Brexit-Covid-Brexit . . . what's next for commercial property?
THE Northern Ireland economy suffered sharp declines in the first half of 2020 contracting by around 11 per cent.
It had started to recover when the main lockdown restrictions were lifted only to be hit again with further Covid restrictions whilst staring down the barrel of the end of the Brexit transition period.
In the short term it is not a great backdrop for the commercial property world, but as we all know property is a long term investment and as property professionals we have to look beyond the current issues in our economy to what we think will be the trends for the years ahead.
The pandemic has accelerated many trends with some sectors performing very well, particularly those who have benefited from changes in demographics and embraced digital technology.
In a Northern Ireland context, the switch to online deliveries has undoubtedly helped the industrial/logistics sector. The new 400,000 sq ft Amazon Distribution warehouse in Titanic Quarter is a case in point. Similarly, businesses involved in innovative food production have forged ahead (Finnebrogue is a notable example).
On the other hand retail, which had already been going through a structural change with a move to online, has been the hardest hit sector and in many instances shops on our high streets and retail centres have remained closed since March.
It's very likely that there will be more casualties in this sector, though all is not lost. There is clearly a need for convenience shopping with our main food retailers reporting strong trading figures and as the restrictions lift people will once again want to avail of our coffee shops, restaurants and pubs.
But this leaves a swathe of mid-market retail accommodation where there will be limited demand in the short term and where alternative uses will have to be found to create properties with a long-term sustainable future.
So what about the office sector and the pandemic inspired option of working from home? Is this a long-term change or once again an acceleration of existing trends facilitated by improvements in digital technology?
Our view and that shared by numerous commentators in the UK and US is that people working from home will put a dampener on demand for office space in the short term.
The prediction is that there will be a full recovery in the office market but that it will be somewhat delayed as people working from home becomes a permanent fixture of working life.
Notwithstanding Covid, where are we with the Brexit debate that plagued our TV screens for years? The simple answer is that no one really knows. Statistics will be thrown at us by all sides of the political divide to justify their heart felt positions, but I find it hard to give the subject the full attention that it deserves while we are in the middle of a pandemic.
When we look back at this period of time, I think it will be clear that the commercial property world, not known for its speed of change, has indeed made a fairly dramatic change driven once again by changes in demographics and digital technology.
:: Declan Flynn (firstname.lastname@example.org) is managing director of Lisney (www.lisney.com) in Belfast