COMMENT
Making predictions is never easy; doing so in 2019 looks like a mug’s game.
While you write your own punchline to that, I’ll have a go. My only advantage
is that I’m doing so from the 18th floor of 22 Bishopsgate, EC2. The view of
London is extensive, with sight of the issues that will affect real estate in
2019 nationally.
1. Look along the river and you’ll see Westminster, where the most
profound decisions to affect property will be deliberated (or ducked). The most
significant consequences revolve around 29 March, of course, but many are
already being felt and will continue to be so in the months, years and perhaps
decades that follow.
2. Squint and you can see Homes England just behind parliament.
More bank than regulator, and more proactive than most government agencies, its
energy will help accelerate housing delivery nationally in 2019.
3. For London’s housing
crisis to ease in 2019, we’ll need greater co-operation between government and
City Hall, just across the river. With preparations for the 2020 mayoral
election campaigns set to ramp up, don’t hold your breath.
4. They may be less headline-grabbing in the occupational
market than tech companies, but there’s a lot of banks down there. They will
stay cautious on loan-to-value ratios, furthering opportunities for emerging
debt providers.
5. You can still see cranes in all directions, despite reported
falls in office construction. There’s nothing to make you disbelieve the most
recent Deloitte Crane Survey’s findings that the
development pipeline over the next three years will soften by 11%. But it makes
you wonder how what is sure to be a surplus of second-hand offices will be
absorbed.
6. You’d have to pay me a lot of money to go up in one of those
cranes. In fact, you’d have to pay anyone a lot of money to go up in one;
labour costs in the global construction sector are rising by 5.6% a year. That
pressure – and pressure on materials costs – won’t ease in 2019.
7. That’s 77 Leadenhall Street, EC3, near Aldgate Station just
below us where WeWork agreed a 74,301 sq ft letting over
Christmas. You can’t see all of its 45 UK locations, but the flexible workplace
revolution is visible from British Land’s Storey just behind Liverpool Street
station up to The Office Group’s stylish setup at Derwent London’s White Collar
Factory.
8. Sometimes it’s what you can’t see. Environmental and social
infrastructure isn’t so visible from a bird’s eye view in a built-up area but
there will be a great focus on real assets in 2019. And you’d need a clear day
and exceptional vision to see the sort of undersupplied regional markets which
the likes of Clearbell see as office development opportunities.
9. Is that an administrator
scurrying into HMV on Oxford Street? Its 980,000 sq ft retail portfolio (equivalent to 30.6m CDs or 11.4m LP
sleeves; yes, Radius Data Exchange can calculate anything) may account for a
fraction of the 18 m sq ft of space lost in 2018 to a raft of CVAs, store
closures and administrations, but HMV would be a symbolic loss. It moves us
closer too to the day when a high street collapse makes everyone (consumers,
politicians, landlords, investors and more) sit up, take notice and act in
unison.
10. With UK internet sales in November accounting for 21.5% of total
sales, you can see the underlying cause most clearly to the east. Urban
logistics has accounted for the industrial revolution of recent years. Full
pricing might relegate investment opportunities from primary to secondary
markets. But within sight of here there will be more truly mixed-use planning
apps in 2019 to sate demand.