Share:

How 2021 Might Reshape The Real Estate Industry

George Roberts • 04/11/2020

We will look back at 2020 as the year in which COVID-19 accelerated forces of change that have been evident in our sector for a number of years. These forces will shape the industry for many years to come and for those that are able to interpret and take advantage of them, the opportunities are enormous. 

 

Key influences  

So, what have we seen in 2020 that will influence our sector in the years to come? For me it is the following:

  • The growth of on-line, impacting retail and benefiting logistics 
  • Acceleration of flexible working calling into question the purpose of the office 
  • A combination of CVAs and moratoria on forfeiture calling into question the solidity of traditional leases
  • Increasing focus on residential and related uses and the importance of wellness and social and environmental purpose 

 

So how should landlords respond?  

Whilst the challenges are clear, so is the opportunity for outperformance. Those real estate owners that stand to benefit will:

  • Have a razor focus on 'productivity' - specifically recognition that real estate providers are in the productivity game. Put simply, irrespective of sector, the provision of space must be an enabler to making the customers more productive. This requires a deep understanding of customer needs and heightened engagement between owner and customer. Landlords should challenge their current processes for customer engagement. Where a landlord is a provider of multiple sites to the same occupier, engagement will increasingly be at the portfolio rather than individual unit level. 

  • Develop a closer understanding of the underlying strength of real estate assets. The pandemic has shown up the weaknesses of the covenants of some occupiers. Furthermore, pressure in the retail and serviced office sector for turnover based leasing approaches continues. Landlords have had the luxury of being able to rest on the covenant of their occupiers. Whilst the underlying characteristics of real estate have always been important, landlords will increasingly require a higher level of data and analytics that informs and benchmarks the underlying real estate.

  • Diversification of uses and the replacement of income streams will becoming increasingly important. This will come in the form of permanent replacement through repositioning; notably but not exclusively within the retail sector. Temporary replacement of income will come in the form of trialling new uses. Whether permanent or temporary, there is little doubt landlords will require to take a more hands-on operational role in managing, maintaining or replacing income streams. 

 

The opportunity for advisers? 

There has been no better time for advisers, especially those with a global scale, to show value add. Those that succeed will do so by: 

  • Providing deep customer insight - specifically helping owners of real estate understand changing needs, influences on decision making and translating how owners of real estate can most effectively position their offer. This requires advisers to have extensive and deep relationships with occupiers and especially key decision makers. 

  • Placing a spotlight of what is meant by “global best in class” - being in a position to inform and to link to case examples of what “global best” means whether that be in building design, place making, technology, sustainability, customer experience.

  • Utilising data - drawing together sources of data that are collected every day in our interactions with clients. The opportunity being to provide analytics that provide more informed decision making. 

 

Where will we be by the end of 2021?

The trends I have outlined will be clear for all to see by the end of 2021 and will manifest themselves as:

  • Landlords and occupiers will increasingly partner together to deliver office, retail and logistics space that is very tailored to the needs of occupiers. In the office sector, expect a rapid transition from delivery of just “the physical box” to a step change in the services the landlord provides. Landlords will utilise technology and the best in class customer service to raise substantially the offer to occupiers. 

  • Engagement with occupiers especially in retail will change with portfolio deals becoming the norm. Space surrendered in one shopping centre for a poor performing store being offset through lease extension in another centre.

  • We will see increasing examples of both temporary and permanent new uses replacing income streams. Residential and logistics uses in their varied forms being the predominant permanent alternative uses.

  • Expectations on advisers will shift in 2021. Whilst intuition will always be a source of value, the ability to back up intuition with high quality analytics drawn from valuable proprietary data will be a prerequisite for an increasing number of clients. 

 

In summary… 

For me there has never been a more exciting time to be involved in the real estate sector. Change presents opportunity whether as an owner, a user or an adviser in real estate. Our first class knowledge and understanding of changing needs, supported by the data we hold and the ability to draw on global comparisons provides the opportunity for us to lead our clients and help them take advantage of undoubted opportunities that change presents! 

