitment to its charity. We, and the young people we support, couldn’t be more thankful.
Last year was a divisive and brutal one. It is no surprise that these factors have exaggerated the impact of property and risk fundamentals on individual asset choices and accelerated some already evident trends.
I believe the vast depth of capital and a low, risk-free return environment means 2021 will bring continued growth in last-mile delivery logistics, while assets that attract specialist innovation or life science customers will become a premium asset class in their own right, given the income resilience and the direction of UK plc, as we strive towards a low carbon, knowledge based economy.
Last year taught us that the UK cannot be so reliant on global trade, travel and just-in-time delivery, and we need to structure our economy around a greater degree of self-reliance, like it or not. The oft-debated WFH threat will lead to more flexibility for some, but things will be far more like they used to be than many would have you believe. The biggest impact will be on commuting patterns and choice, but humans enjoy interacting and sharing a kindred purpose with other humans – not screens.
Chief executive, British Property Federation
Our industry had to absorb significant losses last year, supporting sectors such as hospitality at the sharp end of this pandemic, and I look forward to when people can return to town centres to meet friends and family.
With a return to stability, the commercial property sector will be able to play its role in investing in our town centres and supporting UK recovery.
I expect the BPF will be incredibly busy, demonstrating how real estate underpins the social and economic fabric of this country, and working with government on key issues for our sector’s future – including planning reform and the review of our commercial landlord and tenant legislation.
We must ensure these two fundamental policy frameworks within which our sector operates enable our shared goals to the benefit of property owners, and the pensions and savings we represent, and our customers, both the businesses that occupy our buildings and the communities we’re invested in.
Managing director, Shelley Sandzer
We’re in the eye of the storm and unlike other crises, where hospitality is last to fall and first to recover, this time it’s the polar opposite.
I hope for continuation of genius in hospitality, furthering the sector’s hard work of 2020. From DIY boxes a la Patty & Bun and Pizza Pilgrims, to finish-at-home meals from the likes of The Palomar, to added dimensions – my local pub is the perfect example, with its own wine shop – operators and landlords have adapted, so I have faith this will be enough of a head start, until stability returns and workers, shoppers, and international tourists come back in force.
I expect to see further operator and landlord casualties, but emerging from the rubble are turbo-charged next-gen hospitality brands. I also expect landlords will remain forward-thinking, pushing boundaries to make deals more viable for existing and prospective tenants.
Major issues that linger are unlikely to be resolved; the re-introduction of rates is my greatest concern, a frankly unfair hurdle for the industry. I sincerely hope a sales tax is considered, to replace this archaic model.
Forecast for 2021: looking ahead with hope
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Forecast for 2021: looking ahead with hope (part 21)