After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Head of ESG, Hydrock
The importance of ESG has risen in recent years, and as we emerge from the pandemic, the longer-term impacts on our health and wellbeing will further sharpen the focus on people and community. Companies that don’t strengthen their efforts around social impact risk damaging their reputation and ultimately becoming irrelevant.
This year, the industry increasingly needs to look at all projects through a social value lens and evaluate the everyday impact on people’s lives. As a sector, we need to measure social impact in a meaningful way. This won’t be easy as social value isn’t all about the numbers. It will be interesting to see how new measurement tools work in practice – how can we quantify social impact in a way that truly captures the spirit of a community and delivers equitable human and social capital? To do so will be an important challenge for 2022 and beyond.
Partner and director of legal services – real estate, Irwin Mitchell
This year will herald an increased return to a new-style office. Competition from remote working and regulatory requirements driving energy efficiency will affect how office space is reimagined in design, location and size.
The future office will deliver engagement that cannot be achieved remotely – being ‘present’ enhances focus without other media distractions – for training, collaboration, team innovation, coaching, cementing trust and building rapport. The new office champions these aspects alongside the fast and reliable technology that has dominated lockdown business life. Irwin Mitchell’s occupiers survey explores these issues in greater depth. Driving diversity, inclusion, productivity and greener workspaces is key.
The Commercial Rent (Coronavirus) Bill should come into force with the proposed six-month period of enforced arbitration.
With £7bn of rent debt at stake, how this plays out will be vital both to struggling tenants and to landlords’ own solvency. It may also inform the landlord and tenant landscape going forward.
Managing partner, GCW
Volatility and turbulence will continue for town centre occupiers. However, we’ve all become better prepared to weather the storm and take a longer-term view.
We expect lenders on stressed/distressed assets to act during 2022, which could result in increased sales particularly in the shopping centre market. This will create an interesting dichotomy between those who are funded and see opportunity based on driving the net operating income and those who see long-term potential based around repositioning and shaping a place for the longer term.
As we see a rise in the importance of ESG measures (which is welcome), it is also time to examine some of the other barriers to change. The 1954 Landlord and Tenant Act, which stymies innovation in our leasing models, the approach to rent and flexible occupation of space, is long overdue a review.
Chief executive, NewFlex
With the new variant stirring headlines over the Christmas period, 2022 is certainly starting in a turbulent manner. However, history has repeatedly shown that times of hardship can lead to positive innovation and change. Even pre-pandemic, I said the world of work had changed forever and those who didn’t adapt – both occupiers and building owners – risked getting left behind.
For businesses that survive, the move to a more flexible hybrid structure can’t happen fast enough, which must come as standard now if they are to attract and retain the best talent. As a result, the concept of ‘space as a service’, where smaller office space can be provided ‘on demand’ or with a membership-style model, will quickly become mainstream. This new model benefits both parties. The upside for occupiers is that their total occupancy costs fall, while the upside for building owners is that the reduced core space can be offered at a higher price per square foot. Everyone wins.
We will also continue to see a ‘rise of the regions’. Our out-of-town workspaces were among the strongest performing in the portfolio during the first wave of Covid and I expect demand to rise as people reconsider their own living options.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part ten)