Latest articles in this series

Leeds North Star cafe closure COVID-19
Insights • Economy

Outlook for 2021: Small Prizes and Big Penalties

Long-term property investors should focus on location and asset quality, as those factors drive performance over a cycle. But, right or wrong, risk aversion to income risk tends to trump other factors in downturns and will dictate pricing trends in 2021. 
Greg Mansell • 04/11/2020
Westminster Bridge towards Houses of Parliament, London
Insights • Economy

Brexit Trade Negotiations and What They Mean for Businesses

Like COVID-19, Brexit has major implications for businesses across the country whatever the outcome of the negotiations. 
Richard Coleman • 04/11/2020
Ship with shipping containers
Insights • Retail

Retail & Supply Chain

2021 will continue to see growth in e-commerce and logistics demand and new retail supply chain models will be required to capitalise on the structural shifts in the sector.
Paul Durkin • 04/11/2020
Woman doing yoga next to home desk
Insights • Commentary

Locked Down and Locked In

What will happen in 2021? Perhaps there will be a vaccine, perhaps there won’t. Perhaps people will return to the office, perhaps they won’t. The smarter questions focus on what adaptions business and people will make over the coming year that set them on a new path for the future.
Richard Pickering • 04/11/2020
Technology 3D (image)
Insights • Technology

The Impact of Technology on Real Estate

Technology has created huge changes to the property markets and real estate industry in 2020. We asked Chris Hancocks from our Futures team, and Ross Hodges from our Global Innovation Hub what they see as the proptech to watch in 2021. 

Chris Hancocks • 04/11/2020
George Roberts Cushman & Wakefield
Insights • Commentary

How 2021 Might Reshape The Real Estate Industry

We will look back at 2020 as the year in which COVID-19 accelerated forces of change. These forces will shape the industry for many years to come and for those that are able to interpret and take advantage of them, the opportunities are enormous. 
George Roberts • 04/11/2020
Southwark station empty escalator
Insights • Economy

UK Real Estate Market View

A regular update on the commercial real estate market in the UK.
Greg Mansell • 08/09/2021
tech mesh graphic black background
Insights • Economy

Futures Cut - Reigniting Offices

Sign up to Futures Cut - the regular blog from Richard Pickering, Chief Strategy Officer, UK - a personal view of the evolving role of real estate in a world of technological, social and business change.
Richard Pickering • 23/08/2021
Industrial Landing Image
Insights • Logistics

COVID-19 Impacts on Manufacturing & Supply Chain

An update on the impacts of COVID-19 pandemic on manufacturing and supply chains.
Lisa Graham • 18/08/2021
pillows on hotel double bed
Insights • Hospitality

Hospitality Market Trends & Data

In the second quarter of 2021, C&W conducted a survey amongst over 50 respondents, including senior representatives of major private equity firms, funds, REITs and other institutional investors active in the European hotel real estate market. 
Bořivoj Vokřínek • 22/07/2021
Realising Real Estate Podcast
Insights • Retail

Realising Real Estate Podcast

Join our Cushman & Wakefield hosts Lottie Tollman and Richard Womack and listen to Realising Real Estate, the podcast that covers the spectrum of real estate. They will be discussing what's happening in the UK property markets with a wide range of experts. 

15/07/2021
costs
Insights • Investment

Infographic: Choose Your Next Shared Service Centre in Line with Your Business Drivers

Shared Service Centre and Contact Centre operations, established markets in Central and Eastern Europe, such as Krakow, Budapest, Bucharest and Warsaw remain the top foreign investment destinations.
Dimitris Vlachopoulos • 14/07/2021

What's new

Hove Gardens
Hove Build-to-Rent Scheme

Cushman & Wakefield’s Residential Capital Markets team has successfully secured a funding partner on behalf of Watkin Jones.

12/08/2021

Tom Nuttall, Tom Robinson and Amy King
Cushman & Wakefield Makes Key Specialist Markets Appointments

Cushman & Wakefield has made three senior appointments in its UK Specialist Markets division which provides services to owners and operators of specialist assets.

27/07/2021

David Tonks
Cushman & Wakefield Announces Senior Recruit to Lead its Dedicated Repurposing Team

Cushman & Wakefield has made a major hire to lead its dedicated Repurposing team which is focused on delivery of repositioning services for under-performing assets.

26/07/2021

CAN'T FIND WHAT YOU'RE LOOKING FOR?

Get in touch with one of our professionals.