It would be a minor understatement to suggest that 2020 has been an unprecedented year. The prior years, with their Brexit and General Election uncertainty were clearly just a warm-up to the main act.
Back in January, when we were viewing our plans for the year, they certainly did not include a massive intervention by the State into the economy and the effective shutting down of many private and public enterprises in the interests of public health. This is not the forum for a discussion on the rights and wrongs: suffice to say that it has generated a degree of uncertainty in respect of future planning for all forms of investment.
When the usual 20/20 hindsight is applied to the impact of the Covid situation, it will probably draw the conclusion that the impact of the virus has largely been to accelerate trends which have been emerging for some time and to focus the attention of business on the implications of technology, both in terms of enabling many traditional office functions to be carried out remotely, but also in terms of delivering goods and services to the customer without the necessity for a bricks and mortar high street presence.
The impact of this is having – and will continue to have – long term ramifications, particularly for the commercial property market. However, from our own direct experience the implications and outlook are far from universally depressing.
Whilst it is true to say, for example, that many high street retail and catering establishments have struggled to cope with the effective forced closure of all non-essential retail services, there has been, particularly since lockdown was lifted, a renewed focus on a local retailing picture, which is certainly to the advantage of many independent retailers in prosperous market towns.
As evidence for this, we would point to a number of retail lettings which have taken place in the first half of this year, mainly to independent retailers, which we hope will bring some variety and vitality back to the ‘high street’.
The office sector has been touted by many to be a potential loser given the often confusing instructions to ‘work from home where possible’. It would be logical to assume that demand for office space would reduce, and this is certainly likely to be the case in those sectors that relied upon significant administrative functions being carried out within offices.
However, the trend away from this towards cloud based and remote activity has been gathering pace for some time, and our experience has been that we have actually seen an increase in demand for offices, particularly, again, in attractive locations which are – or can be – accessible by private modes of transport, be they foot, bicycle or motor car, as opposed to public transport.
One sector which has seen a significant boost in activity has been the online retail market, with its consequent demand for delivery, servicing, vehicle parking, returns and other associated logistical aspects, which has meant that demand for warehouse stock in particular is at an all-time high.
The situation, therefore, is by no means completely bleak: there will be downsizing of some office sectors and repurposing of many high street retail locations. However, with the benefit of a long perspective this should be seen as an acceleration of previously established trends rather than necessarily a new phenomenon brought about solely by the virus.
In the property investment sector, we are seeing a significant level of interest in all forms of property, particularly given that there has been price adjustment across the retail sector, and by selecting appropriate stock it is possible to obtain very attractive income yields, particularly when compared to the returns available for cash across all sectors of the property market.
With this in mind, and somewhat against the national trend, Coke Gearing has continued to expand, both in terms of our range of services and our geographical spread. We have recently appointed, as a Senior Surveyor, Will Brown BSc (Hons) MRICS, who has joined us from the Bidwells Landlord & Tenant Team to assist our client advisory work, and we will shortly be announcing appointments at Director level, expanding our geographical reach towards Chelmsford and the A12 corridor.
Our experience of Covid has been that it has forced many clients to reappraise the cost benefit of a regional service, which is both informed and aware of market trends, but also sufficiently nimble to be able to respond to immediate concerns and spot market opportunities against the somewhat vanilla range of services offered by some of our larger national competitors.
We remain confident, despite obvious concerns in relation to the public health arena, that the M11/A120/A12 markets will continue to prosper and that property is genuinely a potential source of certainty in uncertain times.
Richard Coke FRICS
