We start every year by wishing everyone a happy New Year, and everyone is always full of hope and expectations. We do not know what the future holds except for a few surprises, and a year wherein the inevitable will happen.
The property industry is slow, but massive changes do take place over time. International Property Consultants become one-stop behemoths, driving and enabling technological and cultural change in how business is done, although equality and diversity are still very far off. New ways of working, ESG, climate change, co-working, flexibility, digital twins, whole-life carbon, space as a service are just some of the words that have already become quite common place.
With Brexit unfolding, demand has actually held up better than expected. The irrational consumer kept spending more and for longer than expected. Geo-politics create a more complex picture: whereas Brexit creates uncertainty, the UK might appear a safe-haven to those coming from areas with great unrest.
Much of the retail sector is going through structural change, but that is nothing new. Retail is always evolving. What is sold how and why, and to whom, is simply an on-going process. Nonetheless, there have been some obvious victims in the property industry. We hear of funds suffering redemptions, Intu’s struggles, declines in valuations spreading.
Property is a very cyclical sector, and it will remain so, and each downward cycle is triggered by something slightly different from before. Investors have been ready for the ‘late cycle’ for perhaps a few years now, with an increasing focus on good covenants and steady-long term income.
The place of the WeWorks of this world in this has intrigued me for a long time. What happens in a crisis? Will companies vacate the flexible space they took on? Will the space-as-a-service providers hand back the keys having received lengthy rent-frees, will landlords step in, or will quite a bit of space hit the market at exactly the wrong time? Who will benefit?
The market often proves quite resilient and for longer than imagined, but 2020 will prove to be a remarkable year, for better, for worse
A very happy New Year everyone! Let’s build a great 2020.