The past 3 months of Covid induced lockdown has changed the way businesses operate going forward in order to comply with social distancing and other governmental guidelines.
It is inevitable that investors will become increasingly interested in properties and solutions which make tenants feel safe when they return to the office, provide real time updates on the ‘environmental health of the building’ and reduce costs in a challenging economic environment.
Here are some thoughts on commercial property trends
Smart Buildings
Whilst we all expect a building to be structurally safe, there is now more emphasis on the building to be internally environmentally safe. Technology allows us now, in real time, to monitor operational data, how many people are in the building, where they are and what they are doing. We can monitor and control energy usage, temperature, noise, air and light quality. Sensors can detect leaks or defects at very early stages allowing for quicker repairs before further damage can occur. The legal, lease terms and financial data can all be accessed at the touch of a button. Physical properties will each have their own “Digital Twin”.
The growth of Space as a Service across all commercial property asset classes
The simplest way to think of this is the WeWork brand. Whilst they may have stumbled more recently, the fundamental requirement for flexibility both within and across buildings is growing rapidly. If you can currently buy access to WeWork offices all round the world, could you in the future buy flexible access to offices, industrial and retail properties, all under the same brand. Properties are not just buildings anymore they are service providers. Landlords need to become more than just providers of space.
Shortened supply chains where production moves closer to the consumer
We had become too relaxed with and reliant on global supply chains. We thought nothing of ordering goods online from China and having them delivered 24 or 48 hours later, but in March 2020 those supply chains ground to a shuddering halt. Supply chains are being restructured and on-shored. Business will both source a higher share of key components or ingredients locally and then supported with data, maintain inventory nearer to the end consumers.
Urban farming is for now an extreme but real example. The repurposing of industrial buildings to facilitate vertical farming in a light and climate controlled environment allows for year round harvesting and minimises food miles.
Micro mobility effect on real estate values and locations
If you less than a mile from the station, you will walk and if its more than two miles you will definitely drive. Historically it has been a given that properties closer to the station are therefore more attractive and expensive. But with the growing acceptance and availability of e-bikes and e-scooters (micro mobility) which can travel from 2-10km on a single charge, distance to the station is becoming a much less important metric when valuing a property.
Commuters are less likely to want to be on public transport or use their car as micro mobility and autonomous cars becomes more accessible and acceptable.
Building Construction
Modular and off site pre-fabricated building is only scratching the surface, it’s not only a smarter and more efficient method of construction but cost saving as well. The next logical step is construction by 3D printing, which this may seem futuristic but it’s a reality in China. This has the potential to reduce material costs by 50% and labour costs by up to 80%.
I remember as a child watching a program called Tomorrows World, well Tomorrows World is here and now.
Photo by Lucian Alexe on Unsplash
