“There are decades where nothing happens, and there are weeks where decades happen.”
Lenin might not have been talking about 2020 but his is a sentiment we all understand better now compared to six months ago. While changes to our everyday lives like online shopping and flexible working seemed to be steadily trundling into acceptance, and we might have dipped in and out of them, lockdown has proven to be the inflection point accelerating the trends.
A straw poll of friends and family has shown me just how widely these changes are being adopted in just a few short months. Whether through a hesitance or inability to comfortably visit the supermarket, we’re shopping more locally, and working from home is now the norm. One family member even told me their company has given up the office completely and now has an entirely online, nomadic workforce. These sound like the decade-filled weeks.
And a more meaningful survey seems like the latter move is unlikely to be the unique. The latest commercial property report from the Royal Institution of Chartered Surveyors (RICS) shows 93% of its members predict businesses will reduce their office real estate footprint over the next two years.
And while most of the discussion up to now has been about how these trends will be the final blow for retailers servicing UK office workers, there is one side of the sector for which lockdown could prove the volte face it needs to revive its fortunes.
RICS chief economist Simon Rubinsohn suggested expensive city centre rents and lower footfall from office employees could prompt retailers to think about moving further afield. He said: "For a lot of businesses they are thinking about that opportunity to move towards suburban locations. We're looking at a very different model going forward - there may still be a central location but it may just be a lot smaller."
There are clear ramifications here for the owner-operators of city centre commercial property depending on rent from café chains and retail boutiques. But it could also be the boost that beleaguered local high streets need.
Greggs is the latest retail-facing business to recognise the opportunity this shift could bring, highlighting its strategic suburban portfolio on Tuesday, which is already designed to service workers outside cities.
If there is a sustained move away from office life, the nation’s towns could be the next destination for commercial property investor capital. Which leaves the question of what is to be done about current developments.
For Rubinsohn, the answer could be to address the UK’s housing shortage by converting commercial buildings into residential properties.
While most of us have seen first-hand the slow demise of the high street, the past few months have shown us just how quickly the narrative can speed up or change. As the likes of shopping centre-operator Intu experienced, profound changes in consumption habits can bring companies to the point of no return, fast. However, today’s survey suggests a possible lifeline can appear just as quickly.
If the work-from-home paradigm shift becomes the new normal, commercial property and local high streets could be the first sectors feeling the butterfly effect but they are unlikely to be the last.
Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.