Emerging commercial property trends for a post-pandemic world

Sarem Eddie Kerman
4 min readAug 9, 2021

In the UK and around the world, hospitality has been hit extremely hard by COVID-19. This has naturally impacted commercial property in fundamental ways, leading to changes in consumer demand and investor opportunities.

Why was hospitality hit so hard by COVID-19?

Lockdowns around the world effectively stopped the hospitality industry in its tracks. With no travel, tourism, restaurants, cinemas, theatres or any other entertainment venue allowed to open for months on end (in the UK) and for periods of time in other countries, this led to an unprecedented situation.

For the UK, the sector contributed £59.3 billion to the country’s economy in the year before the pandemic (2019 figures). According to UK Government figures, pre-pandemic market conditions saw hospitality account for nearly 4% of all UK businesses (223,045). And of course, they are huge employers. #

When lockdown and pandemic restrictions kicked in at the end of March 2020, the impact on hospitality in particular was devastating.

Global hospitality hit hard by lockdowns during 2020
Between February and April 2020, economic output by the UK’s hospitality sector fell by 90%. By September, output increased somewhat due to a temporary relaxation of restrictions and the Government’s ‘Eat Out To Help Out’ scheme. However, restrictions were imposed again shortly afterwards.

In March 2021, the Office for National Statistics (ONS) released figures that show 74% of businesses were back to full trading across all industries. However, for hospitality on its own, less than half (43%) were doing the same. While just under a quarter of all businesses temporarily ceased trading, more than half of hospitality businesses were forced to.

For commercial property landlords then, there has been a drastic drop in rents being paid. According to Remit Consulting, in April 2021commercial property landlords were missing around £5 billion in rent during the first 12 months of the pandemic. With evictions halted by the Government to try and support tenants, it’s been an uphill struggle for commercial property investors.

And outside of the UK, global hospitality has fared in a similar way. There are some exceptions, notably New Zealand, where the story is different but any country that was impacted by lockdowns is in a broadly similar position.

The world is now starting to open up in countries that have had a high uptake of the vaccination programme. In the UK, the 19th July is being touted as ‘Freedom Day’ in the UK) and restrictions will be lifted. How will this now impact commercial property?

Consumer behaviour and expectation have changed

Some of the biggest changes caused by the pandemic are consumer expectation and buyer behaviour. Spending patterns have changed with a permanent increase in online shopping for goods and services.

There is a measure of anxiety about lifting or keeping restrictions and further decisions to made by hospitality and retail businesses regarding imposing rules about masks and social distancing. In the UK, cases are rising dramatically and there is a general expectation that some form of restriction will need to be imposed again at some point.

The general uncertainty surrounding the pandemic’s trajectory means that many behavioural changes instigated by COVID-19 and lockdowns are likely to become permanent.

Here are three commercial property trends that will come with new investor opportunities

1. Increase in e-commerce

Many people were already shopping online when the pandemic hit, but there has been an enormous mainstream acceptance of e-commerce due to lockdowns. And this is changing the way that commercial property is being utilised. According to JLL, it’s now up to the logistics and e-commerce sector to meet this demand by changing their use of industrial and commercial property space.

Property within urban areas is desperately needed by e-commerce companies in order to fulfil the demand for super-fast delivery from consumers. In the short-term this has led to some retail property being utilised for storage and warehouse space. In the longer-term, there is an urgent need for more distribution hubs and this will be reflected in the commercial property developments we’ll see over the next few years.

2. Travel and hospitality

The grounding of flights and drastic drop in travel and tourism around the world was truly unprecedented. Travel will, of course, come back stronger than ever as people begin to want to move around the world again. Operators must be increasingly flexible and creative with their offering.

Hotels, for example, will need to cater for the demand for more space. Consumers want to ensure that hotel rooms can accommodate their needs for work, exercise and longer term stays in case of quarantine.

3. Changes to office space

While it no longer seems that 100% remote working will be the long-term future, a mix of flexible and remote working is. And this changes traditional office space needs. Priorities will be given to flexible commercial property that offers the space and ventilation demanded by tenants. We will see more hybrid urban developments that include office, retail and other mixed-use space.

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Sarem Eddie Kerman
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Thought Leader | Investment | Financial Services | Well-travelled | Interested in psychology, current affairs, creative writing and Roman history