What Does the Cost of Living Crisis Mean for Commercial Property?

The world is an uncertain place at the moment. As we head into the winter, it looks like things are going to get tougher for all of us as energy bills are set to rise and the cost of living crisis sets in. Here at Boxpod, we’ve been thinking about how this is all likely to affect the world of commercial property.

It is likely that the cost of living crisis is going to have a big impact on the world as the COVID-19 pandemic, in terms of how we live our lives, and, potentially, the investment required from the government to help us through it.

With worries about the prospects of an on-coming recession, higher cost of energy, fuel, and water, and ever-increasing inflation, it is unlikely that this will not have any impact on commercial property. It does not mean, however, that it is all bad news. The cost of living crisis is potentially going to be very difficult for many people, but there are some areas that it is going to change.

Changes in Work from Home Numbers

Since the COVID-19 pandemic turned the world on its head, we have seen significant numbers of people choosing to work from home either on a full-time basis or through hybrid working. This is mainly due to convenience, productivity, and the ability to cut costs – on commuting and childcare, for example. As we come into the winter, however, and especially with the prospect of higher energy bills as we look to heat our homes, we are expecting to see a rise in the number of people looking to spend more time at work again.

People are weighing up the difference between staying at home and saving money on their commutes or going into work and saving money on the heating of their homes. Potentially, this could also mean an increase in the implementation of the hub and spoke model, with more regional workspaces, meaning a shorter commute for employees – especially as the price of fuel goes up.

This hub and spoke model was already a trend that has been becoming more and more popular, and it is very likely that this trend will continue further.

Growth in Flexible Workspaces

Flexible workspaces are workspaces that are specifically designed to be used in a number of different ways, depending on your specific needs. It may be that they are designed for collaboration or for individual work. It could be designed to build a relaxed and creative atmosphere – or perhaps a more classic, formal feeling. The point of a flexible workspace is that it is flexible to suit your individual needs when you have them.

A flexible workspace normally involves hot-desking – the idea that instead of everybody having their own desk, each desk is used by different people at different times – according to their needs. As more and more people look to come into the office and are hoping for more effective environments to work in, it is likely that we will see more and more commercial property landlords opting to create flexible workspaces.

Changes in the High Street

The high street has seen many changes in recent years. The growth in online shopping especially has paved the way to a decline in some high street shops, but a rise in others and experiences such as cafes. The increase in work from home has bolstered the popularity of local cafes and restaurants, and this is likely to continue as businesses open up regional hubs instead of big central headquarters.

There is the possibility of a need to adapt some retail units to more local services to serve the community through what has the potential to be a tough time for us all.

Less Spend on Leisure

It is uncomfortable to think about, but as the public’s disposable income decreases, it is likely that there will be less demand for leisure activities. The most popular leisure activities will be the ones that do not cost a lot, or that provide extra benefits for their customers.

As the prospect of fewer families taking holidays looms, there is also the chance that the popularity of ‘special treat’ leisure experiences will rise – especially for those suitable for children, and in areas where the public might go on holiday.

Boost in Staycations Numbers

It is estimated that about 77% of Brits chose to holiday within the country this year. And this is unlikely to change next year. This is great for local economies – especially in the traditional British tourist destinations – near the seaside, or in popular tourist cities.

With a boost in tourists, we are then likely to see a boost in the requirement for the infrastructure related to them. This means a greater need for hotels, restaurants, leisure activities, tourist destination experiences, and the hospitality industry in general.

A Rise in the Popularity of Shared Workspaces

With an increase in the number of people looking to work outside of the home and an existing proportion of people who have agreed to work from home or hybrid working, there is a chance that we will see a rise in the popularity of shared workspaces.

Shared workspaces are essentially large offices where businesses or individuals can rent a desk or desks on a short-term basis (often for as little as a day) when and where they need it. This gives businesses, freelancers, and entrepreneurs more flexibility, and means that they only pay for the space when they use it.

Final Thoughts

The cost of living crisis is lining up to have a massive impact on virtually every area of our lives in the year or so to come. And commercial property is no different. Whether it means fewer people staying at home and more people going into work, a shift in the workspace itself, or a changing landscape on the high street, we are expecting things to change.

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