Economic turmoil and times of significant change can spook investors, but if you take the trouble to analyse the market, such times can be ideal for those seeking good returns. As Warren Buffett said: "A climate of fear is an investor’s best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance."
In the world of commercial property, 2021 will see opportunities and threats, and there will be winners and losers. The key is to understand the wider economy and make the connection between that and commercial property needs. Fundamentally, you have to be in it for the long term.
While the move to online shopping wreaks havoc with bricks and mortar retailers, it is driving huge demand for warehousing and distribution premises, which is the number one growth area in commercial property. In addition, Brexit has led to significant stockpiling and the Covid-19 crisis has led to medical stockpiling, too.
All of this means huge opportunities for speculative developers. Last year saw several such developments break ground in our region, and in 2021 this trend will accelerate.
Brexit might also be one of the reasons behind a buoyant manufacturing sector. A mindset shift towards ‘manufacture your own’ self-sufficiency is driving a healthy demand.
Manufacturing and distribution jobs have to be done in person on business premises, but this is not so for office-based jobs. Lockdowns have taught us that home-working is not just possible, but can be productive and effective, too.
However, no serious commentator is suggesting that the office is dead or that the benefits of collaborative working and communal creativity are cancelled out by the savings to be made on rent, rates and utilities. There are opportunities for those who can provide high-quality, well-designed collaboration spaces – spaces where people actually want to come to work.
Covid has accelerated a trend towards online shopping and, while high street retail faces some significant challenges, it will still exist once the dust has settled. Destination retail in major shopping centres such as Norwich will survive, although they may look somewhat different.
Even during the pandemic there have been winners as well as losers: smaller, local stores have done well, as have niche independent shops. If working from home continues post-Covid, then small, local retail will do well.
There are definitely opportunities to make a decent return from commercial property, but avoiding threats requires an intimate knowledge of the commercial property market, as well as a good understanding of the direction of the wider economy. In 2021, the savvy property investor will make this the year to seek out expert advice.
For more information visit www.arnoldskeys.com
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