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Properties Articles

The Commercial Industry Post Covid

The pandemic has forced an acceleration of structural changes within many industries.

We have always known that shopping would slowly move to online platforms due to tech improvements in the last few years. However, the pandemic and lockdown has accelerated this change, forcing consumers to make all purchases online. Having spent over a year doing so, it is unlikely that the high street will ever return completely to normal as consumers have become accustomed to the ease and efficiency of online platforms.

We have seen a move in commercial real estate where companies are purchasing warehouse space over high street units to accommodate online orders and dwindling interest in shopping centres. Not only can these spaces produce more orders than a store ever could, but the cost of the tenancy for these spaces are dramatically reduced.

Commercial tenants and landlords have faced challenges during the pandemic. Occupiers have been dealing with reduced incomes resulting in a struggle to accommodate the previously agreed rent costs. Many landlords have re-negotiated with the tenants in order to provide ease on their finances. However, landlords have requested a re-negotiation of terms also, providing short term reduced rents in return for an extension of leases.

Many commercial sectors will have issues recovering from the pandemic having faced heavy losses. It has been suggested that many companies will alter their work requirements, allowing staff members to have a more flexible work schedule. As long as staff are performing, fewer days in the office can be required from some employees within certain industries.

This could have multiple affects on the commercial industry and real estate. If fewer staff members are required to be in the office at one time, large commercial offices in the city of London will be less necessary and sought-after. Landlords may find they have to reduce rent costs to entice further companies into the city.

Further to this, employees may find themselves working from home on a regular basis, requiring more space within their properties to do so. Commuting time will be less of a factor to tenants and buyers which could result in people moving further out of the city walls.