The phrase “unprecedented times” has become a tiresome word to use when describing the last 18 months. However, this heavily used phrase is the best way to describe the events that have occurred. No one could have predicted what would unfold in the following months after saying goodbye to 2019 and hello to 2020. Whilst no one could have predicted what would happen in 2020, not many would assume it would also impact how the first half of 2021 would turn out.
The commercial property market is no exception to the impact the pandemic has had on the economy. As the first half of 2021 has come to an end, the key trends that have occurred are what is anticipated for the next half of this eventful year.
Slow Recovery For Hotels
The hospitality and travel and tourism industries were severely affected by the pandemic. Due to the lack of travel and restrictions in place preventing people from interacting, there was a dramatic drop in the number of people booking into hotels. Despite restrictions beginning to ease and business slowly returning to normal, the hospitality industry is not expected to fully recover till 2023.
Unprecedented situations such as this, as well as unpredictable events that can occur, will have a knock-on effect on businesses alike across the states. In times like these, it reinstates the importance of having commercial property insurance. Finding a good commercial property insurance provider will help to protect businesses from a vast range of issues. From business income interruptions in the incident your hotel, for example, has to close due to being damaged by a fire caused by a neighbouring business.
Rise In Vacancies
Although most hospitality places have now opened back up, there are a few businesses that struggled to survive the pandemic. From business to small retailers, they had to permanently shut their doors due to a drastic lack of business. Additionally, trying to operate at a reduced capacity has put some in jeopardy of closing. It is not just small businesses affected, large retail chains have also announced closures of some of their locations, which will lead to more vacancies in shopping malls and urban storefronts.
Downsizing Of Offices
Many businesses were forced to adopt a new way of working, having their employees work from home. For most companies, having their employees work from home has proven to be beneficial to the company. This rise in productivity levels has led to numerous businesses announcing that they will continue working from home moving forward, not bringing their teams back into a physical office space.
Other businesses are allowing their employees the opportunity to split their workweek between working in an office and remotely at home. These changes to have businesses work has reduced the need for large office spaces, and pushed companies operating from multiple office locations to shrink their office sizes.
Warehouses Still Come Out Stronger
The unexpected champion of the commercial property market were warehouses. The extraordinary success they have seen so far this year, and last year, is expected to continue to rise, especially as logistics companies work hard to catch up with the demand for e-commerce orders.
The demand for rapid delivery from consumers will rise as quickly as the demand from investors for commercial property market opportunities. Investors who are fortunate enough to already own warehouses, then rent prices and low vacancy rates will be a lucrative opportunity to invest in.
How The Rest Of 2021 Might Look
Undoubtedly, the pandemic has created a substantial amount of uncertainty regarding the commercial property market. However, it has highlighted the importance of investing in good commercial property insurance, showcasing the importance of protecting the commercial property of your business in the event of an incident.
Despite the pandemic, there are still numerous investors who continue to be heavily involved in the market. This is despite problems related to site visits, assessments and contract signing that often delayed processes. Certain sectors have performed well both this year and also last year, which are areas that investors should consider spaces that are worth investing in. These include self-storage facilities, grocery store chains and e-commerce warehouses – any space which saw an influx in business in the wake of the pandemic. Ultimately, these are the spaces that will continue to flourish after the pandemic, when businesses can return to normal.