As the cost of fuel continues to rise, we may see a further move to home working. Most office-based businesses are used to this phenomenon, but it may form the basis of an adjustment to their space requirements alongside Government standards for EPC ratings. We asked Head of Commercial Transactional, Mike Price, his thoughts on the current commercial property market.
I expect to see the industrial and logistics market go through a change as a result of cost-of-living changes. The levels of discretionary spending will reduce but this does not necessarily mean that demand for “shed” space will dramatically change. In fact, as consumers try and use their cars less there is likely to be a further spike in the use of internet retail platforms.
There is no single answer to the direction of travel, we have recently seen Carzam and Missguided collapse, albeit purchased by the Fraser group, both of which were internet based. I still believe there is the need to physically inspect a product. Many retail businesses continue to have modest online platforms; for instance, TK Maxx only went online in March 2022. Once these are developed it will necessitate the need for further distribution space. We have recently seen Iron Mountain commit to 1,000,000 sqft of distribution space in the Midlands, clearly not everything is being stored in the cloud.
Every commercial building in the UK requires an Energy Performance Certificate (EPC) which rates its energy efficiency from grade A to G. The Government is seeking to strengthen these standards and has proposed that all commercial properties being let have a minimum EPC rating of at least 'B' by 2030 and is also considering a possible interim requirement of level 'C' by 2027. Buildings which fail to meet these news standards would require owners and landlords of commercial buildings to upgrade their stock. However, occupiers have their own ESG commitments but also want better space as do landlords. Consequently, the market is increasingly demanding better property standards
As industrial and distribution becomes increasingly automated there is also the necessity to have highly skilled IT trained staff. This type of employee is in demand and their place of work could be an office, business park or warehouse. As such, staff are demanding comparable working environments with wellbeing features regardless of the type of accommodation. Workspaces need to be flexible and responsive to meet both the staff and the organisational needs. Forward thinking landlords are now providing high quality accommodation which include areas for wellbeing and are sensitive to their tenants current and future needs.
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