10:45 am January 19, 2022
I suspect few people will be sad to see 2021 return. And as we enter a new year, there’s a real sense of optimism that we’re finally approaching something you could call “normal.” – by this I mean learning to live with Covid in a manageable way, and also learning to live with Brexit.
For all its uncertainties, at least in the world of commercial real estate, 2021 was a year when deals closed. The latest EGI Index – the leading barometer of commercial property transactions, run by the industry bible Estates Gazette – shows a healthy level of activity in Norfolk. I’m proud to report that Arnolds Keys leads the way with more deals closed and more space processed than any other agent.
So what are the prospects for 2022? The main feature of the next 12 months will probably be a much higher level of inflation. Although interest rates will likely rise slightly, the fact remains that money invested in “traditional” places will see its value steadily erode. It is in such circumstances that real estate investment, backed by historically cheap finance, will be very attractive. So where should savvy investors put their money?
The undisputed star in 2021 was manufacturing and warehousing, driven by the exponential growth of online retail, as well as a healthy manufacturing sector. Expect this trend to continue in 2022. The mismatch between supply and demand has driven up rent levels, but also capital values, meaning that speculative development has become very attractive. We will see a lot of construction in the next 12 months.
Despite the continuing trend towards short-term work from home and longer-term hybrid work, office buildings remain in demand. Last week, Google took a billion-dollar vote of confidence in the office market by buying its sprawling London office – and if a tech giant thinks the office has a role to play, then we would. better believe it.
This year will see a significant overhaul and reorganization of office space, continuing the transition to more collaborative workspaces, designed to accommodate hybrid working.
In retail, the high street fightback has begun, with national chains and independent local retailers vying for the best locations. Tesco has announced a new store in Norwich, and Costa Coffee now occupies the former Jack Wills store on London Street. New stores are opening, including Seasalt and Blakely Clothing.
Occupancy levels in Norwich Lanes remain high, and it is good for Norwich city center to see Chantry Place moving towards a brighter future. We can’t pretend retail isn’t facing significant challenges yet, but the high street is far from over.
Finally, other types of real estate investments are expected to grow, including agricultural land and vacation rentals. Not only will 2022 be another ‘holiday summer’, there is evidence that the shift to UK holidays is becoming more permanent, making holiday rentals a smart investment.
For more information visit www.arnoldskeys.com