How coronavirus is transforming our towns
Published: 15th February 2021
After almost a whole year, the coronavirus pandemic is having a transformative effect on our country. While the loss of life and livelihoods has been devastating, not every sector is doing as badly as might be feared and the pandemic has brought about some long-term changes in our towns and villages.
As a property consultant operating across commercial and residential markets in the South West, I can see these changes first hand and they are fascinating to see: Although the economy is clearly suppressed because of the pandemic and the ongoing lockdown, there are reasons to be optimistic about our local economies both in our region and elsewhere in the country.
Covid-19 business support
Of course, one reason why the situation for many businesses isn’t as bad as it could be is because of the support that’s been given by the government to reduce business outgoings, particularly with the action that’s been taken to ease the burden of business rates.
Throughout much of the pandemic, more than 350,000 occupied retail, leisure and hospitality premises have been receiving a business rates holiday for the financial year. Now, a further 418,000 office premises have a 25% reduction off their rateable value, paving the way for a rebate worth up to £481m.
This support was sorely needed, particularly while shops and leisure venues are closed and people are instructed to work from home if they can, effectively meaning that offices should, by and large, be empty. While this could have been devastating for the commercial property sector, the business rates relief means these sectors are now in a far better position to face the rest of this pandemic and, hopefully, it will help them recover soon.
As a result, the property sector has adapted to their challenging conditions: Because every retailer and every office is affected by the lockdown rules - and because property owners and landlords don’t want to lose their tenants - the property market has become much more favourable to tenants. This means that turnover rents and flexible lease terms are becoming the norm and tenants can negotiate shorter terms with no rent reviews, helping to keep them in business through the lockdown.
Resilience of the property market
While the retail, leisure and office sectors have needed a helping hand to survive, I’ve been struck by the resilience of the property market for the industrial and manufacturing sector where there is still good demand for sales and lettings. One reason for this is that, unlike in the first lockdown, most industries are allowed to remain open because many people in the sector cannot work from home.
And, speaking of working from home, it is in residential property where we can see the most change with conflicting pressures converging with shifting cultures. As has been reported, interest rates have risen, pushing mortgages up and Halifax and the Office for Budget Responsibility has warned that house prices nationwide will fall by as much as 5 or 8% this year. However, demand for homes in towns and villages across the country and particularly in the south is actually rising and the property markets here are holding strong.
Shift from city living to suburbs
Although rising unemployment might reduce demand, the rise of remote working, growing wariness of densely populated areas and the possibility for an improved quality of life outside the capital, people and businesses are leaving bigger cities and moving to less populated areas. A report by PwC claims that London’s population is set to decline for the first time since 1988 as a result of this change, while industry figures have shown that rents are falling in London and rising in the rest of the country and residential prices in towns and villages are holding up well. I’ve seen this myself in areas in the South West such as the Cirencester and the Cotswolds where demand from businesses and individuals relocating from the capital is helping to keep prices steady.
With this ‘exodus’ from the capital and the imbalance in demand for residential properties compared to retail and office premises, I expect that this will also accelerate other changes which will lead to clear and visible long-term differences in our town centres.
Return of the high street?
Before the pandemic, we were already seeing a gradual transition in town centres across the country with retail and office spaces being converted into residential properties. Town planners have long been seeking to bring these changes about as it is seen as an essential step in rescuing high streets from the effects of online retail. Now, given the changes we’ve seen, I’m confident that this transition will be far more rapid - especially since the government has made it easier for these conversions to go ahead and since independent retailers have also had to invest in online services to survive.
I do understand just how difficult this pandemic has been for a great many businesses as well as their owners and workers. I also know that while towns and villages in some areas may benefit from some of these changes, it may not come to the benefit of everyone. But as we look ahead to spring and summer, and move on from a winter we’d all sooner forget, but I am confident that, once this virus is beaten, local economies in our region will be in an excellent position to grow and recover.
These may have been very dark times, but the future is once again looking bright.