Merry Christmas and a Happy New Year from all of us here at Boxpod! 2024 has been a pretty rocky year for the United Kingdom. The country has continued to struggle post-COVID-19 – both economically and socially, and wars in Ukraine and Gaza have had a particularly destabilising impact. However, the major change that has happened in the country this year, is the General Election, which was fought throughout June, with the results on the 4th of July, leading to a landslide victory for the Labour Party, potentially bringing drastic changes to the way that commercial property works in the UK.
We have continued to see a record cost of living and high energy bills, rising water bills, and a more normalised hybrid working culture – but also signs of people moving back to spending more time back in the office, with the environment still near the front of priorities, but also a stronger push back against the measures that are being put in place to try to tackle the environment.
So, 2025… The main difference that we are likely to see is the difference that the new Government makes. We have had the budget, but it mostly doesn’t kick in until later in 2025. There is not much that has happened in 2024 that is a result of the new Government, so we are likely to see their policies come into play.
We also have the potential impact of the new Trump administration in the USA and all that his views on the US relationship with the UK bring – and further afield. The wars in the Middle East and Ukraine, for example, and any further instability in the world.
We are moving further away from the COVID-19 pandemic and mindsets are changing again relating to our attitudes to work, where we are working, what we are doing, and of course, the ever-increasing role of technology, specifically AI and robotics. There is potential for 2025 to change our lives pretty drastically, so what do we think about how this is going to impact the world of commercial property?
Retail
Although there has still been a massive move to online retail, there is still a place for the high street, especially when it comes to more customer-engaging businesses such as cafes and restaurants, supermarkets, and experiential retail. It looks like we are likely to see continued demand for space on the high street, especially in supermarkets.
There is proof that the public is generally increasingly looking to support smaller businesses over massive multi-national organisations. This could also have a positive effect on the high street as this is where many smaller businesses thrive. The new Government’s planned rise in business rates is also more likely to have an impact on businesses with large retail units than smaller ones.
There are also signs that out-of-town supermarkets are looking to spread more widely and accumulate land outside of town centres. The new Government has made great promises around the massive construction of housing that there will also be huge amounts of infrastructure required.
It is predicted that eco-friendly, sustainable, technology-friendly, and employee welfare are likely to be priorities when it comes to the demand for retail unit rentals.
E-Commerce
E-commerce has of course, become deeply ingrained in the world, and it does, of course, have a huge impact on commercial units – not only in its impact on the high street and other retail but also in warehouse and industrial commercial unit demand, as well as the infrastructure required to support the massive need for online services (data centres, etc.).
With the already high levels of e-commerce and its need for large spaces in useful locations with good transport links (although not necessarily in-town) there is already high demand for out-of-town warehouse units. It looks like this demand is going to continue to grow.
With the hope of building better ties with the EU and other countries or trading blocs across the world, there is potentially going to be a greater demand for warehouse units close to ports and airports.
Last year we predicted that people would be buying increasingly across the world (and less from national organisations)/ This year, we think that this is still happening and likely to continue, whilst also looking to buy from smaller local businesses where possible.
Office Space
The ‘unsettled’ nature of office unit demands has changed significantly since the pandemic, as employees have moved from a preference to working from home to working in the office, a ‘hub and spoke’ system, to a more hybrid system. Signs are now showing that people prefer to spend time collaborating in an office, whilst having the flexibility to work from home when they wish.
And that seems to be the key word this year – flexibility. When it comes to the layout of an office unit, to the amenities provided by the commercial unit, down to the leases available to tenant businesses.
Businesses are looking to prioritise flexibility as well as ESG matters, sustainability, and employee welfare.
Final Thoughts
It has been a rocky past few years for the British economy. What we are hoping to see in 2025, however, despite the external influences around the world, is more stability in the country. Greater investment in public services and the building of homes means that things are unlikely to feel easier for a while, but the hope is that they will stabilise the economy as much as possible.
We are expecting to see an ever-increasing demand for warehouse and data centre units as technology becomes more and more important, and e-commerce continues to grow. Although, this, by no means, means that the high street is obsolete.
As we move towards the encroaching Net Zero targets, sustainability is at the forefront of building projects and commercial unit refurbishment, and this is likely to only increase.
Here at Boxpod, we see it as our job to connect commercial unit landlords with commercial tenants, in a match made in heaven. So, if you are a commercial unit landlord in 2025 looking to find their ideal tenants, or are a business looking for your first or a new commercial unit, take a look at our website and see what we can do for you!