Each one of these trends is underpinned by a higher weighting afforded to individual needs, preferences and experiences – meaning that real estate developers and landlords can no longer take a cookie-cutter approach.
Environmental issues have been rising up the real estate agenda for some time, and rightly so. While the pandemic has focused minds on more pressing concerns this year, we expect the environment to return with new impetus in 2021. This concerns the natural environment and the move to net zero, which will be turbo-charged by the new US administration. It also encompasses the physical environment as the importance of health, wellness and social sustainability in the places we live, work and play has been brought into stark contrast by recent events. Real estate will be expected to offer genuine solutions to climate change, users’ wellness and community cohesion. In our view, it is up to the challenge and in 2021 we will see it shine.
Flexibility will be prominent in 2021. This is not just about flexible leases, although they will certainly become more prevalent in office and retail markets as a response to weaker occupier demand and continued business uncertainty. There will be a fresh focus on worker flexibility. We expect most office-based companies to adopt flexible arrangements as standard practice, empowering workers to choose where they work and when. This shift will require offices to be more flexible and capable of accommodating fluctuating numbers of employees undertaking different activities on different days. Successful offices must deliver real value to companies, which can now choose not to take a physical office and will be more demanding of landlords. We foresee more building use flexibility as the lines between an ‘office’, a ‘retail’, a ‘leisure’ and a ‘logistics’ asset blur. Expect a wider mix of uses in the same building and traditional offices accommodating everything from cafés, shops and last-mile logistics through to fitness studios and data centres. Categorising real estate into distinct sectors will become harder than ever.