Our predictions for the six key trends that will shape the commercial sector in 2019
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Customer care
The growth of workspace as a service, co-working and serviced offices was the talk of the commercial property markets from 2016 to 2018. Its growth reflected a need for a better customer experience for tenants. The best landlords and buildings will be those that look after their customers best, whether they want a six-month or 15-year lease.
Global capital
London remained the world’s most popular destination for cross-border investment into real estate in 2018 and we do not expect this to change in 2019. Yields are high in the UK compared with most of Europe and Asia, and the possibility of more opportunistic deals will bring some North American buyers back into the market in 2019.
Retail repurposing
Not all retail is prime, and a major theme for 2019 and beyond will be what you do with a vacant shop. We expect retail landlords to look harder at mixing uses and bringing more services into their schemes. Residential, hotels and even warehouses will be popping up in retail schemes across the country.
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The rise of logistics
Logistics is already the most popular commercial property asset class, and yields have fallen below those of offices and retail for the first time in history. Occupier and investor demand will remain strong, and industrial developers will start to build upwards to satisfy demand in the most constrained locations.
London in demand
London was seen as being most exposed to Brexit, but the strength of tenant demand for London offices has contradicted this view. With only a year’s supply of office space in the City and the West End, investor’s eyes will turn towards how to capitalise on this.
Regional growth
The major regional cities are generally undersupplied with new office development, and are forecast to see continued employment growth. This, combined with a stronger house price and consumer confidence story than the South East, will keep them high on investors’ wish lists in 2019. Mixed-use development, in particular, looks interesting in these markets.
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