Covid 19 has had a negative impact on several industries and commercial property landlords have had to adapt. Many have had to deal with their tenant’s cash flow issues and, moving forward many commercial property landlords will be looking at their portfolios to ensure that it is appropriate and diverse enough for this ever-changing world.
Retail was already moving away from the high street towards online shopping pre Covid 19 and flexible working was also reducing the need for large office space. Covid 19 has however accelerated this trend.
It is clear the office is not dead and still offers an environment which encourages collaboration and development but, it is acknowledged by many that both employees and employers are not expecting life to return ‘normal’. It is likely that agile working will become more prevalent which, in turn, will necessitate a different type of workspace. Although, notwithstanding this, it has been reported that Google is to progress with its plans to lease an additional 70,000 sq ft office building in London despite all of its 4,500 UK staff wording at home. In addition, the recent announcement by Deutsche Bank calling for employers to pay a 5% levy of worker salary for those who continue to work from home following the pandemic could significantly increase and promote office working, if implemented.
It is also likely that town centres across the UK will continue to play a vital role within our everyday life as long as they provide the right amenities for the local population. Given the key challenges facing retail it is likely Tenants will be looking for good quality properties in good locations for a good value. This may require a reshaping and redevelopment of some town centres with commercial opportunities which afford lower rent, greater rent-free periods, term flexibility or turnover rents. It is also hoped that the wider changes to the planning system will also provide greater flexibility to landlords and allow them to redevelop and move between the uses without the need for permitted development rights or planning permission. This will, in turn, give more redevelopment flexibility and offer mixed uses.
With a vaccine on the horizon and news that country is now out of a recession, it is hoped this will have a significant positive impact on the commercial property market encouraging future investment in town centres, retail, hospitality, leisure and office space despite everything these sectors have been through.
If you are a landlord or a tenant and need commercial property legal advice, email email@example.com or call 01642 356500.
Helen Marram, Associate Solicitor, Commercial Property.
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