I was sure that after 16 months of not being able to take foreign holidays (or domestic ones easily), the whole industry would decamp for at least a fortnight this summer as parts of the market hardest hit by the pandemic picked themselves up off the deck with a view to getting going again with a vengeance in September.
Who was I kidding? Just as many in the industry long ago pre-empted the great return to the office, so have even the most decimated parts of the market defied expectations by getting out of the starting blocks as soon as freedom day was in sight.
With the return to the office now well and truly under way (unless you are a civil servant), WFH five days a week is dead. Unfortunately, with plenty of deals to be done, it is now a case of ‘long live the new WFH’… as in working from holiday.
I would love to know how many of the deals being struck involve one or more principals logging in from their yachts or villas abroad. Then again, why not? We’re all WFH experts now, many people will have already ‘worked from home’ while abroad during the pandemic – and there is certainly plenty to work on, as all the deal stories in this issue of Property Week attest.
This promises to be an August like no other. It is not just the level of activity that is unexpected. It is the sheer breadth of it. There are all the usual suspects, of course. Amazon keeps gobbling up space (it has just signed a 20-year lease on a 746,000 warehouse at GLP’s Magna Park). No surprises there. Industrial has been going gangbusters and Amazon is the leader of the gang.
The residential sector, too, remains red hot, as Redrow’s £24m acquisition of a development site near Canterbury from Quinn Estates demonstrates. Student accommodation is also looking strong, with Southern Grove’s plans for Hackney Wick very much indicating the direction of travel. Its proposed £55m mixed-use student scheme doesn’t just feature more than 200 beds, it also includes 27,000 sq ft of commercial space, co-working facilities, a gym and space for pop-ups and creative workshops.
But large parts of the industrial and residential sectors were helped rather than hindered by the pandemic, student accommodation was always going to bounce back and in all three, the fundamentals are still strong.
What is more surprising is the flurry of activity in the sectors that looked down and out: hospitality and retail. Soho Home Studio, Soho House’s interiors brand, has just opened its first permanent retail outlet in the UK, in Chelsea. Meanwhile, Castleforge is betting big on a resurgence in the hotels sector as affluent international tourists, particularly from China, descend on the UK once more following the relaxation of travel restrictions. That is why last year it recruited a hotels acquisitions director from Marriott International and earlier this year, it made its first two hotel purchases in the UK.
Given the continued activity in the strong sectors and rapid resumption of activity in the weak ones, it is no surprise that, according to data from Real Capital Analytics, the UK now leads the European pack when it comes to real estate investment, enjoying its strongest first half since 2018.
There is no reason to think that the second half won’t follow suit – or, less excitingly, that the new WFH won’t become the new norm.
Source: Office - propertyweek.com
