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Commercial Property outlook

richfool
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Commercial Property outlook

#327295

Postby richfool » July 19th, 2020, 3:52 pm

More concern about commercial property and REIT values.

£230billion commercial property crash: Treasury watchdog sounds the alarm as millions work from home.

The value of commercial buildings will fall by nearly 14% this year, the OBR says
Transactions in 2020-21 are also expected to plummet by 23.7%

Commercial property prices look set to plunge as white-collar workers shun the office, the Treasury watchdog has warned.

After employees across the country were sent to work from home in the coronavirus lockdown, the Office for Budget Responsibility (OBR) is predicting that the value of offices and other commercial buildings will fall by nearly 14 per cent this year.

The pandemic has also accelerated the decline on the High Street – hitting the value of shops – as families flock online at the expense of brick and mortar outlets.

https://www.dailymail.co.uk/money/news/ ... alarm.html

Mike4
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Re: Commercial Property outlook

#327301

Postby Mike4 » July 19th, 2020, 4:18 pm

richfool wrote:More concern about commercial property and REIT values.

£230billion commercial property crash: Treasury watchdog sounds the alarm as millions work from home.

The value of commercial buildings will fall by nearly 14% this year, the OBR says
Transactions in 2020-21 are also expected to plummet by 23.7%

Commercial property prices look set to plunge as white-collar workers shun the office, the Treasury watchdog has warned.

After employees across the country were sent to work from home in the coronavirus lockdown, the Office for Budget Responsibility (OBR) is predicting that the value of offices and other commercial buildings will fall by nearly 14 per cent this year.

The pandemic has also accelerated the decline on the High Street – hitting the value of shops – as families flock online at the expense of brick and mortar outlets.

https://www.dailymail.co.uk/money/news/ ... alarm.html


Looking on the bright side, a lot of office blocks lend themselves easily to conversion into residential flats.

Kills two birds with one stone. Mops up vacant office accommodation and alleviates the housing shortage.

Not that the housing shortage will ever go away. No matter how cheap you make it, there will always be a stratum of people who can't quite afford to buy where they think they deserve to live and feel locked out of owning a property for ever. Where HAVE all those "house price crash" zealots gone, by the way? A debate for another board though I guess.

richfool
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Re: Commercial Property outlook

#327309

Postby richfool » July 19th, 2020, 4:38 pm

There is a related article also on the DM website, which discusses the prospects for office and industrial, as compared to retail.

Extract:
There's a strong argument to be made that talk of wholesale working at home becoming permanent is overdone.

I suspect it will be a minority of office based workers that want to continue to work exclusively from home.

A more likely scenario is that the lockdown has ushered in an age of widespread flexible working where 'WFH' is available to all, but most people still spend part of their week in the office.

There are a myriad of benefits to being physically in the office, both work wise and socially.

It is also crucial to the economy that workers still go into offices, using shops, takeaways and restaurants en route or during lunch breaks.

Don't be surprised if the government develops an incentive scheme to get companies to maintain a healthy proportion of office-based staff given how important that is to the wider economy.

If this turns out to be an accurate assessment, there could be decent fuel for a recovery in the prices of REITs that own a good amount of office space.

Industrial property could also see a recovery. In fact, it was less badly hit than office space as manufacturers were among the first businesses to get going again as lockdown was eased. Some factories, perhaps unwisely, barely shut down at all.

Logistics centers are another bright spot. All online sellers ultimately need physical space to store products and dispatch them from.

The move to online shopping has been ongoing for a decade or more and has been devastating for bricks and mortar retail chains. Ridding the world of Covid-19 would not change that.

https://www.dailymail.co.uk/money/inves ... -punt.html

I hold Warehouse REIT, which I am fairly comfortable with, plus RGL and SLI, which I am a bit more concerned about.

stevensfo
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Re: Commercial Property outlook

#327314

Postby stevensfo » July 19th, 2020, 5:02 pm

Mike4 wrote:
richfool wrote:More concern about commercial property and REIT values.

£230billion commercial property crash: Treasury watchdog sounds the alarm as millions work from home.

The value of commercial buildings will fall by nearly 14% this year, the OBR says
Transactions in 2020-21 are also expected to plummet by 23.7%

Commercial property prices look set to plunge as white-collar workers shun the office, the Treasury watchdog has warned.

After employees across the country were sent to work from home in the coronavirus lockdown, the Office for Budget Responsibility (OBR) is predicting that the value of offices and other commercial buildings will fall by nearly 14 per cent this year.

The pandemic has also accelerated the decline on the High Street – hitting the value of shops – as families flock online at the expense of brick and mortar outlets.

https://www.dailymail.co.uk/money/news/ ... alarm.html


Looking on the bright side, a lot of office blocks lend themselves easily to conversion into residential flats.

Kills two birds with one stone. Mops up vacant office accommodation and alleviates the housing shortage.

Not that the housing shortage will ever go away. No matter how cheap you make it, there will always be a stratum of people who can't quite afford to buy where they think they deserve to live and feel locked out of owning a property for ever. Where HAVE all those "house price crash" zealots gone, by the way? A debate for another board though I guess.


£230billion commercial property crash

Why is that when property prices go up and up and up ad infinitum, beyond inflation or wage inflation, everyone looks the other way, yet the second they dare to come down, it's called a 'crash'? Yes, I know, it goes back decades, so rhetorical question.

I think that everyone outside London knows that there is no housing shortage; rather a shortage of affordable housing. Certainly, affordable apartments would be welcome, though I think the British public have been brainwashed into thinking of apartments as too continental. They must have a house, a garden, a crazy council tax bill and a ridiculous soul-sucking mortgage that lasts for 30 years. Only then will they have learned the ways of the force and become real men. ;)

Steve

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Re: Commercial Property outlook

#327496

Postby SKYSHIP » July 20th, 2020, 1:52 pm

IMO the article is well off the mark with views on WFH - been reading too much social media.

For sure it can work in some fields, though certainly not all of the time.

This was an excellent article on the subject in The Times back in May:

Office life is more precious than we admit –

HTTPS://www.thetimes.co.uk/edition/comm ... -q3twmh8tv

Zoom meetings are no substitute for the interaction and camaraderie of the workplace


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