Like it or not we live in interesting times…

It was Robert Kennedy who said, “like it or not we live in interesting times”. What may be more apt is Bob Dylan’s “the times they are a-changin”.

With many employers focused on the return to the office as we continue through the pandemic, the smart ones are looking further into the future already.

The large agencies have started a tone shift from a few months ago, when their expectation was for the market to bounce and return quickly, this sounded like wishful thinking and denial. We now see a shift to a more pragmatic tone of more troubled horizons, due to recent economic impacts. In our mind this does not even come close to factoring in what could well be a seismic shift in occupation.

The property landscape is going to become a complex one in the next few years. Those with long leases seeking to reduce overheads may look to sub-let space (where allowed) and will likely find themselves at loggerheads with landlords, trying to protect their investment value. Coupled with downward pressures on rents as tenants seek to release and return capacity. It will become even more critical to be an early bird, to maximise any returns.

As we shift towards a buyers’ market, which will suit those towards the end of their leases, landlords can expect a rough time. They will have to start being far more generous, than they would like to be, to hold onto tenants and not have empty property, especially with so much uncertainty. Likewise, development will slow and stop as developers will see investment yields decrease.

The normal saviour of the cycle, is the eventual pipeline shortage of capacity that creates upward rent pressures, however it seems fair to say the duration before this shortage starts to manifest will be based upon predictions that will be open to challenge.

With the same uncertainties in the overall economy, control of the cost base is vital. With Real Estate as a large part of business costs, understanding the options and strategies open should be high any occupiers on the list of things to do!

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