The flexibility which has been escorted with the pandemic has enabled being able to work from home for millions of people internationally. The necessity of commuting to the office five days a week has become far less significant since covid-19; the departure of the early morning commute for office workers from towns and city centres has had a significant contribution to the footfall in the high street. The dramatic change in consumerism via shopping centres and high streets has resulted in retailers having to adapt and innovate as the primary focus for the majority of high street retailers is on cash preservation.
Jones Lang LaSalle’s (JLL) early assessment regarding covid-19 and its impact on the commercial property sector accentuated the predicted growth in logistics and warehousing spaces, especially since operators are forced to pay close attention to supply chain risk mitigation. The focus on supply chain risk mitigation and the predicted growth in logistics and warehousing spaces come as a result of the considerable surge in e-commerce, which has driven a large proportion in demand. Knight and Frank (1896) report that the drive for the demand in e-commerce could result in 92 million square feet of warehouse space across the United Kingdom by 2024.
Similarly, a recent survey completed by Accumulate Capital [November 2020] suggested that 73% of senior decision-makers prompted the foresight that covid-19 would result in more business down-sizing their office spaces within the next 12 months. The dramatic shift in the ‘new normal’ working pattern has been a focal contribution to this statistic. For commercial properties to optimize opportunity and innovate during the pandemic, adaption is a very important element to be able to do so.
John Lewis and Partners is a good example of retailers optimizing via adaption; they are looking to turn surplus stores into affordable housing and exploring the potential in renting unused storage facilities to gyms, housing projects, and other sectors which are expected to bounce back post-lockdown. In the same breath, several shopping complexes are redeveloping which is sought to see a surge in consumerism once renovations have been completed and lockdown is no longer an obstacle.
Alternative investments have also seen a growth in the interest regarding student accommodation. Economic downturns and a change in the job market often sees a growth in young people in further education which results in a greater demand for university accommodation. Having acknowledged the adaptations some retailers have made; Primark is an illustration of what a lack of adaptation can mean for retailers. Primark – for a long time, but even more so during the pandemic – has been a retailer which has seen considerable demand for an introduction to e-commerce.
Despite having lost over £1 billion (approx. $1.3 billion), the owner of Primark does not intend on introducing being able to purchase Primark items online; 305 out of 389 of their global stores are shut and with the unpredictability of the pandemic, there is potential for even more substantial loss for the retailer. The reason behind the refusal of introducing an online store boils down to the affordability Primark currently withholds.
The instalment of online shopping for Primark would eliminate the affordability element of the retailer as they would have to increase their current prices to uphold new fees. Nevertheless, Savills (1855) advocates the innovation demonstrated by retailers could include seeing more pop-up stores in global retail destinations. As it stands, pop-up stores currently stand as a £1 billion industry; the growth of this sector has only surged throughout 2020 and is predicted to do so as a result of many store operators reassessing their liabilities and store portfolios.
Conclusively, it is evident that the pandemic has largely affected consumerism and consequently affected the future and interest in commercial properties. As aforementioned, fruitful futures for commercial properties are dependant on innovation and adaptability which arguably may not have been much of consideration before having to work from home. Many retailers are having to reassess investments and initialize new ways of retaining their businesses. Alternately, the change in work patterns has enabled a larger focus on e-commerce and pop-stores and the potential substantial contribution they have to the retail industry.
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