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Robert Irving Burns

Which Commercial Sectors Are Set to be a Core Investment Post-Covid?

September 11, 2020    |   Robert Irving Burns

The coronavirus pandemic negatively impacted numerous sectors across the UK. It also challenged the status quo, in terms of core commercial property investments.

For a long time, core investments were defined as properties that were low risk, and which were located in strategic places. However, in the wake of lockdown, the industry is asking itself – does this definition still apply?

Different perspectives

Prior to COVID-19, most experts agreed that the key core investment was office space (usually in a prime city location). Indeed, in many places, demand for office premises frequently exceeded supply. But coronavirus kept workers at home, away from the office; and many businesses have adjusted their working model as a result.

Will there be such high demand for office space in the coming years? It seems probable that offices will still be regarded as ‘core’, but perhaps less so than before.

The continued struggle of retail

Bricks-and-mortar retailers have struggled to regain a solid foothold in recent years, and the lockdown did nothing to help the situation. Increasing numbers of consumers turned to the internet for their shopping needs while stuck at home, and unless physical retailers can offer something fresh and exciting, the high street will probably face further pressure in the future.

The rise of logistics

Logistics premises, on the other hand, are emerging as clear winners in the wake of the pandemic. Ecommerce companies need suitable premises for their goods, and demand is even higher than it was pre-lockdown. This is across all ecommerce retail sectors – the industry as a whole is experiencing interest from businesses selling everything from groceries to DIY products.

Another asset that’s generating more interest is multifamily, which already looks set to be on track for its strongest year on record (in terms of volumes). This is down to several factors – the growth of urban environments, the fact that people are living in smaller households, and the unaffordability of the housing market in some areas. Add this to the economic instability that COVID-19 brought to the country, and it’s easy to see why multifamily investment is becoming so popular.

Predictions for the future

In times such as these, it’s difficult to say with any certainty what the future will hold. The pandemic has shaken the bedrock of many key industries, and businesses are waiting to see how things will settle before making major investment commitments.

It’s our prediction that some things may return to the way they were before lockdown. For example, it’s difficult to imagine a scenario where offices aren’t regarded as a core investment, as they’re so entrenched in traditional business practice. However, we may see some key changes. For example, high street retailers may start to demand premises that reflect their changing requirements, based on public demand. In addition, the shift towards working from home may be more long lasting meaning that many businesses may have different requirements from their office space, thus changing considerations for any investor.

City locations are likely to remain appealing investment hotspots, and a safe place to continue investing in the coming months. As for logistics and multifamily? These assets look set to keep rising in popularity, and could prove to be extremely lucrative for investors.

If you would like more information on the points made above, get in touch with our expert Investment team today on the contact details below.

Damien Field – Board Director – 020 7927 0620 

Antony Antoniou – Managing Director – 020 7927 0617

Adam Ben-Harosh – Graduate Investment Surveyor – 020 7927 6331

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