This year, we have seen a significant shift in the way we live and work, with Covid-19 proving to be an accelerator of existing trends.
Overnight, we were enlisted on a crash course in the digital world, with digital connectivity providing a lifeline for individuals and businesses alike.
Ecommerce experienced 10 years’ worth of growth in two months during lockdown. Enforced home working also demonstrated that many professions can be productive remotely, while emphasising the role of central office hubs in providing a space for ideas and team collaboration.
Meanwhile, the importance of more, better-quality affordable homes to meet the needs of our changing lifestyles has never been more apparent.
Simultaneously, Covid-19 has exposed fundamental flaws in how UK real estate is managed and operated. It has shown traditional property management to be outdated, inflexible and cumbersome. A lack of transparency and collaboration between owners and occupiers has tested relationships.
For retail, Covid-19 has exacerbated the challenges the sector already faced. Changes in consumer trends have caused a seismic shift in the UK retail sector; consumers now prioritise localism, convenience, variety and experiences. The role of retail property owners has shifted from what was solely the ‘librarian’ – collecting rent, renting shops and cleaning spaces – to ‘editor’ – a deep understanding of occupiers’ wants and consumers’ needs.
As an editor, the owner provides the right content, at the right time, in the right place. By taking more curatorial control of assets, and understanding changing consumer needs and behaviours, owners will be on the front foot in delivering future-ready places, while helping occupiers weather the changes impacting the retail, leisure and hospitality sectors.
In response to pandemic-accelerated retail sector challenges, LGIM Real Assets recently launched its flexible partnerships model: a move away from long-term leases with upward-only reviews to more flexible terms.
This model, which is designed for all retailers, from start-ups to superstores, will deliver occupiers more options and flexibility, while giving us increased control over the environment we create. Our Flexible Partnerships Model is part of a long-term strategy in how we manage retail, building on relationships with our occupiers, and is a key part of our mission to deliver incredible places for people.
Covid-19 will have a fundamental impact on how real estate is used, acting as a catalyst for change for many owners. The winners will be disruptors and innovators who adapt, working with occupiers to future-proof their assets to create successful, long-lasting destinations. Those who fail to embrace this change will be left behind.
Bill Hughes is head of Real Assets, Legal & General Investment Management