As commercial activity works its way back to normality, Joel Lobatto from top-performing Commercial Agent, Perry Holt & Co, shares his views on his local Hertfordshire market alongside both commercial investment and redevelopment.
Throughout 2021 H1 locally, have you seen an emergence of certain trends or investor behaviour that have strayed from earlier market predictions?
Watford has been our local market for many years, where we have found the retail market to be performing better than predicted since the Covid-19 pandemic started. Certainly in Watford whilst the Atria Shopping Centre still has large voids the High Street is bucking the trend where occupiers remain keen to occupy space, therefore keeping availability low.
Dark kitchens have become popular since Covid hit and we believe will remain a required entity in the future to service the food delivery sector.
Investors remain keen to acquire industrial/warehouse investments and the residential market is strong with requirements from developers for sites with or without planning consent.
Locally, commercial land is particularly sought after with very little on offer with developers increasingly enquiring for land to come out of the green belt.
In your opinion, where are the emerging commercial real estate opportunities for 2021H2 in your geographical areas?
There remains opportunities in PD conversion from office to residential especially where you can add one or two floors.
Data centres are required by several companies with little or no space to place them.
Modern industrial/warehouse with good minimum eaves height remains sought after and there are a number of developers who wish to purchase commercial sites.
I believe if you acquire either retail or office investments now, when the markets return to pre-Covid performance they will show uplift on the investment.
Locally, which commercial assets do you consider the largest ‘winners’ and ‘losers’ as a result of the pandemic?
Locally the largest winners as a result of the pandemic are industrial/warehouse space, A5 takeaway units, supermarkets and convenience stores.
The losers are offices, The Atria Shopping Centre with the loss of John Lewis etc. hotels, nightclubs and sports venues.
What type of commercial property will do you feel may experience increased distress/constraint as a result of external policy changes from the last 12 months?
Sadly, purpose-built offices will find it hard to fill voids over the next 12 months due to the uncertainty of companies bringing staff back into the office full time resulting incorporates holding off making relocation decisions.
Nightclubs will remain under pressure due to Covid policies, along with restaurants and pubs that cannot run at full capacity. Shopping centres will remain under pressure with customers continuing to shop at independent retailers or online.
Finally, are investors still targeting higher-yielding/ riskier assets, or is there still a flight to quality and sustainability?
Locally we are seeing investors still targeting higher-yielding investments, however, those opportunities are scarce. Retail investments are still being purchased by investors who are moving away from the certainty of the brand covenant as so many have disappointed landlords during the pandemic.
Industrial investments are performing well where yields continue to move in. Mixed-use schemes also remain popular with scope to improve in the future.