Commercial Q&A: The future of the high street and growth of warehousing
2020 was a year of challenges and change, from constraints on traditional retail, more focus on technology, and the rise of home working, Covid-19 has changed how we socialise, work, and shop. Jon Justice, Commercial Partner at Michael Jones, looks at the year ahead, sharing his key takeaways from 2020, how to prepare for 2021, and the general commercial market dynamics.
What do you think the future of the high street will be?
Town centres and high streets were suffering before the pandemic, but the reality is Covid-19 has accelerated peoples buying habits online and therefore the high street has suffered because of it. The high street will come good again, but it may look different and many traditional shops will have “alternative uses” with social and community spaces, for example, doctors, dentists, clinics, gyms, and community centres.
Will we be seeing more commercial to residential development?
The government already in September 2020 brought in a use “Class E” which provides commercial premises more flexibility over their use.
At the beginning of December 2020, the Ministry of Housing, Communities and Local Government (MHCLG) launched a new consultation for a new permitted right to allow buildings to change use from Class E to Residential. If this comes into effect it would significantly broaden the scope for the existing residential conversion rights.
We recently sold St Peter’s Place in Western Road, Lancing, this being an existing residential block of 15 flats and a commercial car workshop yard with lock-up garages. The commercial yard has planning consent to demolish and build a further 18 new one-bedroom apartments. This is a prime example of underutilised commercial property being developed into residential property.
For more information on the new consultations issued and proposed by the Government see the links below:
Changes to Use Classed including Class E > http://bit.ly/ChangestoUseClasses
Proposed changes for Class E to Residential > http://bit.ly/ProposedUseClassChanges
The long-term future of towns and cities?
In my view to create stronger and busier towns and city centres there needs to be an acknowledgment that retail will no longer be the main driver of footfall. More homes within the centre as well as a greater focus on a wider range of activities will assist social hubs to thrive. There will become a time that retailing itself becomes a secondary function with retail units increasingly providing showroom display or 24-hour ‘click and collect’ for online purchases.
Where has most of your demand been for commercial property in 2020? Are you expecting this to continue in 2021?
The growth of e-commerce has driven the demand for warehouse space, and we expect requirements for storage and distribution units to continue through 2021. Demand is currently outstripping supply with some units being let prior to coming to market.
Where are you expecting to see high demand this year?
We are finding that despite the recent lockdowns that the demand is coming from cafes, restaurants, bars, barbers, nail salons, and art galleries. We recently launched the marketing of a former nightclub & bar and secured a letting within a week of it coming to the market.
What impact did Covid-19 have on commercial property in 2020?
2020 was a challenging year for the commercial property market. But despite the uncertainties, the number of transactions last year (both sales and lettings) showed that there remained strong activity along the South Coast. Landlords have remained realistic on lease terms and businesses have been able to be flexible on their approach to leasing.
I am pleased to say the Commercial team have remained positive, steadfast and have adapted to all the changes and the 2nd half of the year finished very strong.
Finally, where do you see the best investment opportunities arising in 2021?
With the growth of e-commerce and high demand for warehouse space, we predict the best investment opportunities being within the warehouse and industrial sector. Rents have grown in recent years (average between 5-10% in south east) and with the relatively short supply of land for commercial development, we can only see the values and rents increasing this year.
If you require our expert advice or would like to discuss your own requirements and how we might be able to help, please contact our commercial team on 01903 201212 or send an email to email@example.com
Content accurate at time of publishing.