FOREWORD BY EDITOR, ANDREW CHILVERS
As the Covid-19 pandemic continues to disrupt businesses across the world, one of the biggest debates being played out is the future of property – in the city centres and suburbs; in office space, commercial and residential.
Just what will the world of real estate look like at the end of 2021? Will cities return to normal, and office space and retail malls remain the same, or will they be changed forever?
Most legal and financial advisors in the real estate sector agree there is an element of crystal ball gazing, but likewise there are now clear signs of how things might just look in the near future.
Helping clients in the new normal: How are legal advisors assisting clients during the ongoing pandemic lockdowns? How important has the Counsel role become?
What Philip is talking about is very similar to that in the Netherlands. A lot of clients are trying to cope and trying to restart their businesses whenever possible. Of course, many have had a very tough time, while others have really not suffered much at all. For example, construction is doing well and there have been hardly any restrictions in that sector. Residential construction, for example, is booming in the Netherlands at the moment. This is a result of a lack of government planning for the past 20 years and there’s been a lack of housing. There’s actually a masterplan in the Netherlands to start to build one million new homes because there’s so much pressure on the residential market.
Regarding retail, those who have adapted are doing very well, particularly with ecommerce internet shopping. Elsewhere, however, there’s a lot of real stress for retailers. For example, the luxury goods industry where people want to go shopping for the experience – that’s dead. It just doesn’t exist anymore, certainly at the moment. There aren’t any bankruptcies because the government has extended its support to the sector. We are
expecting a real crisis to hit retail in the summer, when shops re-open and businesses are still suffering from the costs of the pandemic and have to restart paying their taxes. Then the real hit will come.
Sound of the suburbs. As more people and businesses flee city centres for the suburbs, will real estate investors look more closely at long-term suburban development projects?
In the Netherlands there’s more appreciation for businesses moving to the suburbs, away from the crowded city centres. People are now far more flexible, working from home or maybe in the office for two to three days. They can see that there’s a possibility of changes taking place. It’s the start of a trend, without doubt. It was there before Covid-19, but that’s now just accelerated and the demographics are also changing – the millennials, for example, tend to be in the city centres and not the suburbs. Moving to the suburbs is also tied to the development of malls; they may survive as smaller retail parks away from the city centres. Families and older people are now looking for shopping experiences closer to home and the suburb is better suited for that.
“The mall stores are done.” How long will it take for shopping malls to recover from Covid-19 in your jurisdiction?
I agree with that. Especially the leisure activities. There’s a very strong driver and for the malls there is a desire or need for people to socially interact and that will come back very quickly. As soon as these lockdowns are lifted, people will want to do something. I agree with Philip that there will be too much retail space and that will have to be absorbed with other things. Definitely leisure.
They will have to be very creative but at the same time create a reason for people to want to go there and be amused. But it will be different from what we’ve experienced so far. That means there will also be a lot of opportunities. However, businesses will go bankrupt and there will be vacant spaces, so we will go through a huge transition in the times to come.