My world: June 2021…
This is part of a series of articles where our contributors describe how they think things will look a year from now.
While the accelerated shift online will dent retail space it will benefit logistics – and offices will show recovery in 2021
There is no doubt that the coronavirus crisis is unlike anything we have seen before.
Although the economic shock has been caused by public health fears rather than a financial crash, a recession is either here or coming. Despite the extensive government stimulus package and ongoing support for families and companies, it is difficult to predict what the world will look like in 12 months’ time. Our day- to-day lives changed drastically overnight, and we have been left with little clarity on when things may return to ‘normal’. JK Galbraith famously said that “there are two kinds of forecasters: those who don’t know, and those who don’t know that they don’t know”. Speculation is therefore our only current course of action.
The immediate changes are obvious. We have all had to adapt suddenly to new ways of working. Remote and home working have become the new normal, and it seems this format could remain for much of the year. Companies may start to rotate teams of employees back into their offices, but since productivity levels have been maintained despite remote working we may see more flexibility around the working day even when measures are relaxed.
At Clearbell, our focus is on four skillsets to take us forward in this new normal: critical thinking, collaboration, communication and creativity. We have created a dedicated task force to help weather the storm, including looking to the future.
From a real estate perspective, the impact of the crisis is still playing out. As we move out of the government’s ‘first phase’ of dealing with this crisis, though, our attention is now beginning to shift towards what the future looks like. The outlook for the property sector in 12 months’ time is mixed. On the positive side, logistics and industrial are likely to be most resilient. Lockdown has accelerated the trend for online retailing, which we expect will be sustained post-coronavirus. In addition, the re-shoring of UK supply chains and the growing capacity requirements across the country will keep the sector afloat.
Looking to UK offices, there are concerns that, as people recognise that working from home is a workable (and sometimes preferable) option, the sector will suffer a significant slump. However, at Clearbell we do not subscribe to this view. Central London office employment has risen by over 30% since 2007, and a significant proportion of the UK population work in offices. Companies will be keen to get their teams back together as soon as possible. Businesses are at present delaying making new commitments to office space, but with lockdown restrictions lifting and a timeline in place we expect that by 2021 office demand will have returned – even if this is for lower-cost buildings as corporates become more cash conscious.
Turning to leisure and retail space, coronavirus is likely to have increased the rate of structural change by driving customers to shop online. Social distancing measures will also take their toll on footfall for the foreseeable future. In June 2021, we expect there to be remaining uncertainty in the market. There is no way of knowing, though, quite how the world will look in 12 months.
Predictions for June 2021:
UK in recession: No
Sterling vs US dollar: Higher
Sterling vs euro: Higher
UK base rate: Lower than 1%
UK RPI: Lower than 2%
Halifax UK house price index: Higher
US president: Biden
UK/EU trade deal: Yes
UK/US trade deal: Yes
When this is all over, my grandson, whom I am missing, will get the biggest hug ever.
