From environmental uprising to widespread political and economic uncertainty, it’s safe to say that 2019 was a year of navigating the unknown. So as we leap into a new decade, what can we expect from 2020 in the real estate industry? Here are our predictions for the year ahead.
Striving for sustainability
In November last year, a global ‘climate and environmental emergency’ was officially declared by the EU. From Greta Thunberg to Extinction Rebellion, 2019 brought the issue of climate change to the top of the international agenda – and 2020 will be the year that people start to take action.
As businesses witness the shift towards ethical and environmentally responsible consumerism, during the coming year we expect to see more and more organisations striving to reduce their own carbon footprint voluntarily, particularly by improving the energy efficiency of the buildings they operate in.
This movement is already tangible: the 23 businesses that signed up to the Better Buildings Partnership’s Member Climate Change Commitment last year have all pledged to publish information by the end of 2020 on how they will implement measures to work towards the legal net zero carbon targets. And we’re expecting many other organisations to follow suit as the year progresses, putting plans in place to make their buildings and operations more sustainable. At Hollis, we’re taking a systematic, evidence-based approach to measure and understand our impact on the environment and plan to publish a business-wide sustainability strategy in 2020.
The B Word
Companies across the real estate industry were hunkering down in 2019, attempting to navigate Brexit uncertainty and what it might mean for them.
2020 is the year that promises the resolution of Brexit and all the political, economic and social ambiguity that has accompanied it. Whilst investor caution is likely to continue at least until the UK leaves the EU, and likely for the adjustment period that will follow, the management of existing assets will be a top priority for investors, owners and occupiers alike.
Whilst it’s difficult to predict exactly what’s in store this year, whatever the outcome we’re confident that the resolution of political and economic uncertainty will give the industry a chance to take stock, adapt and stabilise.
The big box boom
The industrial sector has reigned supreme in the past few years and, even amid political and economic uncertainty, remains the most active commercial property market in Europe thanks to the rise of e-commerce.
This year, we’re likely to see a continuation of the huge demand across the sector but with supply still falling short, leaving the field very much open for developers. We also expect to see the roll-out of more warehouse space optimisation at urban logistics sites, with average building heights soaring and more multi-storey sheds being built.
In 2019 we saw investors mixing asset types and combining industrial developments with residential developments in an attempt to diversify, encourage wider use and optimise their assets. This year, however, we anticipate that the biggest opportunities will lie in combining industrial developments with leisure, rather than residential.
ConTech is coming
Investment in construction technology (or ConTech) is set to boom in 2020 and we’re likely to see plenty of ConTech start-ups breaking into the European market across the year. With construction firms being put under increasing pressure to deliver timely and cost-effective results, we expect the stand-out technologies to be ones that focus on rethinking the physical construction processes, particularly modular build.
Last year, we provided advice for the world’s tallest modular tower in Croydon which is due for completion in May. At 44 stories tall, the build time is only 26 months – almost half of what it would be to construct it conventionally. The time and cost savings that modular construction can yield may prove very attractive to investors and developers, so this year we’re expecting to see more and more developments being built using this method.
Drones will also continue to play a key part in increasing efficiency on-site by rapidly collecting high-quality data, identifying hidden defects in hard-to-reach places and minimising health and safety risks. In 2019, we launched our drone surveys and data capture service, with a dedicated team focused on using technology to advance the surveying process, cementing our focus on innovation in the property sector.
The rise of resi and the resurrection of retail
With the UK government pledging to build at least a million homes over the next five years, we’re expecting necessary growth to come in the residential sector throughout 2020 and beyond. And with the housing crisis in mind, BTR (build-to-rent) developments in particular are likely to be a key focus for investors and developers in the coming year.
Meanwhile, in the world of retail, 2019 was another unforgiving year for the humble high street. Whilst there is still likely to be some pain during 2020, we’re expecting to see a renaissance in areas like retail parks, as well as more being done to transform town centres into attractive destinations through placemaking, improving ambience, aesthetics and soundscapes. Transforming the high street is also likely to involve repositioning retail assets to other property types such as leisure, education, cultural or residential to ensure people are still visiting, even if not to shop.