What can commercial property investors expect in 2021?
Just as 2020 brought opportunities in commercial property despite the global pandemic, so will 2021.
But the new year still will look far different from what we might have expected in the past, as businesses start to create their ‘new normals’ and we truly begin our transition into a post pandemic world.
So, here’s what investors can expect in 2021.
A market boost to follow the vaccine
At the time of writing, there have been plenty of vaccination announcements and some countries starting initial rollouts.
Once the vaccine is finally released we can expect a big uplift in business sentiment and confidence in the commercial property asset class, we’ll see greater confidence and positivity in investors. Investors will look to re-evaluate their strategy and plan their next move to prepare for the rise of sectors hit by the pandemic, in particular travel, retail, leisure and hospitality. The boost in business will in turn see commercial properties become fully activated again.
The only thing we’re uncertain about is when. A vaccine will take time to have its impact. Just how long, no one can say. So, the key for investors will be to stay flexible and prepare for multiple scenarios. This way you’ll be able to act quickly and not miss out on major opportunities.
July will be the new January
While Australia has a very promising 2021 outlook, other countries are still greatly suffering from COVID-19 and many employees are still working from home. So, many big companies with large headquarters are now targeting mid-year office returns to ensure the safety of workers. Therefore, we can expect an upswing for office buildings and CBD spaces.
However, even then, many companies are expected to implement smart workspaces and team up with technology companies to cater for a mixture of in-house and remote working. This is to support a growing demand for permanent remote working conditions, with a global survey conducted by global real estate giant CBRE, from June to August finding that 85% of office workers would opt to work from home two to three days a week.
A shift in workplace designs
Office designs will change depending on the structure of the company, especially after July. Businesses that decide to predominantly return to the office may change the positioning of desks and install more sanitation devices to ensure COVID safe practices, while those that are more flexible between working in office and from home would focus more on investing in collaborative technologies, communication services and performance measuring tools.
Business operations going digital
COVID-19 has revealed an even greater need of digital technologies in business operations. More businesses will be in search of properties that can accommodate smart workplaces and support the use of data-driven, cloud-based technologies. Companies will also endeavour to streamline and automate their operations where possible to improve resilience against any future crises.
These technologies will also serve to improve tenant experience and strengthen relationships between landlords with tenants. In particular, data and analytics tools can provide instant facility updates which can be communicated to tenants, along with extensive insights on performance, amenity usage and more. This information can then be used when making important decisions, such as when adjusting workspaces to create a more COVID-safe environment.
More importantly, the boosted usage of the internet and digital technologies highlights the the need for cybersecurity, data privacy and storage. So, investors will need to focus on commercial properties that facilitate these digital demands. Investors will also need to be aware of these technologies and understand how to use them to secure quality tenants and make the most of their experiences.
Properties need to stay flexible
While there are several movements we can expect from now, the truth is 2021 will still be a relatively ‘unprecedented’ time where any change can happen. So, landlords and tenants will need the flexibility to change and adapt their workspaces to maximise value and meet their business goals.
Again, investors can expect a surge in digital tools and leading market research to guide the decision-making process and assist in facilities management. Investors and landlords should also uphold frequent communication and collaboration with tenants to ensure their needs are met.
Get Advice for 2021
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Managing Director, Broadway Property
Director, Broadway Property