The COVID-19 pandemic has had an enormous impact on most businesses. As for the property sector, the stamp duty holiday appears to have played a part in strengthening the residential property market, which has encouraged many developers to continue to locate strategic sites. Entrepreneurs are closely monitoring distressed assets and, with budgets stretched, investors and business owners are continuously looking at financial models and funding of their portfolios. Steven Percy, Partner and Head of Commercial Property, discusses how COVID-19 has impacted the commercial property market.
‘Lockdown 2’ and the Commercial Property Market
Another national lockdown (‘Lockdown 2’) began on 5th November 2020 and will last for a minimum of 4 weeks until 2nd December 2020. Despite the enforcement of Lockdown 2, the impact will be somewhat different from the first.
Whilst the majority of businesses in the hospitality industry have closed, the construction industry can continue to operate, tradespeople are able to enter premises, moving house (whether renting or buying) is still permitted, estate agents can continue to trade and people are able to travel to work if they are unable to work from home.
According to a recent survey by Accumulate Capital, 73% of senior decision makers suggested that COVID-19 will result in more businesses downsizing their office spaces in the next 12 months. This is due to the massive shift we have witnessed to the working patterns of most employees as a result of the pandemic. Working from home has become the ‘new normal’ and the commercial property market will need to adapt to this change in order to sufficiently meet business demands.
Whilst demand for office space has contracted, the expansion of permitted development rights may allow the conscientious to re-model existing space. Tenants of such spaces may seek Landlord consent to vary restrictive user clauses to enable alternative use. Landlords will understandably need to protect their position taking account of restrictions imposed by the COVID-19: Coronavirus Act 2020. Inevitably, Landlord and Tenants will need to have some difficult conversations over the coming months to agree a mutually acceptable way forward.
Despite concerns on the long-term economic plan there is increasing hope of a vaccine and our clients continue to adjust and look for opportunities to safeguard their businesses. As we flex and adapt to the ‘new normal’, we are fortunate to have come through the difficult spring/summer period in a strong position, supporting our clients with an array of transactions including: re-financing portfolios, relocating premises, re-developing and, in a surprising number of cases, acquiring or leasing additional premises.
If you are considering acquiring, re-financing, leasing and/or re-developing land or commercial property please contact our Head of Commercial Property, Steven Percy, on 01625 442158 or email [email protected].