A major industry survey conducted by international law firm CMS took the views of senior real estate leaders, corporate office occupiers and global institutional investors. The survey reveals the likely impact of the Coronavirus pandemic on UK real estate and the priorities for the sector as it moves beyond the Covid.
In a report entitled “Real Estate Re-set: offices and purpose beyond the pandemic”, CMS reveals that despite short term concerns for offices, they are still open, and “some assets have grown in appeal to investors, with Industrial & Logistics and Healthcare the stand-out sectors.”
Offices, says the report, remain central to occupiers who replied that far from abandoning them, “a blend of home and office working will be best for productivity (45%), creativity and innovation (46%), and motivation of employees (47%).”
82% of occupiers replied that their offices “will continue to be a hub for human connection in some form and 61% saying they will refurnish offices when people return to work – floor plates won’t change, floor plans may.”
The report concludes on the whole that real estate looks resilient “with only 42% of industry leaders saying they are pessimistic about the outlook for the market, much less negative than after the Brexit vote when 64% were downbeat.”
Chris Rae, a Glasgow-based partner and real estate specialist at CMS, has said:
“There’s little doubt that Covid-19 is proving to be a game-changer for commercial property but there are also encouraging post-pandemic signs for the sector. While nearly a quarter of Scottish occupiers expect to downsize, a small majority is anticipating no change to office requirements once we are able to return to work.
“The survey also highlights concerns about the productivity of remote working. While many employees will be seeking to work from home more frequently, the office has a key role to play across most industries where the need to interact and collaborate with colleagues, clients and customers remains essential. The office will also continue to be fundamental in establishing the right culture, camaraderie, and energy to motivate people within many companies and organisations.
“Many managers say they are expecting to implement new health, safety and wellbeing measures in advance of employees returning to the office. While we can expect significant changes to how offices are used, our report suggests this will impact floor plans much more than floor plates in many commercial offices”
One other important aspect which the report brings to the fore is the increasing focus at a high-level, industry leaders, occupiers and investors – the subject of ESG (Environmental, Social and Corporate Governance). Across the piece ESG is increasingly seen as an important and fundamental element which “is having a transformative effect on the both the principles and mechanics of real estate.”
The survey took place in July 2020 on behalf of CMS and gauged and weighted the opinions of over 1,500 occupiers across the UK, Europe, North and South America, Asia Pacific, the Middle East and Africa.
Ciaran Carvalho, Partner and Head of Real Estate at CMS, said:
“Even before the pandemic, the real estate industry was embarking on a period of seismic change. The transforming environmental, political and social landscape and rapid advances in technology were changing the way we build, where we build and our relationship with where we live, work and spend our leisure time.
“The pandemic has accelerated many of these trends, while magnifying the issues and bringing into focus the opportunities the industry faces. This report is published at a critical time for real estate, with the industry at a crossroads. It is front and centre of the national agenda with the emergence from lockdown and the reopening of our offices, shops, schools, cafes, restaurants and leisure facilities.
“While the findings from our survey on the immediate prospects for some UK real estate asset classes are challenging, the resilience, innovation and commitment from our industry leaders to tackle climate change, diversity and inclusion and wellbeing is truly inspiring.
“Far from a burying the head in the sand approach and being overwhelmed by the short-term commercial reality of the ‘new world’, our pioneering companies are demonstrating a real social purpose, focusing on long-term, innovative yet pragmatic solutions to building our communities of the future.”