AS it's January again, it's time to get the crystal ball out. So what will 2018 hold for the commercial property market, and where are do the potential opportunities lie?
If 2017 is anything to go by, advancements in technology will continue to be a significant driver of change across the various sectors as we continue to become increasingly connected and reliant on automated services.
In retail, recent numbers released by the big names show that bolstering a strong physical presence with an even stronger online offering is the way forward. As bricks and mortar ‘shops’ become more like showrooms, touch and feel still retains its importance - but leaving with goods in hand isn’t as essential as it once was.
To capitalise on the changing trends, advancing supply chains and delivery methods are being developed by all the major players. Quadcopter drones are being tested to deliver medical supplies in Malawi and circular runways for fixed wing delivery drones are being tested in Holland. It seems that these could be a common sight above our heads sooner than we might think.
With this increase in delivery-orientated purchasing comes a potential boon for the industrial sector. Advanced distribution centres are now commonplace in many industrial parks across the UK. What were once termed warehouses are now referred to as ‘fulfilment centres’ and these vast hive-like operations run around the clock with Orwellian levels of automation.
The office market remains intrinsically linked to all things tech as digital connectivity continues to rank with location and price as a key factor in occupiers’ decision-making. That said, looking to business hubs like London, Berlin and New York, changing working trends, health and wellness and workforce satisfaction are increasingly high on the agenda of corporates.
Landlords are being forced to think, not just about space fit for today, but for the future. Gyms, gardens, break-out areas and food and beverage outlets are becoming standard features of buildings as employment becomes more lifestyle-orientated.
Technology is also driving changes in the private rental sector (PRS), with landlords increasingly likely to offer properties as holiday/short-term lets through Airbnb, or similar online platforms.
Last year’s UK-wide figures from HMRC for the number of unincorporated landlords moving from the private rented sector to short-term lets is estimated, at a minimum, to be 133,000.
Predictions are that this figure is set to increase in 2018 and, with this, comes an opportunity for institutional landlords to fill the void left in the PRS for those looking for long-term tenancies. Locally, both the lack of ongoing supply and the reduction in available long lets due to this trend means rising rents and an increased attractiveness for institutional landlords to invest in the private rental sector.
Models aimed at the ‘millennial’ generation see purpose-built homes, most often apartments, for rental only, with ownership retained by the building owner. These have been successful across the UK in most major cities and, this month, Belfast-based Lacuna Developments submitted a formal planning application for the first scheme of this kind in Belfast.
Belfast City Council has ambitious plans to increase the city’s population by 66,000 by 2035, so it is likely that more than one project of this nature will be required before we can herald a new generation of city dwellers.
While there is no guarantee that the council’s plans will come to fruition, it is certain, however, that the commercial property market will continue to evolve over the coming years as it responds to ongoing advancements in technology - many of which have not yet been conceived or imagined.
:: Declan Flynn is managing director of Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland's most significant investors and developers as well as major retailers and businesses
