As we begin the new year, here at Boxpod, we like to look forward and think about how we see the commercial property market changing in the next year. The British society and the world in 2023 are likely to be affected by a few external factors, which can lead to having an impact on the commercial property market – factors such as the struggling economy, the war in Ukraine, inflation, Brexit, and the cost of living crisis.
Alongside these macroeconomic forces, there are technological factors – the continuous development of technology – more specifically, factors such as artificial intelligence, robotics, automation, the Internet of Things, and SMART technology which are revolutionising the workplace and how we choose to live our lives in relation to business.
With all of this in mind, here are some of our predictions as to how we see 2023 going for the different areas of commercial property that we cover here at Boxpod.
Retail
The retail sector has had a difficult 2022, struggling a little to bounce back after the COVID-19 pandemic, but things are beginning to improve. What we are likely to see, however, is that with the potential of a recession and the cost of living crisis, customers will be more careful about where they are spending their money. This is likely to result in a rise in lower cost and budget shops both on the high street and out of town.
We are also seeing more and more people looking for high street experiences rather than just a ‘shop’. The successful businesses in retail units on the high street will be the ones that offer more than just standard shops. They will need to provide extras that will make people want to leave their homes and make the effort to go to their shops.
There is evidence that certain types of shops will continue to be present on the high street, such as cafes and pharmacies. Department stores seem to be struggling, with many of them being developed into leisure facilities, especially aimed at children and young people.
E-Commerce
The e-commerce sector is growing in the UK and is set to continue to do this over the next year. The main impact that this has on commercial property is the already booming demand for warehouse space. With e-commerce, the key is to get products to customers as quickly as possible, so the need for well-located, local, and accessible storage facilities has never been so important.
Last-mile distribution, automation, robotics, and delivery drones are all likely to become more commonplace in 2023, and storage spaces will need to be able to accommodate these changes – for example, with space and power capabilities.
E-commerce is being seen as a solid bet for the future in terms of business, and this means that we are likely to see both landlords and tenants wanting to secure a more stable future, and, therefore, looking for longer leases on the commercial property.
Offices
The fallout of the COVID-19 pandemic, tied in with changes in technology have meant that we have seen a rise in working from home or hybrid working, especially when it comes to office workers. What we are seeing now, however, is that there is a degree of businesses that are calling their workers back into spending more time in work. In reality, although hybrid working and WFH are certainly not dying out, it is difficult to predict where this is heading in 2023.
What we can be more sure of, however, is that the use of technology in the workplace will rise, especially SMART technology and wearables which can reduce business costs, boost productivity, and help to improve employee job satisfaction.
We are also expecting to see green credentials and quality of the workplace (provision of showers, breakout rooms, gyms, creches, for example) as becoming more important to businesses when they are looking for commercial property. Collaborative working areas and Flexi-spaces are also likely to become increasingly sought-after.
Industrial and Logistics
The industrial and logistics sector ties in closely with e-commerce, as goods are often distributed from warehouses or storage facilities. Vacancy rates are already lower than in other sectors and demand is likely to continue to be greater than supply.
As we explained above, it will be increasingly important that these facilities have adequate power for the use of the required technology.
We are also likely to see a higher demand for spaces that can be used as data centres as the world increasingly uses cloud and other technology. It will be essential that there is the required space, power supply, and green credentials (the channelling of the heat produced into warming houses, for example) to take the UK forward. We are likely to see an increased number of regulations relating to sustainability in this area.
Sustainability
Research shows that 61% of businesses are prioritising energy efficiency in 2023. Of course, some of this is related to the price of energy, but this is also down to the fact that the environment is playing an increasingly important role in the way that businesses are run, who people are deciding to work for, and who people are choosing to do business with.
It is likely that it will be even more the case that commercial properties that are ‘greener’ will be more sought after. Insulation, low-energy lighting systems, natural light, and green roofs are all likely to become more popular in the world of commercial property.
15-Minute Cities
The concept of a 15-minute city is that everything that its inhabitants need is available to them within 15 minutes. This means having everything close by, including homes, healthcare facilities, schools, workplaces, parks, and leisure activities. Whilst there are some shortfalls of the 15-minute city, the concept is interesting as it can help to build communities, values our time more, and can be healthier for the environment.
Although having a pure 15-minute city is a long way off, there is the likelihood that we are going to see elements of this coming into our city planning, and this will be reflected somewhat in the commercial workspaces that are needed.
Final Thoughts
2023 is looking to be a year where technology, sustainability, and the cost of living crisis are most likely to dominate the commercial property market. Regardless of your commercial property needs, why not take a look at our range of office space, retail units, warehouse spaces, workshops, storage space, or land that we have to rent or buy?
Looking to expand or grow your business? Find your perfect space on Boxpod.
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