Jones Lang LaSalle looks ahead
Every property sector is showing polarisation between London and the regions, says Jones Lang LaSalle in its predictions for 2013. The divide is “vast” in the office, retail and residential markets, the firm says, both in terms of occupier demand and investor appetite.
“This is part of a global trend in which a small number of world cities play an increasingly central role in both business and investment strategies. London is fortunate in being one of the leading members of this club,” the firm says.
However, the generalisation can be stretched too far – some regional cities remain stronger than others, particularly in terms of their prospects. “Some medium-sized cities in the South of England, and some core cities, may well outperform,” Jones Lang LaSalle says. It says this trend is linked to the growing tendency of highly skilled workers in some industries to gather in particular centres. “This means that location is becoming more important than ever in retaining staff or attracting customers”. As a result, the polarisation between available commercial property in the more successful regional centres and property for sale and to rent in the rest could become obvious over the next year.
Another key trend this year is the transformation being wrought by technology in every property sector, along with the ongoing march of globalisation, JLL says. The firm believes the pace of change will quicken this year and beyond. In retail, multichannel is transforming the sector, and logistics is starting to adapt to the delivery and returns requirements that this implies. Offices are starting to adapt – more slowly – to a more mobile, wireless world, in which available office space can be used more efficiently, and layouts can be designed more freely with staff retention and brand image in mind.
The industry will also continue to adapt to the risks being driven by sustainability requirements – all this means that obsolescence is becoming the biggest single issue for the offices sector, particularly for secondary office space. “Working and consumption patterns are likely to change so fundamentally over the next few years that many existing spaces will simply become unusable,” the firm predicts.
These trends will benefit the global business at one end of the scale, and the start-up or SME that can use technology to access a wide customer base at the other end. It is the medium-sized company that will generally find life toughest in the coming years, JLL says.
