Changing consumer demands, investors’ desire to mitigate risk, pandemic fallout and Brexit uncertainty will affect activity in the office, retail, residential, and industrial sectors in 2021, according to a UK National Outlook for next year by real estate adviser Avison Young.
The outlook states that “in the short term, occupier requirements are being re-evaluated as businesses look to mitigate costs and respond to a rise in homeworking” and in the long-term companies are “future-proofing” themselves.
The report states that these activities will result in “an emergence of a two-tier market with activity focused on the larger end of the market, particularly through pre-letting”. It added that the office will remain “a key space for collaboration, innovation, relationship building and mentorship, sustaining a level of demand in key regional markets and London throughout 2021” and the new year “will likely also bring examples of the emerging flexible ‘work near home’ concept, with several operators actively looking for space in commuter and suburban towns”.
The rise in homeworking and a focus on health and wellbeing have already led to a sharp increase in minor planning applications to extend living space and a vast number of owners have been upsizing or moving to more rural locations, according to the outlook.
Daryl Perry, head of UK research at Avison Young, said: “We have just witnessed the largest economic hit the UK has ever seen and the landscape is unrecognisable from a year ago. How the commercial real estate industry, and indeed the wider economy, is impacted in 2021 largely depends on when the pandemic can be brought under control, with Brexit another potential cause of disruption.
“While the accelerated structural shifts in our real estate markets provide opportunities to implement change that will ultimately benefit our economies, communities and the environment, they currently also add a high level of ambiguity for investors and occupiers.”