COMMERCIAL FORECAST BLOG - FEBRUARY 2022
Category Advice
As we approach two years on from a nation-wide lockdown, we are starting to see a gradual uptick in commercial property transactions, both letting and sales.
Tenant enquiries:
In the letting space, we have seen a rise in tenant enquiries and offers submitted. This is a combination of tenants looking for new space to let and existing businesses looking to relocate or downscale premise for cheaper alternatives available on the market, indicating that tenants still have the upper hand at the negotiation table, and we don't foresee this changing through 2022. If the uncertainty around COVID-19 continues to diminish, we anticipate demand for space to grow throughout all commercial property classes over the next year translating to slowly decreasing vacancies.
Property owners and rental relief:
After 2 years of ongoing rental relief negotiations between property owners, tenants and managing agents, particularly in the restaurant and bar environment, we have seen property owners discontinue or greatly reduce rental relief offered. This contrasts with 12 months ago where rental relief was a common discussion due to the ongoing alcohol bans.
Navigating commercial property in 2022:
Property owners need to continue adapting to an ever-evolving property market. A good starting point is staying up to date on market trends by communicating with property managers and brokers on what tenants are looking for from a letting perspective such as pricing, tenant fit-out allowance, lease period etc. The cost of operating any business is only getting more expensive and providing tenants with solutions that reduce costs on electricity, lettable space, security etc. will drive demand for a property. By making the property attractive to a larger range of tenants, property owners reduce vacancies and improve their ability to negotiate rental terms in their favour.
While we cannot predict the future, we remain optimistic that a slow recovering economy will drive demand for commercial space as we move toward a post pandemic era.
Author: Dylan Heard