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2021 - The Year to Niche Your Commercial Property Investing Strategy?

Suzi Carter, a Chartered Surveyor with 25 years’ experience in the commercial and residential property sectors, comments

For those of us that have been in property long enough to remember other downturns in the economy (I’m now up to 3 – a sobering thought!) you will know that each one is different – especially with regards to the sectors that are hardest hit.

The market’s reaction to COVID, is no exception. The market bounces around depending on whether we are in or out of lockdown and it's really too early to tell whether all this turmoil will result in a true economic recession. But it's pretty clear that there are some sectors of commercial property that won’t ever look and feel the same again.

It's no secret that retail has been the hardest hit. In fact, it was always going to be the hardest hit because trends were moving against the type of bricks and mortar retail that occupied our high streets pre-COVID. There were a huge number of brands and businesses who hadn’t innovated or evolved for years, and whose existence was wholly reliant on the High Street being propped up by consumer spending and a buoyant economy.

For other sectors, such as hotels and leisure it's really too early to say but I suspect that there will be a post-lockdown spending bounce back, especially in the leisure market. We've all missed social interaction and will be looking to get that in bucketloads once we are released!  And as for offices, I suspect they will most definitely continue to exist but, for some businesses, just not in the shape and form that they were previously. I expect to see the rise of suburban flexible office hubs, downsized head offices and some rationalisation of portfolios.

Of course, some of the current trends are benefiting some sectors of property – parts of the industrial sector, in particular, have strengthened - especially logistics for obvious reasons.
Across the whole commercial property market, however, we are seeing tenants starting to demand more flexible leases and, in some sectors, even different type of rents, such as turnover rents in retail. All of which will necessitate a closer relationship between landlords and tenants into the medium term.

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