Happy New Year from all of us at Boxpod!
2024 was probably a tougher year for businesses and commercial unit landlords than we were expecting. An unstable government, a cost of living crisis, and Brexit, alongside wars such as that in Ukraine have meant that things haven’t been easy for businesses of all kinds. And when things are difficult for business, it usually means that things are also difficult for the commercial property market.
2024 was also a year where businesses continued to deal with the fallout of COVID-19, as employers and employees grapple with the balance of working from home vs in the office, the introduction and development of technology, keeping up with ever-tighter controls on sustainability, and the move towards net zero. This has meant that it has been a very frustrating year for many businesses, with many challenges.
In this article, we will look back at the predictions that we made this time last year and see how we did compared to reality.
Retail and Leisure
Last year we talked about how, despite the continued move to online business, bricks and mortar retail units were fighting back. As businesses are getting to grips with attracting people back to the high street, we are seeing retailers looking to engage better with their customers, creating a shopping experience, and using hybrid shopping models (combining the on and offline worlds into a unique shopping experience). We have also seen more hairdressers, beauty salons, and nail bars, as well as leisure experiences such as games complexes, trampolining, escape rooms, and soft play.
There has been an increased number of cafes and dessert bars – perhaps due to lifestyle changes meaning that fewer people are drinking and smoking, possibly choosing cafes over pubs (as well as a dwindling number of pubs).
Whilst there is still a threat from out-of-town shopping centres, it does appear that the public was getting sick of staying at home and doing everything online – a good sign for the high street! It seems that we are ready to get out into our communities again!
Another trend that we saw in retail and leisure in 2024 was the success of place-maker developments – the construction of retail and leisure areas to attract the public – especially people working nearby – the development around Kings Cross station, for example. Linked to this is the rise that we saw in complexes that include not only residential apartments but also shops and leisure facilities such as gyms and cafes. These are easy to get to and are great for boosting community engagement.
Sustainability is still a massive factor for businesses looking to rent a commercial unit, and we have seen many commercial units undergoing reform, or being built with sustainability at the forefront.
E-Commerce
In the e-commerce market, we predicted continued growth – and, consequently, continued growth in demand for warehouse units. Whilst the e-commerce market has remained resilient and healthy, issues such as high inflation, geopolitical uncertainty, Brexit and the consequences of importation/exportation, economic issues, and the cost of living crisis seem to have created more caution when it comes to expanding businesses and growing the space needed by customers. This has led to less growth than we were expecting, but still a steady demand for industrial space from where e-commerce businesses can operate.
Timelines have remained as tight as possible, meaning that location is key for warehouses, enabling businesses to get their products to their customers are quickly as possible.
Of course, also tied in with e-commerce is the development and increased need for data warehouses. In 2024, data warehouses were given ‘critical infrastructure’ status, meaning that we are likely to see more being constructed in the future. The data centre market continued to grow, and 23 companies have announced 29 new data centre facilities – driven by the increased use of technology – especially AI.
Office Space
The post-COVID fallout has meant that businesses have re-evaluated the question of where employees are based. Last year, we predicted that hybrid working was going to become more commonplace, and to an extent, it has. What we have noticed, however, goes further than this. Trends are showing that many workers are actually spending more time in offices again (without completely ruling out working from home).
We predicted the key factors to the office space market in commercial units to rent to be:
• Sustainability
• Increased use of technology
• Employee welfare
• Flexible workspaces
• Hot-desking
These trends all held throughout the year and continue to trend into 2025. ESG including sustainability is increasingly important, as is another priority for businesses – which is flexibility – whether it is within the office space, or in terms of leases and contracts.
In much the same way as the warehouse units, we have found businesses struggling with the uncertainty that we had in 2024 and resisting expanding as much as they potentially could have.
We have also seen a rise in businesses valuing additional facilities in their commercial units in 2024 – bike parks, gym or changing facilities, and spaces for breaks, have all become more desirable. And of course, locations close to good transport links and shops, restaurants, or cafes have also become more in demand.
Final Thoughts
When it comes to the commercial unit market in 2024, the main takeaway was that there was plenty of caution as the world felt less stable, but more care for employees and the environment.
Some of the key words that we would associate with last year include:
• Adaptability
• Sustainability and net zero
• Facilitating the increased use of technology
• ESG
• Hybrid
• Caution
We are hoping that the economy will become stronger and more stable as the new government becomes more stable, and hopefully, geopolitical issues get resolved, enabling businesses to focus on growth and success over the next year.
Here at Boxpod, we have a range of commercial units for rent. So, if you are a business looking for a home, or you are a commercial unit landlord looking for tenants, take a look at our website to see how we can help you!