2020 has been an unusual year to say the least for both commercial landlords and tenants. As the year draws to a close, here’s my take on the current state of the market in my commercial property review.
The Q3 2020 RICS UK Commercial Property Survey results revealed that demand for office and retail units continued to slide from July to September, while the availability of such premises increased.
Interestingly, the industrial sector seems to have shown signs of recovery with capital value and rental projections turning positive.
According to Savills another positive trend for September and October was the level of non-UK investors, with nearly half of all commercial property purchases being made by buyers from outside the UK. This is a good sign that investors still have confidence in the UK despite COVID and the uncertainties around Brexit.
It is clear that the pandemic will have a lasting effect on commercial property markets. Much of the decline seen in Q3 is driven by the retail sector and we are continuing to see more retailers leave the high street to go solely online.
Likewise demand for office space is changing. While not as dramatic as the decline in retail units, office tenants are reviewing the amount of space they actually need and taking the opportunity to downsize.
Many businesses are continuing to weather the COVID storm, hoping for calmer waters from Q2 2021 at which point much of the government support and protections currently in place will end.
There is still some uncertainty ahead, but with the rollout of the vaccine and a hunger for a return to normality, a much more positive picture is emerging for 2021.