Real Estate –
What will office space look like post-lockdown? Part 2
Last week we sat down with one of the world’s leading estate agents, Savills, the UK’s largest property auction house, Allsop, and our very own real estate banking team to hear their views on the future of office space. In this follow-up piece, we ask how the lending environment is reacting to the shift in office trends.
The pandemic affected the work-life balance of millions of people due to the Government’s lockdown, requiring us to work from home for many months. Whilst tricky for some, others realised that they were capable of doing their jobs from home, with no need to commute to and from an office every day, raising the question of the role of office spaces going forward. Will it be business as usual, or will our work lives be entirely different?
How are you seeing lenders react to the office trends being adopted by businesses?
Mat Oakley, Director European Commercial Research, Savills
“This is a very different story compared to how lenders reacted when the 2008 financial crash happened, where credit tightened up. Despite the effects of the pandemic, businesses aren’t having issues obtaining money.
Lenders aren’t standing in the way of businesses adapting to Covid, but they are cautious about lending to office developers. This might be a minor issue of contention when there is a query to borrow money for a purchase of an office building.”
In the previous article I mentioned there is a lack of clarity as to where office space trends are headed. Lenders are unsure what the demand for office space will be post-pandemic, so they must manage risk.
Large buildings are likely to continue to be in demand going forward and could also be a way to entice employees back into the office. Lenders still need evidence of a return to the office to make them confident. This may take 2-6 months, but it’s not going to be as easy to obtain lending on purely new office spaces just yet.”
Ed Dunningham, Valuation Partner, Allsop
“Lenders across the board are being cautious, watching markets closely and taking comfort from the fact capital markets are holding up.
There will be difficulties in the short to medium term as commercial tenants are moving around, changing how they operate. I can see that there are going to be some second-hand tenanted spaces that will be difficult to let.
Commercial property is being placed into higher risk brackets by lenders. It is not that lenders do not want to lend; it is just that they are being cautious.”
Anusha Peries, Real estate advisor, Arbuthnot Latham
"Arbuthnot Latham continues to support clients who require funding for good quality office to residential based schemes where the asset is well located and there is proven demand for the completed product.
The introduction of the Government’s Recovery Loan Scheme (RLS) has allowed us to work with the British Business Bank to support our clients with funding facilities for those who are predominantly property investors, developers, house builders, and business owners."
Further information can be found at https://www.arbuthnotlatham.co.uk/commercial-banking/rls/
Please visit our dedicated business recovery hub for more information positioned to help support your business and your teams, as you transition to a post-lockdown working environment.
What will office space look like post-lockdown? Part 1
We sit down with one of the world’s leading estate agents, Savills, the UK’s largest property auction house, Allsop, and our very own real estate banking team to hear their views on the future of the office space.
Real Estate Round-Up: Retail Property
How the pandemic is affecting the retail property sector.