After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Co-founder, Backbone Connect
Reports of the office’s demise were overstated last year, but it’s true the rules of the commercial leasing game have changed in 2022. While many businesses remain committed to shared workplaces, the way they value and assess space has shifted. Tenants’ focus is now less on desks per square foot and more on what the office can deliver commercially, culturally and corporately for them. In 2022, landlords must be much more fluent in this new language, directing their portfolio investment and leasing strategies accordingly. The best marketing pitches will be those that emphasise the role of high-quality office space in meeting occupiers’ dominant and emerging business drivers, especially around ESG – from staff retention, through to governance on issues like cybersecurity, to tracking climate change targets. Our research shows 69% of tenants would pay more for a sustainable office, while the same number would pay extra for smart tech that helps them achieve net-zero goals and boost staff wellbeing and productivity. There will be rewards for asset owners who get this right.
CTO, KONE
In 2021, urbanisation continued at a pace, although the nature of this phenomenon has evolved. Living close to services, jobs, education establishments, and other facilities continues to be important, despite the effects of the pandemic. We’ve identified three main trends: homeowners and tenants expect convenience and better services and experiences; new ways of working and growing building intelligence lead to redesigning offices; and efficient public transport is a key enabler for sustainable cities, with increased expectations for its healthiness and safety. Overall, adaptability will continue to be important. Almost every aspect of urban life - shops, offices, residential segments - have had to change. When needs change, the equipment in a building needs to change. Elevators can learn and they can provide more intuitive guidance based on data and how people work and behave. There’s tremendous power in innovation and together with our partners and customers, and with the help of new technology, we can create totally new types of people flow experiences.
Investment director, HB Titan
Despite the operational pressures of rising inflation, labour shortages, supply chain issues, and the potential for Omicron shutting venues down altogether, there is still significant investment appetite for the hospitality sector. UK operators will be reassured by 2021’s summer staycation boom, with corporate and government business providing infill as fallow leisure demand arises into the winter, and hoping for a repeat of record levels of demand this summer. This will depend heavily on consumer confidence and any potential travel restrictions. Following COP26, sustainability will remain high on the agenda, with operators looking for funds to reposition and repurpose their assets to meet changing consumer tastes. Investors and banks will also be on the hunt for assets which meet ESG requirements.
As traditional lenders remain apprehensive about new hospitality lending and seek to exit existing positions, alternative lenders who remain convinced by the long-term fundamentals of the sector will pick-up the slack.
CEO, Oxenwood Real Estate.
My expectations for 2022 are a slowing of the aggressive yield compression in logistics that we saw through 2021 as rate setters jostle with the question of whether current levels of inflation are less transitory than expected and base rates face upward pressure; an Increasing contribution from asset management to total return than has been evident over the last 12/24 months; logistics retaining its place as the most favoured for global capital looking for sustainable income flows and hedging inflation; and a divergence of growth rates emerging between larger regional distribution locations and urban and high population density markets. My hopes for 2022 are more invention within other mainstream sectors, perhaps with government intervention, to halt the social and economic decline of UK town and city centres and for a rapid response from all sectors of the industry to meeting fast-arriving ESG targets through both regulatory requirements and, importantly, occupational demands.
Director, Rund Partnership
In a world changing more rapidly than ever, I believe the property sector will become much more flexible. Not only is this needed to react promptly to changing circumstances, but also to proactively drive forward new methodologies. Due to the global pandemic, changes that previously took five years to adopt are coming to fruition in five months. With changing work patterns, from stop/ start lockdowns to hybrid working, we’re seeing a raft of ‘new normal’. As a multi-disciplinary consultancy, we’re used to collaborating between teams, connecting the dots and filling the gaps. I can see the real estate sector behaving in the same way, to embrace this faster pace of change. In fact, there is a necessity to, in order to ensure the UK property sector remains competitive and continues and deliver on innovative spaces and places for communities.
MD, Pentadel Project Management
I hope in 2022 we can continue to help solve one of the key challenges faced in the UK today; shortages of available workforce as well as industrial properties in which companies can grow and expand their operations. With a lack of properties to go round, we’ve already seen the rise of retrofitting in 2021 as more companies realise the benefits of either retrofitting their own properties or seeking our help to find unused properties to bring to life. I expect this to continue with pace in 2022, as retrofitting not only addresses the property shortage, it is also a much more sustainable way of developing property. I also expect more companies will focus on making their industrial premises nicer places to work; where employee wellbeing is prioritised to help attract and retain staff.
CEO (Europe), Principal Real Estate
The last two years have changed our relationship with real estate – how and where we shop, work, live and play. Governments and central banks have demonstrated the willingness and ability to mitigate the downside risks of asset ownership in times of crisis. Real estate has performed much better than could reasonably have been expected. But we must not be complacent. 2022 is the year for our industry to become strategic, think creatively and show a compelling vision for the built environment. Regeneration of our cities, provision of quality affordable housing, embracing ESG, investing in infrastructure, facilitating a flexible economy – building back better. Success will require collaboration and energy. Lessons can be learned from the way the community, private sector and state came together to fight Covid. Let’s embrace these lessons and work together to create the foundations and fabric for a society fit for the future.
MD, Edward Architecture
Our experience of the property sector looking forward to 2022 remains buoyant and will hopefully remain so whilst bank rates remain low. A recent RIBA study has found that UK based architecture workload remains steady in key sectors like infrastructure, residential and logistics. The industry is however, having to work through supply issues in construction, materials, consultancy, legals and the planning system, which will hopefully ease as we cope with some industry inertia brought about by Brexit and Covid. To be resilient to this continued workload and retain capacity, consultancies like ourselves are working hard to both retain staff and take on more graduates. We have also introduced innovations like flexi time and hybrid office/home working to give an optimum work life balance and a good learning environment for our team.
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