How might accelerated growth in online retail and home working drive the repurposing of commercial real estate?
As the world continues to come to terms with the Covid-19
pandemic, I can’t help but imagine that two trends we see accelerating—growth
in on-line retail and working from home—are set to potentially result in the
transformation of city and town centres across the country.
Retail Revolution
Observers would point out that the trend for customers to
increasingly focus on internet based shopping rather than attend a physical
store has been with us for some time. While there remain successful retail businesses
in the physical space, the squeeze is real; just look at the well-known names
that have gone to the wall over recent years.
The pandemic has accelerated the change in our shopping habits; from
walking through the front doors of our favourite store, to click and collect
services or home delivery via on-line shopping in pursuit of personal safety
and convenience. In addition to the giants of the UK retail sector, even
smaller businesses—including restaurants and cafes—have found a way to provide
home delivery and click and collect services.
Multiple factors such as:
- Evolving consumer habits
- Automation of store check-out processes and stock management
- The imperative to cut costs in an uncertain operating environment
- The rise of new store concepts such as stores without physical check-outs
- The use of immersive technology so customers can ‘try before they buy’ without ever leaving home
- Reducing need to maintain stocks in multiple retail outlets
all combine to question the viability of a similar level of retail
floor space we have seen even in the recent past.
So what happens to vacated real estate in cities and towns as
traditional players move into highly automated ‘dark stores’ based out of town,
with limited convenience and ‘show stores’ in urban centres? An excess of
retail space in major cities and towns will depress prices and act as a driver
for the repurposing of buildings.
Home Working for Profit and Convenience
One thing many people have learned to do throughout and after the
period of national lockdown is work from home. Whilst the degree of
productivity or otherwise can often be associated with each worker’s family
situation, there is little doubt that after lockdown experiences many employers
will take a critical look at their office space needs. Can enterprise continue
to function without the people coming physically together in a central
location? Are the collaboration and video conferencing platforms robust enough
to support the employer’s and employee’s needs? Will employees value the time
they can re-claim from not commuting? Clearly the answers to these questions
will vary from person to person and between different enterprises. But, has the
pandemic become a tipping point for many employers to move out, or at least reduce
their presence in expensive city-centre locations?
Clearly many workers do feel that the need to always be in the
office no longer exists. Perhaps there is a need for teams to come together for
particular events but as competence in the use of on-line tools has improved,
many people will not feel or have the need to travel to a central location.
Whilst working from home is a practical option for many, it isn’t
a realistic option for some. So perhaps commuter towns will see a number of
serviced office operators enter the market to provide for localised remote
working; perhaps occupying real estate previously used as a supermarket.
Meanwhile, an excess of office accommodation could emerge in major
cities and towns that will depress prices and act as a driver for the
repurposing of buildings.
Combinational Impact
We already see projects designed to repurpose unused office
accommodation for residential use. So let’s imagine for a moment that we see
vacant retail and office space in significant quantities. Perhaps the
repurposing can be accelerated to ensure that:
- Residential communities form in city and town centres to create human focused environments which in turn changes the need for mobility.
- Small community focused businesses are allowed to grow and thrive to serve their own local populations.
- Old housing stock can be retired quickly and the component materials recycled were possible, and sites turned into green spaces.
- Local authorities are able to provide suitable accommodation to help address the issue of homelessness.
The opportunity to improve the quality of housing stock with a
positive knock on impact to peoples’ health and wellbeing is taken.
To help enable this transition, we might expect that regulations
are designed to ensure that repurposed retail and office space is converted for
residential use in a way that minimises environmental impact through
energy-efficient materials, and that new housing can be provided at an
accelerated rate.
Clearly there are issues of the funding required to facilitate
this transition. But new technologies such as autonomous mobility, artificial
intelligence, 3D printing and construction, new materials, and immersive
technologies like augmented and virtual reality, together with the consumer
habits and home working trends that have accelerated through the pandemic,
could prove to be the tipping point that enables a transition to more human
cities and towns.
Image Credit: photosforyou -
https://pixabay.com/photos/company-stock-industry-3368699
