Are we in the midst of a property revolution?

17th June 2019

The property and construction industry is ever evolving. It needs to be if it is to keep up with changes in society and the continuous legal testing of the robustness of the planning system. However, the current extent of change in the industry, such as in town centres and the residential market, feels different. It feels like we are moving into a new age of challenges and opportunities. You might call it a property revolution.

It is tempting to bemoan the perceived loss of traditional development opportunities to a new generation. Like all revolutions, though, the pains of change bring new prospects. When we shift the focus away from losses, we see all the ways that change can promise rewards for those who adapt their strategies to meet emerging trends and demands.

In the commercial property sector, many have mourned the so-called death of the high street. But this tunnel vision to the loss of traditional retail ignores all the industries that are burgeoning thanks to the advent of e-commerce, flexible working, and other “millennial” habits that generate new property requirements every day.

Consumers turning to online retailers instead of high street shops means a boom for supply chain management and other distribution-related industries. These emerging businesses require storage and distribution floorspace as well as collection and drop off points in shops and in freestanding facilities.

An increasingly flexible workforce may result in a decreased demand for traditional office space, but it also brings about an increased demand for cafes and coworking spaces that can accommodate the needs of remote workers and entrepreneurs. In addition, these same entrepreneurs may not need a traditional office, but they may seek out retail spaces to promote their services or high-end artisanal products.  

Residential property likewise feels the pressure of a millennial generation facing a different set of circumstances. Higher housing prices and stagnant relative income growth means that many young adults cannot buy homes.

Even if they can afford a home, those who came of age during the housing crisis may be wary of investing in a home and instead choose more flexible investments. As more adults either cannot, or choose not to, buy homes in favour of renting, traditional house sales may not continue to grow at the same rate.

However, an increased pool of potential renters presents new opportunities for private rented sector developers, smaller buy to let investors, residential lettings businesses and storage facilities. The demand for rental properties may take the form of co-living space, houses of multiple occupations or serviced apartments, which the property industry can respond to. The storage industry is already seeing the benefit, having expanded in recent years as both renters and owners of homes, who are abundant in possessions but lacking in storage, turn to self-storage warehouses for solutions.

For the digital generation of remote workers, self-employed entrepreneurs and online shoppers who pursue leisure spending over home buying, high streets and town centres across the country can become hubs for new experiences. Where traditional shops once flourished, health and beauty services, such as nail bars, leisure and entertainment facilities, such as escape rooms, and food and drink venues offer services catering to modern demands. Where a large supermarket once drew shoppers, an independently-owned farm shop attracts shoppers looking for a different experience and different products. While service and experience trends change with the times, the basic demand for entertainment and leisure stays constant. Savvy commercial property owners can step in to meet these demands (STPP!).

Change can be painful, but it need not be. Shifting lifestyles and expectations require research, innovation and courage to take the initiative on the part of business and property owners, but the alternative – letting the opportunity pass you by – is no alternative at all. Those who welcome the property revolution stand to profit the most from its benefits.

The planning system is adapting to a new era by introducing more flexibility for the use of buildings and recognising the demands of new technology and behaviour patterns. In these times of change, Bell Cornwell prides itself on keeping up with the latest legislative framework to help your business adapt to and overcome the challenges that are presented and make the most of the opportunities.

For more information please contact Partner, Rebekah Jubb.

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