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From turbulence to transformation – a time to re-think real estate

  • United Kingdom
  • Real estate


Real estate is at the centre of the COVID-19 revolution. That’s inevitable - because everything that ever happens to you, or to your business, happens in real estate. No one ever got married in a share certificate.

As long as people need to live and work, real estate will never be redundant - but every generation must reinvent the real estate industry to respond to new ways of living and working.

Now it’s our turn. Many of real estate’s key sectors must now pack ten years of evolution into the next two, or risk extinction. Our high street, shopping centre, offices, retail and hospitality sectors all need a fundamental re-think if they are to survive and thrive. Of course, they need, and should get, some state help and support. Many of them are not only viable sectors, but will spring back and thrive once COVID-19 has been tamed (and one day it will be, perhaps soon).

But we need to do much more than just preserve the old ways in bail-out aspic. With sectors, as with old species, when they wane, new ones emerge to take their place – and the government should encourage this economic process.

All across the market, we are seeing entrepreneurial investors, landlords and tenants re-imagining real estate and bringing new business models in to replace the old. Only the inventive (and, as always, the lucky) will survive.

Cotton mills destroyed hand loom weaving and artisan home working. If there is better way to do something, people adopt it. Teams, Zoom and internet shopping and on-line socialising will revolutionise real estate. You can try and hold back these waves of change, like an analogue King Canute, but they will just wash you away.

Our occupier clients have realised this and they are responding with energy and vigour by:

  • reassessing their real estate portfolios and their use of them, from parking spaces to mega-stores, or lock-up shops to glittering HQ towers. In a robotised, remote working, on-line and self-checkout world, how much physical property do we actually need? Where? What type? Long after COVID-19 has (hopefully) been tamed with drugs or evolved into a weaker virus (after all many other corona viruses are mild colds curable with Lemsip and a box set), this total re-invention and reshaping of real estate portfolios by every kind of occupier will continue;

  • switching to shorter supply chains, greater on-line resilience and business models that involve flexible blends of physical shops and business in the digital world (CVAs are a topical, but only temporary symptom, of a profound and long term trend of COVID-catalysed portfolio re-organisations);

  • recognising that one person’s surplus space is another’s new business. We are seeing other occupiers picking up space that is emptying out after CVAs and other forms of re-structuring in order to repurpose it – retail to residential and last mile delivery and so on;
  • using the present situation as an opportunity to break into new markets that were previously closed to them - whether by acquiring an omni-channel business where they have previously been single-channel operators, taking the opportunity to expand into a global market which would otherwise have been beyond reach, or allowing buyers to ‘trade up’ from their usual position in the market by acquiring or JVing with a more prestigious brand; and
  • realising that traditional locations are declining, that the virus has accelerated that decline into a nosedive, and that they need to look for new places to capitalise on local demographics and to meet the needs of certain consumer groups and their buying power – for example, city centre sandwich shops to local suburban locations or delivery hubs.

As a leading international occupier practice, we are advising our global clients from board level strategic portfolio planning through to the implementation of their physical and technological moves.

This is the most challenging and transformational time for occupiers in a generation, and that can’t be downplayed. But this turbulence also brings an historic opportunity to rethink the way occupiers use property, and to create stronger and more agile businesses.