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Commercial property's role in London's renewal
21 January 2021
Commercial property is often a good gauge of the health of London’s economy. The current pressures facing the sector, either caused or intensified by Covid-19, convey the scale of the challenge facing the city in 2021. Core retail sites have had a devasting year — in central London we’ve seen West End footfall down 87% year on year in the second quarter 2020. The huge acceleration in working from home has meant the daily tide of workers that sustain so many enterprises may not return, or if it does return, may return slowly. But I remain optimistic for the future of the sector – it showed amazing resilience last year and like any crisis, Covid-19 has also created space for new types of enterprises and new types of commercial arrangements. But how can we best prepare for what comes next?
Structural changes in the way we work and live post-Covid are still to be fully defined, but we are already seeing clear trends that will shape the future of the office. In conversations with our members no-one sees an entirely remote online future, it’s clear London’s companies cannot build their DNA solely through a combination of Zoom and Teams calls. Businesses need collaborative working space for their people, their clients and stakeholders; younger people, in particular, need the interactions of an office to develop and thrive. The offices of the future are likely be more flexible and attuned to new forms of collaboration, both in the sense of firms wanting more contractual freedom to resize their space and in the use of collaborative workspaces.
For commercial retail space, COVID accelerated the shift to online shopping, though the popularity of click and collect services means this isn’t entirely incompatible with renewal in bricks and mortar retail. In London, the decline in visitor numbers and office workers travelling to core areas has been intense, as the city is both a global tourism hub and more Londoners can work at home than workers in any other UK region.As the vaccine rollout continues and a form of normality returns, we can expect the pressure to ease, but there’s still major uncertainty around what commercial space we need to build and how to make best use of that we already have.
Few could have predicted the impact of 2020 from the vantage point of January 2020, though as we make plans for 2021 we do at least know what’s at stake. London’s Commercial property is a vital part the UK recovery — to give only one example, our city’s businesses pay over £8bn in business rates alone, over a third of the total collected in England. It’s against the backdrop of pressures to change and a need to get things right that key businesses and stakeholders will come together next week at the Building London Summit. Though making predictions in 2021 is difficult, I think one certainty is that those businesses that are adapting best are those that are continuing to talk and continuing to learn. I hope to see you in the discussions next week.
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