Life as a commercial property consultant back in the mid-90s was far simpler. Broadly speaking, the commercial property market could be broken down into three primary sectors: retail, office and industrial. And in that order in terms of investment hierarchy, according to the pension funds. Under the mantle of ‘retail’, out-of-town warehousing had started to feature and, for the bold, ‘leisure’ assets such as nightclubs and cinemas were also on the shopping list.
As a young retail property agent, it was an exciting time and deals were plentiful. High street brands were in expansion overdrive, with the likes of Costa Coffee going head-to-head with Starbucks, NEXT taking on GAP and Superdrug battling for supremacy with Boots.
Then Tim Berners-Lee turned on the internet in the late 1990s, which created a chain of events leading to where we are today. From that moment the doom-mongers were proclaiming the demise of the retail property market. We’ve had peaks and troughs, sure, but in reality 20+ years of a gradual decline in the sector. The arrival of Covid accelerated the slowly unfolding demise happening in front of us, not just for retail property, although certainly there has been a marked shift in sentiment from 2020. The office sector, having trundled along satisfactorily, was also plunged into chaos. Industrial has been faring well, born of increasing occupational demand leading to rising rents.
With offices and retail looking uncertain, the appetite for industrial further grew and staggering prices were witnessed for the limited industrial stock which came to market.
With so much money and competition within the property markets, pension funds and vanilla investors have been forced to cast their nets wider and look for value in alternative investments. Residential (BTR) and Student markets have shifted higher up the pecking order and genuine ‘alternatives’ have started to feature. Markets such as forestry and even cemeteries have been mentioned to me in various conversations. We should expect the spread of ‘alternatives’ to widen as the years progress and these hitherto risky or unheard-of investments become mainstream.
